A close friend of a married member of the Royal Family said to have performed a gay sex act on his aide told a jury today of the moment he received a menacing telephone call from a blackmailer.

The witness said he was “shocked” when Ian Strachan demanded £50,000 to stop him going public with eight hours of tapes of a senior royal aide snorting cocaine and making lurid claims that his boss performed a sex act on him in front of a Stringfellows stripper at a party.

The witness, named only as Witness C, said that as a “close friend” of the royal he had been “nervous” about setting up “a sting” with British police to ensnare the alleged blackmailer.

On the third day of the trial at the Old Bailey, C said that Mr Strachan, 31, had demanded £50,000 to sell the video and audio files of the aide, who had also claimed that the royal took cocaine.

C explained how he had been in France when he received a series of “bizarre” and “baffling” telephone calls from Sean McGuigan, 41, about what he said were “sensational” and damaging computer files that could seriously damage the royal.

The friend said that Mr McGuigan, who tried to “befriend” him, had agreed to either destroy the recordings or give them to the royal after their final telephone call. But, within a few hours, C said, Mr McGuigan's accomplice Mr Strachan telephoned and said: “We don't give. We sell.”

Giving evidence from behind a screen at the Old Bailey in London, he said: “It made more sense. It fell into place. The day before we went to bed with the happy thought that the episode was just bizarre. And now we had fear.

“To me it's extortion. It's quite simply moving mud about - whether true or not, it always sticks.”

He said that during the call Mr Strachan, whose tone was “not very nice”, described Mr McGuigan as “shy”.

Witness C returned to London in September last year. Working with the Metropolitan Police he “nervously” called Mr Strachan to tell him to deal with a man in London called Paul Butler, who was in fact an undercover police officer.

The witness explained that he had planned to fly both men over to France to meet him while he was there, but the meeting was stalled because French police do not work at weekends. Mr Mark Ellison, QC, for the prosecution, said: “Let's hope the criminals don't know that.”

He added that he did not “envy” his royal friend because he had to be so “wary” of people's intentions.

Later it was the turn of the royal's personal assistant to give evidence, telling the court that she was “stunned” when she received a threatening phone last August from Mr McGuigan who explained the bizarre sexual allegations the aide had made. She was so shocked by the claims that she was too scared to approach the royal and instead contacted his friend, Witness C.

The woman, identified only as witness B, received a telephone call from a man who talked about the married royal performing an oral sex act and another employee who was snorting cocaine.

“I was somewhat stunned I have to say,” she said. “I just said that was interesting. I knew it was not true.”

There was laughter as Mr Ellison asked: “Did you understand what he was talking about?” and he was forced to add quickly: “I didn't mean the act . . .”

Ronald Thwaites, QC, for Mr McGuigan, asked: “Do you think there is any danger that your perception of this call has changed over the nine months since you received it, because you are now in a blackmail trial and you are putting a different complexion on it from the one you put on it that day?”

Witness B: “The message was clear. What I was told was it was certainly unpleasant what they were threatening.”

She added: “I think my mind changed slightly after reading things in the newspapers.”

Mr Strachan from Fulham, south-west London, and Mr McGuigan, from Battersea, South London, both deny making “an unwarranted demand with menaces” of £50,000.

The trial continues.

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