Exclusive:

Exclusive: Mandelson targeted in phone-hacking scandal

Ex-business secretary pulled into row engulfing David Cameron's spin-doctor, Andy Coulson, despite the former News of the World editor telling PM he knew nothing of law-breaking

Peter Mandelson last night became the most senior political figure to become embroiled in the phone-hacking allegations that threaten to engulf David Cameron's spin-doctor, Andy Coulson.

The Independent on Sunday has learnt that Lord Mandelson's mobile-phone details and an invoice for research on him were among files seized by police investigating illegal activity by News of the World reporters during the time when Mr Coulson was editor. The former business secretary told a senior colleague that his phone had been "hacked", and has been in contact with the police.

Mr Coulson resigned as editor of the Sunday newspaper in 2007, after two men working for the paper were jailed for intercepting phone messages left for aides to the Royal Family. He has always strenuously denied knowing about the activity at the time and last year told a parliamentary inquiry: "I have never had any involvement in it at all."

However, doubt has been cast on his claim by the growing list of top-flight politicians, celebrities and sporting figures who believe they could have fallen victim to attempts to access their voicemail messages by journalists working for the News of the World, owned by Rupert Murdoch's News International.

It can also be revealed that the former Labour defence minister Peter Kilfoyle has received confirmation that his phone number and billing information were uncovered by officers during the phone-hacking inquiry, which ran from 2005-06. The former deputy prime minister Lord Prescott revealed on Twitter last week that he has a document which proves the convicted phone hacker Glenn Mulcaire was paid by the media empire "to work on me". The ex-cabinet minister Tessa Jowell told The Independent that police had warned her that her phone messages had been intercepted at least 28 times while she was in the government.

The NoW has pointed out that much of Mulcaire's activity was legal, but the inclusion of phone details belonging to Lord Mandelson, who was European trade commissioner from 2004-08, illustrates how wide the net was cast. Lord Mandelson declined to comment. Clive Goodman, the NoW royal editor, and Mulcaire, a private investigator, were both jailed in 2007. News International has always insisted it was an isolated case by a rogue member of staff. However, The New York Times last week quoted a former NoW journalist saying: "Everyone knew. The office cat knew." Mr Coulson openly discussed the use of unlawful news-gathering techniques, the US paper added.

Mr Coulson is now Downing Street's director of communications – a role previously held by Labour's Alastair Campbell. It is understood Mr Coulson reassured Mr Cameron 18 months ago – before moving into government – that there was "categorically" no basis to the claims that he knew telephone messages were being accessed illegally while he was editor.

Downing Street has backed Mr Coulson to the hilt, with one senior source reported to have said the director of communications is "going nowhere". Aides have also noted that Sean Hoare, a former NoW reporter quoted by The New York Times, left the paper after struggling with drink and drug problems.

However, the revelations are beginning to place a strain on the coalition, with some Liberal Democrats, who were critical of Mr Coulson's appointment as head of the Tory media operation in opposition, scenting blood. "It couldn't happen to a nicer guy," said one Lib Dem minister.

Meanwhile, Adrian Sanders, a Lib Dem MP and member of the culture select committee which twice investigated the allegations, called on Mr Cameron last night to set up a full investigation. "If I was the Prime Minister's adviser with nothing to hide, I would recommend a judicial inquiry. There are three groups of people involved here – there's the Prime Minister's Office, the Met Police and probably one of the most powerful media corporations on this planet. The only body that could launch a proper investigation into this would be a government."

Labour figures yesterday queued up to criticise Mr Cameron's silence on the issue. Ed Miliband, a Labour leadership contender, told The Independent on Sunday: "David Cameron has working for him someone who has had serious allegations made against him and they cannot be dismissed out of hand. The longer it goes on and David Cameron and Downing Street try to laugh off these allegations, the more it calls into question the standards he applies to the people he has working for him." He added that the Prime Minister had to "account to the public" for Mr Coulson's continued employment as a £140,000-a-year special adviser.

Ed Balls, a Labour leadership rival, called for the Home Secretary, Theresa May, to give an urgent statement to the House of Commons tomorrow, when MPs return from their summer recess. The New York Times suggested that the Metropolitan Police curtailed its investigation to protect its close relationship with News International titles. Scotland Yard yesterday defended its handling of the phone-hacking allegations after the former home secretary Alan Johnson said he was going in to the Home Office to review documents from the case. He added that Mrs May may have to consider calling in the Inspectorate of Constabulary.

The Labour MP Tom Watson, a member of the culture committee, has written to Met Commissioner Sir Paul Stephenson warning that the "historic and continued mishandling of this affair is bringing your force, and hence our democracy, into disrepute".

But a Scotland Yard spokesman said the jailing of Goodman and Mulcaire in January 2007 for conspiring to unlawfully intercept communications "brought an end to the investigation". A review in July 2009 concluded that there was no new evidence and consequently the investigation remains closed. "There has been no investigation since the convictions of Goodman and Mulcaire," the spokesman said.

The News of the World said: "A team of New York Times journalists, employing at least one private investigator, spent five months investigating the News of the World. They focused mainly on events that occurred in 2006 which, in co-operation with the News of the World, resulted in two criminal convictions. The New York Times story contains no new evidence – it relies on unsubstantiated allegations from unnamed sources or claims from disgruntled former employees that should be treated with extreme scepticism given the reasons for their departures from this newspaper.

"We reject absolutely any suggestion there was a widespread culture of wrongdoing at the News of the World."

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