Module two of the Leveson Inquiry, examining the relationship between the police and the press, drew to a close this week with evidence from the former and current Director of Public Prosecutions, and former News of the World employees Lucy Panton and Neil Wallis.

During the Monday morning hearing, Stewart Gull, a former assistant chief constable of Suffolk Police, said press reporting on a series of murders in Ipswich during 2006 raised the level of fear in the local community.  He told the inquiry:

“I found some of the reporting headlines, particularly in the print media, what I’d describe as sensationalist.”

The Attorney General issued a warning to the press at the time and the defence team of Steven Wright, convicted of the murders of five women, argued his fair trial rights had been undermined by some reporting.

Gull, now with the Jersey Police, described how Tom Stephens, an initial suspect in the investigation who was later cleared, “put himself on offer” to the media. He said a BBC journalist had recorded an interview with Stephens and passed it on to the police before he was named as a suspect.  He said:

“I didn’t think the media were being particularly helpful. There was little that I could do about it, because I couldn’t afford to show my hand, but it was as we now understand, Tom Stephens was collected by journalists from [the Sunday Mirror] and as I understand it, taken to a hotel just outside Ipswich. They spent some time interviewing him, and then of course the following day there was a big expose… as we now know Tom Stephens had nothing to do with those murders.”

He said the force found itself “in a place it never expected to be” and he spent between two and five hours a day briefing journalists on the investigation.  He added:

“Dealing with the media can be demanding and it can be a real time-stealer, but it is necessary and I think senior investigating officers recognise the importance of that relationship – but there is a balance to be struck.”

Representatives from the Association of Police Authorities (APA) also gave evidence to the inquiry on Monday. The body will be dissolved in November this year and replaced with an interim organisation, while each police authority will have an elected Police and Crime Commissioner.

Mark Burns-Williamson, chairman, said the APA hospitality register was published online for transparency, but said inappropriate relationships with the media were unacceptable.  He added:

“I think all staff are aware that they shouldn’t enter into any such arrangements with the media or anybody else for that matter, without very good reasons, and we tend to conduct out business through formal events where we may put on refreshments and a few sandwiches, but that’s par for the course.”

Head of press Nathan Oley said press interest in policing will increase with the introductions of PCCs, and said clear guidance was needed to regulate media contact. He added:

“It’s absolutely crucial that the flow of information between the two is sufficient and is well managed to deliver that, and it would just be a concern if the outcome of this inquiry – I’m sure it won’t – but results in a shutdown of information. It’s all about for us identifying correct and appropriate channels of information flow.”

Paul McKeever, chairman of the Police Federation, advocated national standards across a police training, including press relations. He said leaking and bribery in the Metropolitan Police is an “absolute no-no” and is “abhorrent for the vast majority of police officers full-stop”.

Lord Justice Leveson said he would consider the written evidence of police officers Russell Middleton, from Devon and Cornwall Police, and Brendan Gilmour from the Met, before it is admitted formally to the record.

During the afternoon hearing, the inquiry heard from Neil Wallis, former deputy editor at News of the World, who denied having an “arm lock” on senior figures in the Metropolitan Police. He said:

“I have not put an arm lock on any of those people. I have built up relationships over a number of years, and I they feel that it is of use to them to have that relationship. To a certain extent, it’s not my call is it?”

His evidence followed the resignation of the Met’s head of press, Dick Fedorcio, who faced disciplinary action over his hiring of Wallis’s PR firm Chamy Media in 2009.

The former journalist denied making himself more “tantalising” to the Met, when offering his company to fill in for Fedorcio’s deputy, who was on an extended leave of absence. Wallis said he had a “good working relationship” with Fedorcio that spanned 15 years and denied any impropriety over the £24,000 contract with the Met, lasting from October 2009 to September 2010.

Fedorcio denied the contract had been set up to ensure Chamy obtained it, after he told the inquiry PR firms Bell Pottinger and Hanover submitted rival bids. Lord Justice Leveson suggested at the time he knew they would enter higher bids than Wallis’ company. Wallis denied contacting Fedorcio so News of the World journalists would receive preferential treatment.  He added:

“It was pretty much dealt with by the news desk, [crime reporter] Lucy Panton, they all had his phone number. They all knew Dick. He wasn’t some shrinking violet. I didn’t need to get involved in these things.  She’s known Dick longer than I have, I think, and she had a perfectly good relationship and it benefited Dick on occasion if he wanted to call us.”

Wallis spoke of his relationships with several senior officers including former commissioners Lord Condon, Lord Blair and Sir Paul Stephenson, and assistant commissioners John Yates and Andy Hayman.

In his written statement he described having the mobile phone numbers of Stevens, Stephenson, Yates, Hayman and Fedorcio as well as the home numbers of Stevens, Yates and Fedorcio. He said:

“I would have a personal view and I would say to whoever I was talking to: ‘I think this’. If a hoofing great story came along that wasn’t convenient to that, first and foremost I’m a journalist and the hoofing great story went in the paper.”

Lord Justice Leveson questioned his evidence, saying:

“We know a lot more about your friendship with some senior police officers than transpired in the hospitality register, don’t we?”

Wallis said his relationship with Lord Condon, commissioner from 1993 to 2000, had grown out of meeting at functions and meals. He added:

“I’d give him my views, and if he found them interesting or if he found them useful then I was glad. We talked on a number of issues.”

He said the relationship was corporate and strategic, and beneficial to both the Met and the Sun, the paper he was then working at.

Wallis described Lord Stevens, who headed the force from 2000 to 2005, as a commissioner who “cared about the Met a lot”. He said he “did the best he could” to advance Stevens’s application as he agreed with the officer’s view on press relationships with police, and gave him public relations advice. He said:

“What I knew about John Stevens was that he had a view about how the police and press should interact… he had a view that I agreed with and was also convenient for him and was also good for newspapers. So if you like, the opposite of a perfect storm. A perfect sunburst.”

Wallis denied having a preferential relationship with Stevens, and said the commissioner frequently spoke to journalists and editors, including editor-in-chief of the Daily Mail, Paul Dacre. He said he wanted to be taken seriously by senior officers as this allowed him to alert them to criminal activity his newspaper picked up on.  Wallis was not questioned over the relationships with Condon or Stevens when giving evidence last year.  On Stevens, he later added:

“The suggestion is that this man of integrity, of experience, of immense crime fighting ability is going to be seduced by me taking him [for] steak and chips and a nice bottle of wine, I just can’t begin to see where this comes from.”

He described Lord Blair, commissioner from 2005 to 2008, as a bad communicator and said he took a very different view from Stevens when dealing with the tabloid press. He added:

“He was a very cerebral man. He saw himself very much as somebody who didn’t want to pursue those sorts of contacts, so, you know, didn’t.”

Wallis told the inquiry Blair had visited the News of the World offices, and told journalists Stevens, whose column for the paper, ghostwritten by Wallis, was called “The Chief’: “I don’t know how you can call him the chief, he’s not the chief anymore – I am.”

He said Blair had damaged his reputation by referring the shooting of Jean Charles de Menenzes in 2005 by Met officers, as a “Houston, we have a problem” moment.

Wallis said Lucy Panton and managing editor Stuart Kuttner had interviewed the commissioner following the 7/7 bombings, intended as a good public relations opportunity for the force.  He added:

“It was a wonderful example of his ability to snatch defeat from the jaws of victory. He had absolutely no work to do on this, but his arrogance and his views regarding that sort of phrase, of the killing of an innocent man – ‘Houston we have a problem’. You know, we’re journalists so we stuck that in as a headline and it didn’t go down too well.”

He referred to six dinners with Sir Paul Stephenson, during his tenure from 2009 to 2011.

Wallis went on to describe former assistant commissioner John Yates as “an immensely impressive bloke”. In his previous evidence, Wallis had admitted to a personal friendship with Yates, who confirmed the relationship.

The pair maintain they struck up a friendship over their mutual love of sports, particularly football, and attended two or three matches together outside of work. He said dinners with Yates and property developer Nick Candy, previously raised while the former assistant commissioner was giving evidence earlier this year, comprised of “chit-chat” around current events.

Yates admitted last month the pair had discussed work but said their conversations had mainly been about family life and football. The inquiry went through his hospitality register, which showed several dinner meetings and drinks with Wallis during his time at the Met. He told the inquiry:

“There was a life outside the Met, and I’m sure there’s a life outside of News International for him.”

It has been suggested at the inquiry that Yates, who lead a review of the original phone hacking investigation in 2009, failed to reopen the case due to his friendship with Wallis. The former deputy editor was arrested last July under Operation Weeting.

Wallis described obtaining footage of how a failed shoe bomb attack, attempted in 2005, could have impacted if successful, from Andy Hayman to publish on the News of the World website.  In his written statement, Wallis said:

“I was persistent in my advice to Hayman that this footage would have a profound effect if released into the public domain as a result of which he provided to the News of the World.”

He added:

“It wouldn’t have been published in any way if it hadn’t have been my newspaper’s idea… This was an asset they didn’t know they had. The upshot of us publishing it was that video appeared in other newspapers, on television, and went around the world. It was a rather good idea.”

He further defended his meals with senior officers to the inquiry, saying working lunches were a successful way of doing business and he nurtured contacts “because that’s what journalists do”. He said:

“There seems to be almost a presumption that it’s somehow wrong, the idea that people like senior journalist should have access to senior opinion-formers… it’s actually quite important to a free press that a senior journalist can sit down and have off-the-record conversations with a whole variety of people. Whether they be judges, whether they be police officers, whether they be politicians. I have done all of those things.”

He became visibly angered when questioned over the hiring of his daughter, Amy Wallis, by the Met after he sent her CV to John Yates. He went on to claim that Met officers Catherine Crawford and Tim Godwin referred relatives and neighbours to him for work experience. He told Robert Jay QC, inquiry counsel:

“You’re name checking her, she’s trying to build a career and her name is constantly being put into the public domain over something the IPCC [Independent Police Complaints Commission] have said she has done nothing wrong whatsoever – I did nothing wrong whatsoever. John Yates did nothing wrong whatsoever.”

Yates told the inquiry last month:

“As I’ve said before I completely equivocal about whether Amy got the job or not, and I had no influence on it at all. As has been confirmed.”

Wallis had also been recalled to answer questions on journalists interacting with the police during investigations, and said it was “fair game” for papers to report on raids they had been invited on by officers.

He said former News of the World reporter Mazher Mahmood, otherwise known as the ‘Fake Sheikh’, had worked on several investigations with the police, including a case in which a drug-addicted woman had attempted to sell her baby. Wallis said in that particular case he had contacted Yates to provide information. He added:

“Sometimes storms happen and they shouldn’t but they do. The McCanns: you’ve got this perfect storms of what the port police where saying to the press out there, they were feeding this all the time… there was a feeding frenzy. And that does happen occasionally.”

The Tuesday morning hearing began with evidence from Lucy Panton, former News of the World crime correspondent. She told the inquiry John Yates was a working friend who attended her wedding, and the wedding of Jeff Edwards, chair of the Crime Reporters Association. She added:

“He was a police officer who was at my wedding, along with many other police officers. There were a few people at my wedding who I would class as working friends who I didn’t socialise with outside of work, and Mr Yates falls into that category. I certainly got on well with him, I had a good rapport with him, but we didn’t socialise outside of work. The wedding was the only occasion. There were a lot of people at my wedding.”

Panton was arrested in relation to Operation Elveden, investigating illegal payments to police, in December 2011. She was later released on bail. The journalist said she had a good relationship with Yates, who resigned from the force last year over criticism of his review into the 2006 phone hacking investigation. The inquiry had previously been shown an email, sent from news editor James Mellor to Panton in 2010, asking her to get information on a suspected al-Qaeda plot from the assistant commissioner. It finished with the line:

“Really need an excl splash line so time to call in all those bottles of champagne… [sic]”

Panton said Mellor had been “bantering” with her and there were “no bottles of champagne”. She admitted drinking with another former assistant commissioner, Andy Hayman, but said it would have been in a group situation.  She added:

“We used to have champagne at the CRA Christmas parties, just a bottle at the beginning. Or maybe two. It didn’t flow in huge quantities. And I have to say, champagne didn’t feature although it seems to associate with me, but it didn’t feature in my day-to-day working lunches, very much at all.”

Yates told the inquiry last month the he had not been “plied with champagne” by Panton but said he may have shared a bottle with her and several other people.

Panton denied having a preferential relationship with either Hayman or Yates, and said although she found them helpful in background briefings, they were not forthcoming with “News of the World stories”, on specific child abuse cases or high profile crimes.

The journalist was asked about her relationship with Dick Fedorcio, former head of the Met’s Directorate of Public Affairs, after he revealed to the inquiry in March she had filed a crime story from his office.

Panton said she could not remember which computer she had used, but believed she had sat at Fedorcio’s desk to write the article. He claimed the journalist used a stand-alone laptop, and not a computer connected to the Met computer system, but said it may have been an “error in judgment”.

She had emailed the story to her own account from Fedorcio, and forwarded it to the news desk with the message:

“Had 2 use Dick’s computer 2 file.  Can’t seem to delete the original message details.  Would not be helpful 2 him for people 2 know I was using his office so please delete that”.

She told the inquiry:

“I think what my point of writing that was because I know how these things get pinged around the office, and if someone saw a story being filed from someone within Scotland Yard, it might start people asking questions. They may not notice it has my name on it, they may just notice the email at the top.”

Panton said her relationship with Fedorcio was important, as the DPA would ask officers to hold back briefings or information for journalists working on the Sunday papers.

She added:

“What I saw as my role – and I did act as the representative for the Sunday newspapers in the CRA – was to try and remind them there is another newspaper outlet that needs their assistance and could they perhaps hold back a photograph or arrange somebody, if they were arranging interviews of victims’ families, could they possibly hold something back for the Sundays.”

She denied the News of the World was in a special position with the Met, but said her role was to keep the relationship between the paper and the force running smoothly. She added: “I don’t feel I was bullied by the editors. We were all put under a lot of pressure. It comes with the job.”

Panton admitted working with private investigator Derek Webb on two stories, one on the private life of a politician and another on a celebrity imprisoned abroad for child sex offences.

Ed Stearns, a former Daily Mail journalist who heads the Met’s newly renamed Directorate of Media and Communication, said the inquiry had painted a “partial picture” of his department. He said:

“I felt it is important to give really a full picture of the work of the directorate that I work for, and the environment and the context that the press officers that work under me work in.”

He contradicted evidence given to the inquiry by Times crime reporter Sean O’Neill, who complained about inaccurate briefings from the press office. Stearns said details on a case involving an assault on a 14-year-old boy by a police officer were contained in a statement from the Independent Police Complaints Commission.

He denied the Crime Reporters Association were a “privileged clique”, saying the journalists were experts in their field.

Stearns said the job of his colleagues was to negotiate between “cautious officers and an insatiable media”, and said there were often operational reasons for holding information back.

Chief Superintendent Derek Barnett, president of the Police Superintendents Association of England and Wales (PSAEW), said it was important officer training focused on ethics and integrity when dealing with the media. He added:

“It is a question, I think, particularly with the new police professional body that will be in place in November this year, of making integrity and ethics core in all police training, and particularly in the early parts of a police officer’s career. We have to be careful that we don’t introduce guidelines that constrain people’s normal relationships. It is very subjective as to what stage something becomes inappropriate, and my sense is that we should actually leave that to people’s common sense and judgment, and their professionalism but based on a very clear code of ethics and guiding principles. I think that’s the right way to hold people to account.”

The PSAEW represents the majority of the 1,170 superintendents and 268 chief superintendents in the country.

Another witness, Dr Rob Mowby, a crime specialist from the University of Leicester, described a “constant tension” between police officers and journalists. He said:

“That tension operates within a healthy framework, where the police are trying to be open and accountable and the media are trying to hold them to account, and where there’s clear channels to pass information.”

He said informal contact was now minimal and not part of the previous relationships where reporters would meet officers in “smokey pubs”.

Lord Justice Leveson said he had a “distinct impression” this was different in a local context to relationships between the Met and national media.

Mowby added: “I think it’s essential that communication – including through the media but not just through the media – is supported and championed by ACPO.”

The afternoon hearing was devoted to a directions hearing for module three, examining the relationship between politicians and the press.

Former News International chief executive Rebekah Brooks applied for a third time for core participant status, later granted by Lord Justice Leveson. Stephen Parkinson, representing Brooks, said his client was at risk of being criticised by witnesses in module three of the inquiry, examining the relationship between the press and politicians. He also confirmed Brooks is expected to give evidence before the inquiry in May. Parkinson added:

“I also say on the basis of her experience of modules one and two that exposes her to the possibility of criticism by others we know that such criticism has been made of her in the past.”

David Sherborne, representing the core participant victims, argued that politicians Tom Watson MP and Dr Evan Harris be granted the status, as both had direct knowledge of being harassed by the press. This was later granted. Politicians Chris Bryant, Simon Hughes, Denis MacShane, John Prescott, Claire Ward and Tessa Jowell continue to hold their status as core participants.

Newspapers represented at the inquiry, along with the National Union of Journalists and the Metropolitan Police, will continue to be core participants.

Leveson LJ invited newspapers to submit their top five public interest stories to the inquiry, saying he recognised the “good work” of the press.

From April 23, proprietors and media owners will give evidence to the inquiry. The judge said he would also hear “catch-up evidence” from previous modules and address the hacking of Milly Dowler’s voicemail in full, on the week of May 8. The first part of the inquiry is expected to finish before the end of July.

The judge heard submissions from lawyers representing News International and Trinity Mirror, who said any findings of fact made by the inquiry could implicate individuals in improper or unlawful activity. He told the court:

“I can make a finding of fact that X was happening without making a finding of fact, not having investigated, who was responsible for X happening… I’ve certainly got to make a finding haven’t I, or do you say I haven’t, about whether there was unlawful interception of mobile telephones? I am merely what I can do and what I should do, in advance, in fairness, if I am minded to proceed in a certain direction… I’ve not made findings of fact against anybody yet.”

Sherborne told the judge:

“Sir, with the greatest respect, the submissions that you’ve heard belong very firmly in Alice in Wonderland territory. If the inquiry reaches conclusions that it was well known that these unlawful or improper practices were taking place, or that those who denied knowledge did so falsely, then these are conclusions which can and should be fully addressed in the report.”

On Wednesday morning, officially the last day of module two, the inquiry heard from David Perry QC, appearing via video link from Northern Ireland, who said he was conscious of whether hacking extended past Goodman and Mulcaire when preparing the prosecution case in 2006. He said:

“I’m not sure that we had evidence in relation to other individuals and I think that what was being discussed at this stage was that the case went wider than the three original victims [from the royal household] but whether there would be evidence to establish how wide was not yet, or had not yet, been determined. I was concerned to discover whether this went further than just the particular individual with which we were concerned and I think I was conscious in my own mind that the q question had to be whether it was journalists to the extent of the editor.”

Perry said the “door had been left open” to bring more prosecutions but the legal team had not seen any evidence with which to present a wider case.

He said he was not aware that junior Met officers involved in the investigation, including DCS Keith Surtees and DCS Philip Williams, who have both appeared before the inquiry, were concerned not all evidence had been considered.

Williams told the inquiry in February police were aware hacking could potentially be widespread in 2006. When asked whether editor Andy Coulson could have been involved, Williams said officers were aware of speculation but did not have any evidence.

Former Director of Public Prosecutions Lord Macdonald QC said he was visited by Nick Davies in 2009 but had limited information on the 2006 investigation. He told the inquiry he had introduced a deliberate policy of broader media engagement within the CPS. He told the inquiry:

“Contact between public bodies and journalists is strongly in the public interest, and I think we need to avoid a situation where public bodies feel that contact with journalists is something which is unprofessional or inappropriate. I agree with the evidence given to the inquiry by Nick Davies that its not contact with journalists that is the problem, it is whether you allow that contact to corrupt your decision making.”

The inquiry heard that Lord Macdonald had regularly met with national newspaper editors, with the exception of Daily Mail editor-in-chief Paul Dacre.

Current DPP Keir Starmer QC, who gave evidence into the afternoon hearing, said the CPS had relied on information from the police over the phone hacking investigation. Starmer was asked about his response to allegations the CPS made a deliberate decision not to prosecute a senior executive at News of the World over phone hacking in 2006. He said his 2009 review of CPS advice to the Met during the original investigation, spanning 2006 to 2007, was based on information from the Metropolitan Police and leading prosecutor Perry QC.

The DPP said Simon Clements, head of the CPS special crime divisions, was under a huge amount of pressure at the time to provide a response to the Home Secretary, after the Guardian published a series of allegations about hacking at the News of the World in July 2009.

The CPS were unable to contact the original prosecutor, Carmen Dowd, and had limited documentation on decisions made at the time. Starmer spoke to Perry about the case, but said he had a limited recollection of the facts. Starmer told the inquiry:

“I needed to reconstruct the picture from the CPS point of view as quickly as possible. And so it was really the Guardian article that started the process and my thinking, but it was very rapidly followed by very many requests for more information, either from the press or from officials, so it was really all of that taken together that over the course of 9 July persuaded me that I needed to reconstruct the picture and do it rapidly.”

He said he took the statement of John Yates, the then-Met assistant commissioner who conducted a day-long review of the original investigation, at “face value” and did not appreciate how quickly it had taken place.

When Nick Davies gave evidence to the Commons Culture, Media and Sport Select Committee later in July 2009, he presented the “For Neville” email that suggested hacking could be widespread at the News of the World. Starmer said he had not seen the email at that stage in 2009.

He also revealed John Yates “pushed back” against suggestions for a new investigation into phone hacking in 2009. He told the inquiry:

“There was a degree of pushback against my suggestion that there should be a reinvestigation or further examination of the ‘for Neville’ email. To the best of my recollection, Mr Yates said that it was not new, it had been seen before and thus I took from that he didn’t consider at that stage there was any point for investigation of [the] email.”

He said he accepted the email did not prove anything alone, but flagged up the need to examine material not used in the 2006 case against royal reporter Clive Goodman and private investigator Glenn Mulcaire. He added:

“My concern then was that I had been told in July 2009, in confident terms by Mr Yates, that all of this had been looked at: ‘it’s nothing new, Mr Starmer you needn’t concern yourself’. When I really focused on the fact that this had all happened in a day I became increasingly concerned about the confidence with which those answers had been given.”

Perry QC was drafted in by Starmer to review the CPS advice on the case. By 2011, when further material was revealed during civil action brought against News of the World by actress Sienna Miller, Starmer said he decided a full review of all police material on hacking was needed. He said:

“At that stage I thought nothing less that a root and branch review of all the material that we have and the police have is now going to satisfy me about this case, and that’s why I indicated in fact to Tim Godwin, who I think was then acting commissioner, that I had for my part reached the view that we could no longer approach this on a piecemeal basis – looking at bits of material – and we really had to roll our sleeves up and look at everything.”

The DPP described a 2011 meeting with Yates, saying he had made his mind up that a full review was needed. He said:

“To be fair to Mr Yates, he did not seek to block that approach and in the end agreed to it, but I have to say by then I had reached the stage where I really was not in the mood for being dissuaded from my then course of action.”

Starmer said a full CPS review is currently underway, headed by Alison Levitt QC, but that findings would not be published until any charges have been brought under Operation Weeting.

The inquiry will resume the week commencing 23 April 2012.

Natalie Peck, is the web reporter for Hacked Off and a PhD researcher examining privacy law and public figures. She is @nataliepeck on Twitter.