Jonathan Grun told the inquiry the name error had not affected customer relations in the long run
The editor of the Press Association told the Leveson inquiry a mistake which saw the right name but wrong person identified in a story was "a catastrophic example of human error" which has left a "very red and painful" scar.
Jonathan Grun was asked by the inquiry about the incident, which he described as "probably the gravest" error made by PA editorial in his time at the agency.
"The scar is still very red and painful," he said, adding that it "flew in the face" of what PA sets out to do in providing an "accurate service".
Asked whether the incident affected the relationship of PA with its customers, Grun said "in the long run, no".
"People who studied the case realised it was a catastrophic example of human error ... We felt terribly embarrassed and angry with ourselves".
During his evidence to the inquiry Grun was asked by Lord Justice Leveson why there was not greater coverage of the phone-hacking scandal earlier.
He said "all of us feel regret that this story wasn't pursued more vigorously" in previous years, but added that "it is difficult to pursue a story vigorously in the face of official denials anything untoward has occurred".
He added that aside from hacking, other evidence given to the inquiry has "certainly" caused him "some surprise and a great deal of concern".
Grun said he did not want "to present PA as any kind of paragon of journalistic virtue" but that some of the evidence heard has "represented things entirely alien to me as an agency journalist".
In reference to the Press Complaints Commission earlier in his evidence, Grun said "the flaw in the PCC's operations is contained in its name".
"Where we are going is that whatever replaces the PCC or if the PCC's operations are expanded, will have to deal much more with monitoring and maintaining editorial standards".
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