British Sky Broadcasting Group Plc (BSY)’s Sky News channel breached criminal law by hacking into e-mail accounts for stories, a judge said at a media-ethics inquiry triggered by wrongdoing at News Corp. tabloids.

The unit of BSkyB, which is 39 percent owned by News Corp., can’t use a “public-interest” defense for hacking, even though the e-mails were given to authorities and used as evidence against a man on trial for faking his own death to collect insurance money, Judge Brian Leveson said. Regulator Ofcom also said it started a probe of Sky News over the incident.

“What you were doing wasn’t just invading somebody’s privacy, it was breaching the criminal law,” Leveson said today during testimony in London by the head of Sky News, John Ryley. “At the end of the day you committed a crime.”

The Leveson probe was called for last year by U.K. Prime Minister David Cameron in response to the phone-hacking scandal at News Corp. (NWSA)’s News of the World tabloid. James Murdoch, son of News Corp. Chairman Rupert Murdoch, stepped down as chairman of BSkyB earlier this month following demands that he resign over his role as the chairman of the News Corp. unit that published the News of the World.

The Leveson inquiry, which started last year, is entering its third phase after previously examining the media’s relationship with celebrities and police.

British Couple

BSkyB said earlier this month that Sky News executives cleared a reporter to access e-mails as part of his investigations into criminal activity, including the 2008 case of a British couple who faked the husband’s death in a canoe accident. Another case involved a British couple wanted by police who fled to Spain. Sky News has said the hacking of e- mails was in the public interest.

“I am pretty much ruling it out,” Ryley said of the possibility of breaking the law again to get stories. “Journalism is at times a tough business and we need to at times shed light onto wrongdoing. There might be an occasion, but I think it would be very, very rare.”

The reporter, Gerard Tubb, guessed a password to access e- mails between John Darwin and his wife Anne to prove a conspiracy in the fake death. Both were sentenced in 2008 to more than six years in prison. Tubb had sought editorial approval to hack into the e-mails after learning from sources close to the Darwin case that prosecutors didn’t plan to access the account, Ryley said today.

45 Arrests

The Leveson media inquiry began after evidence emerged that phone hacking at the News of the World tabloid was rampant and not limited to a rogue reporter, as News Corp. had claimed.

The scandal has led to 45 arrests, the closing of the News of the World and police investigations into phone hacking, computer hacking and bribery at the company’s other papers, including the Sun, the best-selling daily title in Britain. Ofcom is also examining whether News Corp. is “fit and proper” to hold its BSkyB stake.

News Corp. dropped its 7.8-billion-pound ($12.6 billion) bid to buy all of BSkyB in July after revelations that News of the World hacked a murdered schoolgirl’s phone for a story.

The inquiry is also scheduled to hear testimony today from Telegraph Media Group Chairman Aidan Barclay, publisher of the Telegraph newspaper, and Russian billionaire Alexander Lebedev, owner of the Independent and London’s Evening Standard titles. Those papers haven’t been accused of wrongdoing.