* Accused of fuelling climate of fear

* Sense of outrage among journalists

By Mark Hosenball

March 7 (Reuters) - A senior member of the unit Rupert Murdoch created to clean up reporting practices at his British newspapers has hired a private security firm for personal protection, sources close to the company said.

Current and former staffers at Murdoch's News International in London said the security firm had been hired by Will Lewis, a former editor of the business pages of Murdoch's London Sunday Times who later became top editor at the group which owns Britain's Daily Telegraph.

A key member of the Management and Standards Committee (MSC), a unit which Murdoch's News Corp created last year to respond to a growing uproar over phone-hacking and other activities by his British newspapers, Lewis has been criticized within the company for fuelling an atmosphere of fear and paranoia among journalists who still work for Murdoch's three remaining UK newspapers.

The private security firm is protecting Lewis's home, one source said. It was unclear whether other MSC members, such as Simon Greenberg, Lewis's principal associate on the committee, had also hired private security advisers.

Spokespeople for Murdoch's News Corp in New York and News International in London declined to comment.

Lewis rejoined the Murdoch organization in 2010 and last year joined the MSC, which the company created to deal with growing controversy over allegations of widespread voice mail hacking by journalists at the News of the World.

Murdoch shut down the Sunday tabloid last summer amid an uproar over allegations that its journalists had hacked into the voice mail of a schoolgirl who was kidnapped and murdered.

The MSC's stated mission was to oversee internal investigations into the company's journalistic practices and to liaise with outside parties, including police and other government entities, conducting parallel investigations. It also will set up new editorial policies and procedures at Murdoch's UK newspapers to ensure ethical behavior.

Company officials stressed that News Corp had instructed the MSC to respond to and cooperate with relevant authorities, and that they believed the committee, and its leaders, including Lewis, were doing the job the company had asked them to do.

A source close to the MSC added: "Nothing will stop Will (Lewis) and Simon (Greenberg) from carrying out the work of the Management and Standards Committee."

In recent weeks, the MSC provided key evidence which led police assigned to Operation Elveden, a Scotland Yard team investigating alleged questionable payments to public officials, to conduct a series of raids and high-level arrests directed against journalists from The Sun, Murdoch's daily British tabloid.

Top Sun editors and journalists, including John Kay, who served as the paper's chief reporter, were among those arrested on suspicion of corruption and aiding or abetting misconduct in a public office. No criminal charges have been filed.

Key evidence which the MSC has turned over to Operation Elveden and two other police teams includes material extracted from a cache of 300 million emails. The MSC assembled the emails from data which some company officials allegedly attempted to delete.

In the wake of the latest arrests at The Sun, sources inside Murdoch's publishing campus at Wapping, East London, said that a sense of outrage and dismay had grown among company journalists.

Earlier this week, it was reported that two Sun journalists who had been arrested in connection with Operation Elveden had attempted suicide. One incident allegedly took place on Monday.

A source inside the company said that in the wake of the arrests and the growing rank and file distrust of the MSC and company's management and owners, there was "no doubt that a number of people in the company are suffering serious mental issues."

The source said journalists are concerned that nobody will want to work at the company if they believe their sources are going to be exposed and handed over to the authorities.

In a blog item posted on Wednesday, Neville Thurlbeck, a former chief reporter for the News of the World, identified the security firm which Lewis hired as a company specializing in sophisticated close-circuit TV and alarm systems. Thurlbeck was arrested last year in connection with the Scotland Yard investigation of phone hacking, but has not been charged and has denied wrongdoing.

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