Richard Stott told a High Court libel trial he did not know when he published the story in August 1990 that the travelling expenses of the Secretary of State for National Heritage had been paid by his hostess, Mona Bauwens, 31. That fact emerged from her evidence on the first day of the trial. Yesterday's Independent revealed that Mr Mellor was being investigated to see if he should have declared the gift.
Mr Stott said: 'Stories like this can take a long long time to come to fruition. Quite by chance there is a major development today. For a minister to have his travelling expenses, and that of his family, paid for by somebody else certainly is something worth commenting on, particularly as ministers have a rule book whereby they have to declare any form of gift. Obviously it's done to protect the ministers from any suggestion of impropriety. We would obviously have asked, if we had known, whether Mr Mellor had declared that gift.'
Mr Stott was giving defence evidence for the People, which is fighting a libel action brought by Mrs Bauwens, a film producer and daughter of Jaweed al- Ghussein, over articles on a holiday she spent with Mr Mellor and his family at her rented Marbella villa in Spain at the time of Iraq's invasion of Kuwait.
She claims the People suggested she was a 'social leper' because of her father's PLO connections and was not fit to be seen with a government minister.
The newspaper denies libel, saying its story was justified and fair comment.
Mr Stott told the court that Mr Mellor's holiday clearly came within the public interest because he was with the daughter of a well-known member of the PLO at a time when Britain was facing the gravest crisis for many years.
Richard Hartley QC, for Mrs Bauwens, asked if Mr Stott's attitude had been that 'it was just too bad' if Mrs Bauwens was harmed by her inclusion. Mr Stott said: 'No, it's not . . . The fact is she was on holiday with him at a particularly sensitive time. You couldn't have done the story any other way. You couldn't put he was with a mystery woman. That would be ridiculous.'
He believed he had taken all the precautions he could to ensure that the story was not unfair to Mrs Bauwens.
'That was when our soldiers were going to be sent to the Gulf; when there were 4,000 British hostages held in Iraq by Saddam Hussein who had clearly shown that he would stop at nothing; when he had invaded Kuwait, and when the PLO, in the shape of Yasser Arafat, had supported that also.'
During questioning of Mr Stott about evidence relating to the friendship between the minister and Mrs Bauwens, the judge, Mr Justice Drake, said: 'I may just say the jurors may have thought there was a suggestion of a bit of hanky panky going on.'
George Carman QC, for the People, said: 'I did not suggest hanky panky, or anything more dignified.'
Mr Stott said: 'I am not suggesting it.'
Mr Stott was later asked by Mr Hartley about an editorial relating to the story. He said that, while it had been written by another member of staff, he had re-written it.
Mr Hartley asked who had written the original editorial.
Mr Stott: 'I don't remember.'
Mr Hartley: 'Not Mr Maxwell?'
'He does write some editorials?' The court broke into laughter as Mr Stott replied: 'Not now he doesn't'
The case continues today, when the defence may call Mr Mellor.