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One of Britain’s most powerful policemen was put under surveillance by private detectives commissioned by the News of the World.

Lord Stevens, who led Scotland Yard between 2000 and 2005, was spied on by Southern Investigations, a firm of private investigators linked to one of London’s most notorious unsolved murders.

Its co-founder Jonathan Rees claims the now-defunct Sunday tabloid hired his company to watch Britain’s most powerful policeman in 1999. He said Southern Investigations (SI) received a tip that the then-deputy commissioner was using taxpayer funds to fly a Metropolitan police plane to Northumbria to see a mistress. There is no suggestion the tip-off had any foundation.

At the time, Scotland Yard had an undercover officer — Derek Haslam — inside SI who warned police that the firm was also trying to obtain other embarrassing information on the former Commissioner.

As well as selling the story to the NoW, Haslam claims SI wanted to use the sensitive information to “control” Lord Stevens.

Haslam said: “I told my handler ‘you’d better tell him they are on to him and they are looking at anything’. They saw filth on police and politicians as a way to control them.”

However, in an interview with the Evening Standard’s partner website independentvoices.com, Rees rejected the bombshell allegation as absurd. Asked if he had Lord Stevens put under surveillance, he replied: “We were given instructions and an allegation that he was using a Met police plane from Biggin Hill to see his mistress in Northumbria. Now we did organise a surveillance team and we had teams in Northumbria and here, but he never showed so whether the allegation is true or not, who knows. The allegation was that he was using … a Metropolitan police federation plane bought by donations from charity, and the petrol, the fuel, to travel up to Northumbria to see his mistress. You can see why people wanted … that story.”

Haslam’s take on SI’s activities is very different. During his nine years as a police “mole”, he claims he told the Yard the firm was committing a vast array of crimes — often on behalf of the NoW.

Given the widespread criminality he was reporting back to his handlers, Haslam claims he was astonished and confused when no one was arrested. However, his suspicions were raised last July when the relationship between the Murdoch media empire, Scotland Yard and senior politicians came under scrutiny after it emerged that the NoW hacked the phone of murdered schoolgirl Milly Dowler, 13.

The scandal led to the resignations of David Cameron’s chief spin doctor Andy Coulson, two Scotland Yard police chiefs and ex-Murdoch lieutenant Rebekah Brooks and cost almost 300 jobs when the NoW was forced to close after 168 years of publication.

Haslam, 65, believes one reason for the Yard’s inaction was “an unhealthy association between senior police officers and News International”.

He refused to speak to the Standard because he is currently suing the Met. However, we obtained a confidential briefing he passed to investigators. He claims he told the Met that SI was “a corrupt organisation that was corrupting police officers and illegally accessing all sorts of confidential information”.

He added: “I told my handlers that MPs, ministers and home secretaries were targets. They fell into two categories: one they could earn money from, and the other was to use blackmail, influence, to do their own thing. Anything that put the Met in a bad light, or anybody they could infiltrate or put in a bad light. It was about money and influence.”

Rees — who admits he was once “very close” to Haslam — described his allegations as “nonsense”. He claims Scotland Yard asked Haslam to infiltrate SI to invent “blatant lies” and smear them at a time when the firm was uncovering police corruption on behalf of the press.

He said: “Haslam was tasked by senior officers to ... come in there and mix with us again and ... to find out ... what we were doing against CIB3 ... they knew we were investigating CIB3 ... it was a force within a force, they were given total autonomy to do whatever they liked, their own accounts, their own finances. History tells us that when you allow policemen to do that it goes wrong ... if you let these squads run themselves it leads into trouble.”

Rees claims to have seen Met applications for audio probes inside SI’s offices and said the Yard justified the intrusive surveillance because the firm might “undermine the structure and the moral wellbeing of the Metropolitan Police ... or even bring it down”.

He added: “We’ve got this poxy little firm of private investigators, half a dozen men, suddenly they are alleging that we were going to bring down the Met police. Good arguments to get your surveillance.

“They were abusing and using the process to see what we’re doing against them. So a battle started ... things got very dirty indeed.”

Haslam’s undercover work began in 1997 when he was asked to infiltrate SI to gather evidence on Rees, who was a suspect in the murder of Daniel Morgan, the firm’s co-founder, who was found with an axe embedded in his skull in a south London pub car park in 1987. He claims one of SI’s main clients was former NoW executive editor Alex Marunchak whose name was “constantly mentioned” inside the firm.

Haslam alleges the veteran journalist paid SI to source confidential information from corrupt serving officers on high-profile targets including Tony Blair, Kate Middleton, Alastair Campbell, Jack Straw, Lord Mandelson, Lord Stevens and John Yates — a claim both SI and Marunchak strongly deny.

When asked about these allegations Marunchak stated that he had never commissioned SI to obtain any confidential information relating to celebrities, politicians, the royal family, police investigations or any third party or to commit any illegal acts. Working under the alias “Joe Poulton”, Haslam alleges he also told his handlers at the Met that SI tried to obtain the new identities of people inside Scotland Yard’s witness protection programme.

In one of his confidential reports to the Yard in 2006, seen by the Standard, Haslam warned the Met that Rees was paying visits to Epsom police station “in an attempt to ingratiate himself with serving officers ... to the detriment of the service”. He said Rees described the trips as a “loss leader”.

Perhaps the most shocking allegation from Haslam was that SI burgled MPs’ homes and photocopied documents in a bid to obtain embarrassing titbits they could sell to the NoW.

Rees totally denies he was ever involved in anything illegal. He said: “The allegations in that report are not true. They know it’s not true and the people who were instructing him didn’t care. I think he was directed to make the worst report, the worst allegations he could.”

“He alleges that [SI] burgled an MP’s garage to remove a briefcase, photographed the contents of the briefcase and put that back ... that is a lie.”

He added: “We’ve got nine years of [Haslam] claiming we were involved in criminality. If there was one iota of evidence in there, CIB3 would have liked nothing better than to kick our door in and arrest us. They never did that, because there was no evidence.”

Detectives working on the various criminal probes into News International have arrested about 80 people so far. Rees and Marunchak, who supplemented his NoW income by working as a Ukrainian translator for the Met for 20 years, are not among them.

A spokesman for Lord Stevens denied he had flown a Met police plane to Northumbria and denied he had ever had a mistress. He said the ex-Commissioner was unaware he was under surveillance.

News International declined to comment. However, a source emphasised the company was now co-operating vigorously with the Met. A Scotland Yard spokesman said: “We are not prepared to discuss these matters.”