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Mahmood gave only audio evidence to the inquiry to protect his work as an undercover reporter

Credit: Peter Byrne/PA

The News of the World's investigative reporter and 'fake sheikh' Mazher Mahmood has denied ever commissioning or paying a private investigator and said he knew nothing about phone hacking before the arrest of royal reporter Clive Goodman.

Appearing at the Leveson inquiry this morning, Mahmood – who now works at the Sunday Times – was asked whether he had heard of others being involved in hacking in the wake of Goodman's arrest.

He told the court that he had not heard any other names mentioned, nor saw any "firm evidence", but said that "rumours were around" and "all fingers were pointing to the newsdesk".

Mahmood worked for 20 years with the News of the World, producing some of their most high-profile scoops including last year's Pakistan cricket match-fixing scandal.

Mahmood, who gave audio evidence only to protect his work as an undercover reporter, also denied ever having commissioned a private detective to work on his investigations, despite allegations in today's Independent.

The Independent's story alleges that the News of the World hired bodyguards from the firm of private investigator Jonathan Rees, who was jailed for seven years in 2001 for plotting to frame a woman for drug possession.

Mahmood said that he had never commissioned or paid a private detective, "contrary to the report in this morning's Independent".

He also denied claims made by former deputy features editor Paul McMullan that the two had worked together, telling the court: "I never worked with the chap. I can't even recall talking to him. Never worked with me on a single investigation."

Mahmood did admit that Derek Webb, a private investigator who has recently admitted surveilling celebrities and lawyers for News International, may have worked on some of his earlier investigations.

Those investigations, Mahmood said, had led to 261 criminal prosecutions, with two women currently awaiting sentencing. He told the court that only a "fraction" of his work was on celebrity stories, with the rest motivated by exposing wrongdoing.

Mahmood also claimed that he, and the News of the World in general, had "adhered strongly" to the Press Complaints Commission code of conduct.

One of the undercover reporter's investigations – a 2003 report on an alleged plot to kidnap Victoria Beckham – was investigated by the PCC over a £10,000 payment to convicted conman who provided the tabloid with information.

The regulatory body ruled that the payment had not breached its code of conduct.

Mahmood said that the newspaper "made no bones" about making payments to sources.

"I don't think there is anything wrong with that as long as people are not profiting from their crimes," he told the court.

He added that he thought that breaking the law was justified in the course of an investigation, and admitted buying child porn while working on a story.

Asked to compare the checks in place on investigative journalism at the News of the World and the Sunday Times, Mahmood told the inquiry that it was "a lot more stringent" at the broadsheet, where formal meetings compared with "informal chats" at the tabloid.

He did however say that he was "in constant touch" with the News of the World legal manager Tom Crone during his investigations.

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