Surrey Police confirms receipt of £2,000 from News Corp company

Labour MPs call for investigation – while Rupert Murdoch vows to 'hit back' at critics

A payment made to Surrey Police by the News Corporation company accused of using piracy to crack pay-TV rivals' technology was earmarked by the force for use "in the fight against organised crime", it emerged. NDS said the £2,000 was a "one-off charitable donation" and received an acknowledgement from a senior detective understood to have been in charge of running undercover operations for Surrey Police. He said the funds would be channelled "directly" into efforts to combat organised criminals. The payment was ordered in June 2000 by an NDS executive who said in an internal email he had been doing "some work" with Surrey Police. A senior Labour MP said it raised a "shower of questions" and called for police watchdogs to investigate links between Rupert Murdoch's media empire and the force. The revelations came as Mr Murdoch warned he would "hit back hard" following a rash of allegations that London-based NDS, which is being sold to computing giant Cisco for $5bn, used hacking to target the encryption codes of satellite television operators. NDS issued more denials of wrongdoing and attacked its accusers, including the BBC's Panorama.

Surrey Police, which has said it is investigating the payment after an initial search could find no trace of the funds, did not respond to a request to detail work it had carried out with NDS. But last night the force got back to confirm that it had after all received a payment from NDS, adding that the money had been spent on lap-tops and had been permitted under Home Office rules.

A spokesman added that its internal enquiries would continue: "At present this is the only payment from NDS that the Force is aware of, however enquiries are still ongoing into this matter."

In an internal email seen by The Independent, Len Withall, the deputy head of NDS's security unit, asked for a cheque for £2,000 to be written to Surrey Police, explaining it was to be drawn from a budget which was "set aside for payment to Police/Informants for assistance given to us in our work". Prior to joining NDS, Mr Withall was a detective chief inspector with Surrey Police.

In a letter to the Home Secretary, Theresa May, Labour MP Tom Watson said: "It is a cause for concern that an employee of NDS, a subsidiary of News Corporation, can apparently claim, in an email, that the company had a special account for making payments to British police and informants. Such an arrangement, if found to be true, raises many questions about policing priorities, probity, transparency and relationships with big business. There is a clear public interest in this... being investigated outside the internal mechanisms of Surrey Police."

Under the 1996 Police Act, forces are permitted to accept "gifts of money... on such terms as appear appropriate" to the governing police authority. Guidelines issued by the Association of Chief Police Officers state that donations or sponsorship should not be used to cover "core functions" of policing and all donations must be clearly recorded. NDS drew attention to its collaboration with police forces in tackling satellite encryption card piracy: "Over the last two decades NDS has at its cost supported the prosecution of pay-TV pirates around the world often by assisting regional law enforcement agencies.

"Unconnected with any of the foregoing, in August 2000, NDS made a one-off donation to the Surrey Police force for the sum of £2,000. NDS' support and donation was acknowledged with a thank you letter from Surrey Police."

Deputy mayor: I tried to rein in hacking investigation

A key ally of the London Mayor, Boris Johnson, confirmed that he put pressure on Scotland Yard over its investigation into phone hacking at Rupert Murdoch's newspaper group.

Giving evidence to the Leveson Inquiry yesterday, Kit Malthouse, the Deputy Mayor for Policing, said he questioned the allocation of officers to Operation Weeting because he was concerned that the force would not be able to investigate rape cases.

Two senior Scotland Yard officers, the former Commissioner, Sir Paul Stephenson, and the current Assistant Commissioner, Cressida Dick, have separately told the inquiry that Mr Malthouse repeatedly urged them last year to remove officers from the hacking inquiry and assign them to other duties.

Mr Malthouse told Lord Leveson – who is investigating concerns that Scotland Yard failed to investigate hacking properly because of its close relationship with News International – of his surprise that his questioning had been mis-interpreted. "It came as a shock to me that people thought I was not allowed to ask legitimate questions about the resources across all the various crime types."

The Met, he said, was forecast to spend £40m on "Weeting and related" investigations. "We have, I think, about 150 officers engaged in these investigations. We have only 27 engaged on tracking down paedophiles."

Martin Hickman