The Princess of Wales was dragged into a BBC inquiry into the journalistic methods employed by Martin Bashir to secure his sensational Panorama interview with her last November.
The Princess, the Independent can reveal, was asked by senior corporation officials whether she had seen documents faked by Mr Bashir, purporting to show a former employee of her brother, Earl Spencer, was selling information about the Spencer family.
The existence of the inquiry, which was known only to a handful of senior executives, and the questioning of the Princess, show how seriously BBC and Panorama management took suspicions raised by Panorama journalists about the granting of the interview to Mr Bashir, not a well-known figure.
Panorama journalists suggested that Mr Bashir fed Earl Spencer's suspicions that his family were being spied on by the security services, which led to the interview with the Princess. This formed the basis of the internal inquiry in which Mr Bashir was cleared.
Mr Bashir had been preparing a programme to highlight the security services' activities in relation to the Royal Family. As one of the illustrations for that programme, the BBC confirmed last night, he had two false bank statements made up by one of the Corporation's graphic artists.
One statement showed a payment from News International, the newspaper group, to Alan Waller, former head of security for Earl Spencer. The other showed a payment to Mr Waller of pounds 6,500 from a mysterious offshore company, Penfolds Consultants.
Mr Bashir's colleagues realised Penfolds, a genuine company, had featured in an earlier programme Mr Bashir made for Panorama on the business dealings of Terry Venables, the England football manager.
They questioned why the same company should feature in both programmes, one about Mr Venables, the other about MI5's role in relation to the marriage of the Prince and Princess of Wales.
BBC executives then began an inquiry into whether the faked documents had been used to secure the world exclusive interview with Princess Diana. It has been suggested that it was Mr Bashir's warm relationship with Earl Spencer which eventually led to him securing the interview.
BBC sources said they had received three conflicting accounts from BBC management. The first was that Penfolds Consultants had changed hands since the Panorama about Mr Venables. The second was that Mr Bashir had stumbled across a genuine offshore company but inserted the name Penfolds Consultants. The third was that it was a graphic representation of a genuine statement.
Earl Spencer's suspicions about Mr Waller were well known. In March 1994 he obtained a High Court order preventing Mr Waller from disclosing information about the private lives of the Earl, his wife, children, or members of the Royal Family.
Until the end of the previous year, Mr Waller had been employed to look after security on the Spencer family's Althorp Estate in Northamptonshire. Mr Bashir approached Earl Spencer about a wide-ranging programme concerning the state of the monarchy, and including the role of MI5.
In her Panorama interview, the Princess of Wales spoke of how "life became very difficult" when she and the Prince had separated.
This manifested itself, she said, "by visits abroad being blocked, by things that had come naturally my way being stopped, letters going, that got lost, and various things".
She said that she had "no idea" how the so-called Squidgy Tape of her conversation with friend, James Gilbey, became public, but "it was done to harm me in a serious manner".
Afterwards, the Minister for the Armed Forces, Nicholas Soames MP, a friend of the Prince of Wales accused the Princess of "instability and mental illness ... I cannot account for what she was talking about when she referred to mail interception and telephones being tapped. It really is the advanced stages of paranoia."
A BBC spokesman said last night that an inquiry had been held "two to three months ago" into whether the documents had been used to secure an interview with the Princess. This inquiry, said the spokesman, "culminated in an assurance from Princess Diana that she had never seen these documents."
The inquiry, said the spokesman, had cleared Mr Bashir. He has since won numerous awards for his scoop and earned substantial royalties for the Corporation in world-wide television rights.
Asked if Mr Bashir had shown the faked documents to Earl Spencer during the preparations for the programme on the Royal Family, the spokesman said: "I don't know. All I know for certain is that they weren't used to secure an interview with Diana".
The spokesman said that the bank statements had been prepared in connection with Mr Bashir's investigation into the Royal Family and the security services. He admitted that they were false bank statements.
"The explanation for the documents is that they were set up as graphic representations but elements of them could not be substantiated. They were fake documents," he said.
The spokesman was unable to explain, however, why the name Penfolds Consultants had been used. What the Princess told her interviewer 'Everything changed after we separated, and life became very difficult then for me... By visits abroad being blocked, by things that had come naturally my way being stopped, letters going, that got lost, and various things ... My husband's side were very busy stopping me.'Reuse content