He told the phone hacking trial that he “rubber-stamped” the requests because he didn’t believe the money was actually being paid to police officers.
Mr Coulson, who edited the paper between 2003 and 2007, complained that its royal editor Clive Goodman – who made the requests – was “prone to exaggeration.”
Mr Coulson and Mr Goodman are jointly charged with – and deny – conspiring to commit misconduct in public office over payments to police guarding the royal family.
In emails sent to Mr Coulson in 2003 and 2005, Mr Goodman asked his then editor to approve payments of £750 and £1000 respectively for copies of royal phone directories.
In the first, on 24 January 2003, Mr Goodman wrote:
“… one of our royal policemen has obtained the brand new green book, the telephone directory with all the phone numbers of the royal family and their household staff.”
Explaining that he was having difficulty getting cash payments through the News of the World’s managing editor Stuart Kuttner, Mr Goodman stressed:
“These people will not be paid anything other than cash because if they’re discovered selling stuff to us, they end up on criminal charges, as could we.”
Mr Coulson replied: “This is fine….”
On 14 May 2005, Mr Goodman made another request for a payment to police, writing:
“Andy – know your busy but… One of our palace cops has got hold of a rare and just printed Palace staff phone directory. Every job, every name, every number. We usually pay £1,000 for these. It’s a risky document for him to nick.”
After a follow-up email from Mr Goodman, Mr Coulson again replied “Fine.”
Prior to offering his explanation, he suggested Mr Goodman was an under-performing, work-shy journalist who rarely left the office.
“I don’t want to say that Clive was lazy,” Mr Coulson told the Old Bailey, “but he certainly didn’t like travelling much outside the office.”
Mr Goodman, who he said was disappointed at not being made news editor, was “a tricky customer” and “prone to exaggeration,” he added.
Asked by his counsel Timothy Langdale QC about Mr Goodman’s first email to him in 2003, Mr Coulson told the Old Bailey: “I don’t remember this email and I don’t remember the email in 2005 either.”
Adding that had read them for the case, he told the court: “I don’t believe that Clive Goodman was paying a policeman, I still don’t believe that Clive Goodman was paying a policeman.”
He added: “I think what I did was fail to address it properly, but I didn’t because I didn’t believe him and I rubber-stamped it.”
Raising the 2005 emails, Mr Langdale asked: “Did you believe that Clive Goodman was paying a policeman for a royal phone book?”, to which Mr Coulson replied: “No, I did not.”
He also said he had no idea that Mr Goodman was paying Glenn Mulcaire £500 a week for the private detective to hack the phones of royal targets.
In his evidence, Mr Goodman claimed that Mr Coulson had explicitly approved the project.
However, giving evidence today, Mr Coulson said that although he had approved the £500-a-week payments in a quick conversation by his office – he thought they were for a legitimate royal source.
Mr Coulson told the Old Bailey:
“Clive came to me and, I think as a response to the pressure – in my view entirely legitimate pressure – to improve his performance – and he told me he had a new royal source. Somebody who was able to provide stories, particularly about the younger royals.”
Mr Coulson, who became director of communication to Prime Minister David Cameron, denies two alleged conspiracies – to hack phones and commit misconduct in public office.
Mr Kuttner, managing editor until 2009, denies a charge of conspiring to commit misconduct in public office.
Mr Goodman, who also denies conspiring to commit misconduct in a public office, is currently too unwell to attend the trial, which continues tomorrow.