22 January 2011 A version of the following correction was due for publication in the Guardian's Corrections and clarifications column, 22 January 2011: The article below misstated the nature of the offence of aggravated trespass when it said: "This means they had decided to step on to property belonging to the power company E.ON." To clarify: a person commits the offence of aggravated trespass if he or she trespasses on land with the intention of intimidating, obstructing or disrupting people engaged in lawful activity on the site



This is what the head of a police unit set up to monitor domestic extremism said in 2009: "I've never said – and we don't see – that any environmentalist is going to or has committed any violent acts." That chimes with my experience. Two years ago I searched all the literature I could lay hands on, and couldn't find a single proven instance of a planned attempt in the UK to harm people in the cause of defending the environment. (That's in sharp contrast to animal rights campaigning, where there has been plenty of violence.) No one has yet produced a factual challenge to that conclusion. Yet every year a shadowy body spends most of its £5m budget on countering a non-existent threat that officers call eco-terrorism.

The National Public Order Intelligence Unit (NPOIU) employed the undercover officer Mark Kennedy, who was embedded and bedded for seven years among peaceful green activists. Kennedy claims that it has supervised 15 other undercover agents on the same mission. But what is the mission? Sorry, can't tell you. NPOIU is run by the Association of Chief Police Officers. As Simon Jenkins pointed out last week , Acpo is not a police force but a private limited company, beyond democratic scrutiny, not subject to freedom of information laws. While it receives much of its funding from the government, it is not accountable to the public. It looks to me like a state-sanctioned private militia, fighting public protest on behalf of corporations.

Until it was forced to back down by bad publicity, one of the other units that Acpo runs published a list of domestic extremists, to help its officers identify dangerous elements. Dr Peter Harbour, a 70-year-old retired physicist and university lecturer, found his name on the list. Apart from the occasional speeding ticket, he has never been tried or convicted of an offence. So why was he on the database? Because he had peacefully marched, demonstrated and petitioned against a proposal by RWE npower, which owned Didcot power station, to drain the beautiful lake beside his village and fill it with pulverised fly ash. He had broken no law, damaged no property, issued no threats. Dr Harbour wrote to the unit, asking for his name to be removed from its blacklist. It refused.

NPOIU, the unit for which Kennedy worked, runs a similar list of extremists – which means people who have attended a protest or a public meeting. Surveillance officers are given spotter cards so that they can follow people on the database and monitor their movements. Vehicles which have been used by protesters are tracked all over the country by number-plate recognition cameras. One man, who has never been convicted of an offence, has been stopped 25 times because his car appears on the list.

There is no obvious connection between the kind of people in these files and criminality: they're distinguished only by the fact that they have taken an interest in politics. You might expect that this would mark them out as good citizens. But this policing appears to have nothing to do with the public good. If the claims that Kennedy also functioned as an agent provocateur are true, it has nothing to do with upholding the law. Acpo appears to be persecuting peaceful citizens who are trying to protect the places and values they cherish from destructive companies.

Twenty of the activists whose plans Kennedy betrayed to his handlers were convicted on the desperate charge of conspiracy to commit aggravated trespass. This means they had decided to step on to property belonging to the power company E.ON. The prosecutors couldn't find anything more serious to throw at them. Aggravated trespass is a crime invented by the previous Conservative government, to prosecute protesters who weren't otherwise breaking the law. The judge who passed sentence described these dangerous criminals as "decent" people with "the highest possible motives" (they were campaigning to prevent climate breakdown). The case against another six was dropped when the police realised they would have to release documents about Kennedy's activities, and tanked the trial.

This is what the £1.75m it cost to run Mark Kennedy has delivered; this is the sole legal product of seven years of work by a unit ostensibly fighting terrorism and extremism. Twenty peaceful people convicted on a pathetic charge, by a jury from whom the police withheld key facts; another group walking free after those facts threatened to emerge. Does anyone believe this represents good value? Does anyone think this is proportionate policing?

Even the Daily Mail today fulminated about Acpo's lack of accountability and questioned its relationship with corporations and the lawfulness of its actions. It pointed out that "the right to peaceful protest is a cornerstone of our democracy".

This looks like a possible turning point. The government may have to keep its promise to reform the laws restricting civil liberties. But don't expect too much. Kennedy says his superior officer told him that the information he gathered "was going directly to Tony Blair's desk". This sounds plausible. It accords with the paranoid style that Blair imported into British politics. It fits with his instinctive support of power against the people, and his efforts to free the corporations (banks included) from the care they owe to society, while passing draconian laws to prevent society from challenging them. This government shares his inclinations.

The people challenging corporate power are often defamed as destructive anarchists. Yet they are seeking to defend the fabric of our lives from the anarchic destruction of market fundamentalism. The police, on the other hand, are fighting – often without obvious justification – to shield destructive companies from both unlawful and lawful challenges. They are defending neoliberalism's atomising, kleptocratic projects from those who question them.

So who are the domestic extremists? Which body represents the real threat to society, to public order and the rule of law? A group of peaceful campaigners acting on "the highest possible motives"? Or a private corporation running a secret spy ring, which looks as if it's using police budgets to try to change the political character of the nation?

This government claims to be concerned about both civil liberties and law enforcement. So here is a straightforward test. If it is committed to these principles, it will strip the Association of Chief Police Officers of its powers and its funding, shut down the units it runs, and launch an inquiry into the alleged collusion between senior police officers and large corporations. Which does Cameron put first: the rule of law or corporate power? If Acpo is still operating in 2012, you'll have your answer.

• A fully referenced version of this article can be found on George Monbiot's website