THE defence giant BAE Systems has been linked to a private intelligence-gathering operation that secretly infiltrated anti-arms trade groups.

The Sunday Times has seen evidence that the company, then called British Aerospace and the UK??s main defence contractor, paid hundreds of thousands pounds to a consultancy run by the widow of a wartime secret agent.

The consultancy was controlled by Evelyn Le Chene, a grandmother from Gravesend in north Kent and a member of the Special Forces Club.

For at least four years Le Chene, 67, sent BAE regular reports detailing the activities of the Campaign Against Arms Trade (CAAT), a reputable Christian-based group. BAE paid her ??120,000 a year.

Agents downloaded computer files, rifled through personal diaries, conducted surveillance on campaigners and passed on bank account details.

Letters to and from senior Labour politicians including Jack Straw when he was home secretary, the MP Ann Clwyd and David Clark while he was the opposition spokesman on defence, were copied and sent to BAE. Meetings with MPs were reported on.

Le Chene has a background as an active anti-communist. She told BAE she had a database of more than 148,000 names and addresses of activists, peace campaigners, environmentalists and union members. Large corporations could buy part or all of the list for ??2.25 per name.

The Sunday Times has seen computer records of thousands of documents which show that Le Chene was running spies who posed as activists to obtain confidential information from pressure groups.

CAAT was infiltrated by at least half a dozen agents in the 1990s. At the time it was prominent in the campaign against BAE??s sale of Hawk jets to Indonesia.

Reports on the organisation were sent daily to BAE??s security group based in their then headquarters at Farnborough, Hampshire.

Calling herself ??Source P??, Le Chene used the reports to summarise intelligence from her network of agents based at CAAT??s regional and London offices.

Clark, the former Labour MP whose letters were passed to BAE, is now Lord Clark of Windermere. He described the operation yesterday as ??absolutely reprehensible??. ??Pressure groups are a critical part of the democratic process,?? he said. ??The fact that big corporations pay companies like this to obtain information of this nature is completely outrageous.??

A spokeswoman for CAAT said last night that they were deeply shocked: ??We cannot understand why anyone would wish to do this as we are a very open organisation.??

Le Chene was unavailable for comment and a spokesman for BAE Systems said he could not discuss anything that related to the security of the company??s sites. ??We would never encourage anyone to do anything illegal,?? he added.

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