THE DEFENCE giant BAE Systems faces questions about its role in a covert campaign of spying on protesters against the arms trade, including the actress Dame Helen Mirren.

A judge has given the company until next Monday to explain how it obtained a confidential e-mail from the Campaign Against Arms Trade (CAAT), a protest group.

The order comes ahead of the protesters’ legal challenge against the decision to drop a Serious Fraud Office investigation into claims that BAE paid bribes in Saudi Arabia.

The existence of a spy network inside the protest group was revealed three years ago by The Sunday Times. Documents indicated that the group had been infiltrated by “agents” who posed as peace campaigners.

They passed on detailed reports, including bank account details and home addresses, to a grandmother in Gravesend, Kent, whose consultancy was paid more than £120,000 a year by BAE.

Contacts with government, opposition politicians and celebrities were all noted in the secret reports. Mirren, who won an Oscar for best actress last week, was singled out for her campaigning work against the producers of torture weapons.

BAE, which is Britain’s biggest military exporter, declined to deny its involvement in the spying operation at the time of the original article. It said it did not discuss matters relating to security and would not encourage illegal activity.

However, in January BAE’s solicitors, Allen & Overy, wrote to CAAT’s lawyers saying the company had been given an internal e-mail from inside the protest group.

The e-mail had been sent on December 29 by Ann Feltham, the group’s parliamentary co-ordinator, to members of the CAAT steering committee. It passed on advice from the group’s solicitors about tactics for the attempted judicial review of the Saudi decision.

Allen & Overy said the e-mail had been sent to BAE “unsolicited” and handed over a redacted copy in which the header address had been removed. When BAE declined to give further information about the source of the e-mail, CAAT went to court to argue that the leak of such sensitive information would compromise its case.

The group believes the e-mail must have been sent by either a “mole” within its organisation or a computer hacker.

Dinah Rose, the group’s QC, told the High Court there was no allegation of wrongdoing by BAE but she noted that CAAT had previously been infiltrated and said: “History might be repeating itself.” Mr Justice King found that CAAT “has undoubtedly established reasonable cause for the suspicion that [BAE] has previously been party to the infiltration of its organisation and the obtaining of its confidential information by covert means, but the evidence in my view goes no higher”.

He ruled that the company must, by March 12, provide a sworn affidavit giving a detailed explanation of how it came to have the e-mail.

Any suggestion that BAE had played a hand in acquiring the e-mail would be highly damaging for the company at a sensitive time. Lord Goldsmith, the attorney-general, and Downing Street have been heavily criticised for bowing to pressure from Saudi Arabia to drop the police investigation into a £60m slush fund allegedly used by BAE to pay bribes.

Opposition MPs and pressure groups said Britain was behaving like a “banana republic”.

The earlier infiltration had been masterminded by Evelyn le Chêne, the 70-year-old widow of a wartime secret agent. Documents show that for at least four years in the late 1990s le Chêne was filing regular reports on activities inside CAAT.

Le Chêne has a background as an anticommunist and is a member of the Special Forces club, which lists many former intelligence officers among its members.

A source close to BAE says she told the company she had a database of more than 148,000 names and addresses of activists, peace campaigners, environmentalists and union members.

CAAT had been campaigning against BAE’s £500m sale of Hawk jets to Indonesia at the time its London and regional offices were infiltrated.

A spokeswoman for BAE said: “When presented with an e-mail that it did not solicit, the company immediately brought it to the attention of CAAT, whose subsequent attempts to garner publicity have wasted a great deal of time and money, which the company believes is regrettable for all concerned.”

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