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An axe murder, a prosecution that failed, and trouble for the Murdoch empire

The fallout from a 1987 killing is a new blow to the 'News of the World' – and embarrasses David Cameron.

What links the murder almost a quarter of a century ago of a private detective killed with an axe, allegations of corruption within the Metropolitan Police, and the current Prime Minister?

The answer: News International, that's what. And, of all the revelations in the phone-hacking saga threatening to engulf Rupert Murdoch's media giant, the collapse of the fifth trial on the murder of a man in a London pub car park in 1987 may yet prove to be the one that opens a Pandora's box.

Revelations that Jonathan Rees, a private investigator who had served a seven-year jail term for perverting the course of justice, was employed by the News of the World to use his network of corrupt police officers to supply confidential information on the rich and famous has reignited the scandal.

The people most likely to be feeling the heat are News International's chief executive, Rebekah Brooks, and the former Downing Street communications chief Andy Coulson, Brooks's successor at the Sunday tabloid.

MPs are now considering recalling Brooks and Coulson for a fresh round of questioning by select committee members investigating the phone-hacking scandal. Adding to the clamour are Danny Morgan's family who, desperate to learn who murdered their relative, are demanding a judicial inquiry.

Nor is David Cameron, who might have thought he was clear of the inferno when Coulson resigned in January, escaping scot-free. Yesterday, the Labour culture spokesman, Ivan Lewis, demanded to know when the Prime Minister and his deputy, Nick Clegg, became aware of Coulson's links to Rees: "These revelations about Jonathan Rees raise questions about David Cameron and Nick Clegg's judgement in appointing Andy Coulson to such a senior post."

Coulson's links to Rees emerged after the private investigator was acquitted at the Old Bailey of the murder of Danny Morgan, found dead in the car park of the Golden Lion pub, Sydenham, in March 1987. The murdered man ran Southern Investigations, a private detective agency, with Rees as his business partner.

Morgan's murder has been the subject of five investigations by Scotland Yard. The most recent ended on Friday with the acquittal of Rees and four others. All the men have repeatedly denied any involvement in the killing.

The failure of the police to bring anyone to justice have fuelled a belief that police corruption lies at the heart of the case and has led to calls for a formal judicial inquiry.

Rees, it emerged in evidence, enjoyed a lucrative relationship with the newspaper supplying illegal information, including ex-directory phone numbers, confidential business and financial details. He regularly earned six-figure sums from the tabloid for supplying information on such targets as the Olympic athlete Linford Christie, the songwriter George Michael and politicians such as Peter Mandelson. Brooks, who is now a friend and dining companion of the Prime Minister, worked at the tabloid during much of this time, becoming its editor in 2000. That year Rees was jailed for seven years for perverting the course of justice for a plot to plant cocaine in the car of a woman to discredit her as she fought a divorce and child custody battle.

The plot was discovered when detectives bugged the offices of Southern Investigations. What they also found, according to one police intelligence report, was that "Rees and [others] have for a number of years been involved in the long-term penetration of police intelligence sources", it stated. "They have ensured they have live sources within the Metropolitan Police Service and have sought to recruit sources within other police forces. Their thirst for knowledge is driven by profit to be accrued from the media ..."

Such was the value attached to Rees's services that when he came out of jail in 2005 the newspaper, now under Andy Coulson, re-engaged him. Rees' involvement with the News of the World casts serious doubt on the paper's claim to police in 2006 that its royal correspondent Clive Goodman was a "rogue reporter". It also calls into question why police accepted the NoW's claim that senior executives knew nothing of the activities of another private investigator, Glenn Mulcaire, who was later jailed for "hacking" royal aides and targeting the phones of the rich and the famous.

The News of the World says it would investigate any evidence of alleged wrongdoing.

Post-mortem: Five investigations into one unsolved murder

1987 Danny Morgan murdered in south London.

1989 Rebekah Brooks (née Wade) joins News of the World as a secretary. Rees arrested in connection with Morgan's murder; released without charge.

1993 Private investigator Jonathan Rees starts working for the NoW.

2000 Brooks is made editor of the NoW. Rees is jailed for seven years.

2003 Andy Coulson, Brooks's deputy, replaces her as editor.

2005 Rees re-hired by NoW. Fifth inquiry into Morgan murder begins.

2006 Scotland Yard investigates NoW after allegations of royal aides' phones being hacked.

2007 January: Coulson resigns from NoW over phone-hacking allegations. Royal correspondent Clive Goodman and investigator Glenn Mulcaire are jailed. July: Coulson made Conservative Party director of communications.

2008 Rees and others held on suspicion of Danny Morgan murder.

2009 Newspaper revelations of systemic phone hacking by NoW and large sums paid to victims in out-of-court settlements. Coulson tells MPs he was not aware of illegality.

2010 May: Coulson made Downing St director of communications.

2011 January: Coulson resigns his post. March: Rees and others acquitted of Danny Morgan's murder.