Royals & red tops: Inside story of the 'News of the World' phone tapping scandal

How much did Rupert Murdoch know about the illegal tactics his biggest-selling British tabloid was using to tap royal phones? As the media baron deals with the embarrassment of yet another scandal in his empire this weekend, the Press Complaints Commission is preparing to press on with its investigation into who exactly knew what the royal reporter of the News of the World was doing.

While Clive Goodman began a four-month prison sentence yesterday, Mr Murdoch was facing the business and political elite of the world in Davos, Switzerland, knowing his company News International was again in turmoil. MPs here are calling for a thorough inquiry and tough action. And the PCC, self-regulator for the press, is asking which senior executives were aware of payments made to an investigator who specialised in illegal eavesdropping.

Goodman was convicted of "intrusive, sustained and criminal conduct" at the Old Bailey on Friday. Glenn Mulcaire, the investigator, was imprisoned for six months. The pair had made more than 600 calls to intercept voicemail messages relating to members of the Royal Family and other high-profile figures.

Andy Coulson, the NoW editor, has always said he knew nothing about the bugging but quit after the verdict, saying he was taking "ultimate responsibility". His resignation is unlikely to satisfy the PCC, whose inquiry was suspended during the court case. Insiders predict it will now resume and demand detailed answers from News International. "The level of anger about this and the number of loose ends are such," said a source, "that it would be surprising if the whole thing was simply dropped."

John Whittingdale, chairman of the Select Committee on Culture, Media and Sport, confirmed yesterday that it, too, was considering an inquiry. "This has been the most serious breach of the PCC code. It must carry out a full and thorough investigation into what happened... at all levels of this news organisation."

For Mr Murdoch, the timing of Friday's sentencing at the Old Bailey could hardly have been worse. As the media magnate shared a platform with prime- minister elect Gordon Brown and other decision makers at Davos, the judge in London was laying into his tabloid's "unattractive" and "reprehensible" tactics.

The first most people at Wapping say they knew about it was when Clive Goodman was arrested on 8 August last year, and his office raided. Shortly afterwards, his boss, Mr Coulson, was called into a meeting with Mr Murdoch and Les Hinton, executive chairman of News International (and chair of the committee that oversees the PCC's code of practice). The editor was effectively put on probation. His formal resignation was accepted a fortnight ago, but this was kept secret. "We are all shaken by what has happened," said one senior executive at Wapping yesterday. "If you are asking, is this the proudest moment in the 163-year history of the News of the World then no, clearly it's not."

But he had few fears for his 39-year-old former colleague, who not long ago was being tipped as a future editor of The Sun. "I have no doubt Andy will reappear at a high-level position in the media - although maybe not here - within months." On Tuesday his replacement will arrive: the former Sunday Mirror editor - and friend of Mr Hinton - Colin Myler.

Those who work for the red tops know only too well the pressures that led Goodman to turn to a private investigator for help. The reporter made his reputation with a series of exclusives about Princess Diana, but his stock fell after her death. By early 2005 he was considered by his bosses to be no longer coming up with the right stories. Colleagues in the office gave him the nickname "the eternal flame", because he never went out. When he was sidelined by the appointment of a younger reporter to cover the Royal Family, Goodman became desperate. He called Mulcaire, a private investigator who could give him access to the voicemail messages of those closest to the royals.

Their targets were Helen Asprey, who works for the Prince of Wales; Paddy Harverson, communications secretary to Prince Charles; and Jamie Lowther-Pinkerton, private secretary to Prince Harry and Prince William. Goodman knew it was "improper, unethical and reprehensible" to hack into these messages, said his QC, but he "did not know it amounted to a criminal offence".

Listening to other people's voicemail can be easy. Mobile users can get their messages remotely by ringing their own number and typing in a security code. In many cases they do not bother to change the code, and leave it as the default setting. This is often 4444 or something simple that a hacker can guess.

Even when users do change their code it can be broken, as Mulcaire knew. The prosecution said there was evidence that he posed as a credit controller and got telephone companies to switch PIN codes back to the default. It also suggested that he got hold of secret passwords that security staff at telephone companies use to identify themselves to colleagues. This would have enabled him to ring up the company that provides a mobile phone to Helen Asprey, say, and pose as someone working on her account.

After quoting the security password he would be given a PIN that could be used to open up the voicemail files for Ms Asprey, or whoever. Then he could dial her mobile number, tap in the code, and listen to her messages. Some may be from Prince Charles, or his sons, about sensitive issues.

Mulcaire made 122 calls to the mobile numbers of the three royal aides. He also sent PIN codes in text messages to Goodman, who made 487 calls. Some were from his home in Putney, south London, and some from the offices of the News of the World.

The newspaper paid Mulcaire a retainer of £2,019 a week for "research and information services" and he also earned an extra £12,300 for stories about Prince Harry, his girlfriend and the Duchess of York. This was paid in cash in £500 instalments, but it is unclear whether Goodman told his bosses what this money was for.

The calls for which the men were prosecuted began on 1 November 2005. Five days later, Prince William suspected something when he read in Goodman's News of the World column that he had hurt his knee and would have to put off a mountain-rescue course. The item in Goodman's Blackadder column said he had "pulled a tendon in his knee" playing football. The prince was puzzled - only he, his private secretary and his knee surgeon knew of this. Mr Lowther-Pinkerton, the secretary, is a former SAS officer deeply trusted by the prince. The surgeon was judged just as unlikely to have told anyone.

A week later, the same column claimed that William had been lent broadcasting equipment by Tom Bradby, political editor of ITV News, so that he could edit his gap year videos into "one very posh home movie". But Prince William and Mr Bradby had not yet met. When they did, the journalist said, "We both looked at each other and said, 'Now how on earth did that get out?'"

A few weeks later Mr Lowther-Pinkerton noticed that some new messages on his Vodafone mobile were being shown as old, suggesting someone else had picked them up. Helen Asprey noticed the same thing on her O ₂ mobile. Calls were made to the police, but Goodman and Mulcaire hacked into the voicemails for at least six more months. During that time they made 427 attempts to access Mr Lowther-Pinkerton's messages and 122 calls to Ms Asprey's number.

When police arrested Goodman they found access codes in his office for Paddy Harverson's phone. The reporter was suspended by his paper, which has said it will make a statement on his future "in due course".

Mulcaire was arrested on the same day at his home in Cheam, Surrey. There police found notebooks containing telephone numbers and PINs, with references to "Wills", plus "Harry" and "Chelsey" - the younger prince and his girlfriend Chelsey Davy.

Both men pleaded guilty when the trial began in November. Goodman apologised to the princes and their household for his "gross invasion of privacy".

Mulcaire also admitted five other charges related to hacking into the voicemails of people, including publicist Max Cliffordand the model Elle Macpherson, who found out about it when she was told that her PIN had been reset.

Private investigators are used by many papers. A month ago the Information Commissioner, Richard Thomas, published a league table based on the results of a police operation against one agency, which recorded 952 search requests from the Daily Mail, 681 from the Daily Mirror, 134 from Best magazine and 103 from The Observer. After Goodman was sent to prison Mr Thomas said: "Today's sentence sends out a very clear signal that breaches of individual privacy will be taken seriously by the courts." As they contemplate the fate of Clive Goodman this weekend, many tabloid reporters may be taking it a bit more seriously too.

Murdoch's annus horribilis: how it has all gone wrong for Rupert

The past 12 months have not been kind to Rupert Murdoch, chairman and MD of News Corporation.

On Friday, Andy Coulson, the editor of the News of the World, resigned after it emerged that journalists at his newspaper had intercepted hundreds of mobile phone messages from celebrities and members of the Royal Family.

The newspaper's royal editor Clive Goodman was arrested in August after aides in Prince Charles's household noticed that new messages on their mobile phones had already been listened to. He was jailed for four months on Friday after pleading guilty to intercepting telephone calls intended for well-known figures including the model Elle Macpherson and the footballer Sol Campbell.

Earlier this month, the Murdoch-owned publishing house Harper Collins cancelled a paperback edition of an autobiography by Jade Goody after she was accused of racist bullying on Celebrity Big Brother. The company said that it would not be "appropriate" to release the book - which sold more than a million copies in hardback - after Ms Goody was accused of victimising the Bollywood star Shilpa Shetty on the reality television show.

In November 2006, Mr Murdoch intervened to cancel a book and TV interview in which OJ Simpson gave a "hypothetical" account of how he might have committed the 1994 murder of his ex-wife and her friend. Mr Murdoch apologised to the families of Nicole Simpson and Ron Goldman.

Last July the News of the World's investigation's editor Mazher Mahmood faced criticism after three men were acquitted of plotting to buy components for a dirty bomb.

The men were arrested in a joint sting operation mounted by the "Fake Sheikh" and anti-terrorist police. All three denied conspiring to buy "red mercury", arguing that they had been victims of an entrapment operation instigated by Mr Mahmood.

The ex-footballer who made a fortune trading personal details

Glenn "Trigger" Mulcaire is a 36-year-old former footballer for non-league AFC Wimbledon who runs a "crisis management consultancy" called Nine Consultancy out of an industrial estate in Sutton, south London.

Ironically, given the charges on which he has been sent to prison for six months, he offers to help people protect their privacy. However, the News of the World court case revealed his lucrative work as an investigator trading in personal information. Mulcaire was paid £104,988 a year by the NoW for "research and information", plus extra payments in cash for stories about the personal lives of various royals and their lovers. Investigators like him have been used by various newspapers, including the Mail, Sunday Times and Observer.

A report by the Information Commissioner last year found, for example, a reporter on the newsdesk of a Sunday title having run up a bill of £830 in one week by asking for 18 searches of addresses, company records and vehicle licences. These and other charges were revealed during a police investigation into the illegal sale of personal data. Many of the targets were celebrities but others were not - such as a painter and decorator who had once worked for a Lottery winner.

The going rate for an ex-directory telephone number was shown to be £75. Revealing a criminal record cost £500 and getting someone's mobile accounts £750.