By William Maclean
LONDON (Reuters) - In a small, semi-detached house overlooking a park in the unlovely south London suburb of Croydon, Jorge Salgado-Reyes sits at a glass-topped desk in his living room plying his trade as a private eye. In the corner, a goldfish glides around a water tank. A flat screen television hangs from the wall alongside replica samurai swords and photographs of landscapes. Black leather sofas line two of the walls.
The phone rings. Salgado-Reyes answers it, jots down a few notes and consults his screen. "A non-molestation order," he says, referring to a court order he is being asked to monitor.
Charging up to 75 pounds ($120) an hour, the dapper, goateed gumshoe takes on cases that range from the banal to the tragic -- tracing missing people, serving court orders, monitoring "anti-social behavior" such as vandalism or noisy neighbors, checking cases of benefit fraud, or simply carrying out checks for people who are convinced, rightly or wrongly, that their house is bugged.
Salgado-Reyes is the acceptable face of private investigation in Britain. But there's another side to the industry, a subculture in which sleuths tap police contacts and criminal informants for information that they then sell on to tabloid reporters; where private detectives excavate nuggets that can be used to embarrass politicians or celebrities and titillate readers.
Of all the dark corners the country's phone-hacking scandal has lit up over the past two weeks -- illegal tabloid tactics, cozy ties between newspapers and the police, the press's influence over politicians -- perhaps none are murkier than London's private investigator underworld.
One former Metropolitan Police detective who spoke on condition of anonymity told Reuters that in some cases the line between private investigation and organised crime is nonexistent.
"A number of private investigators now operate on behalf of criminal enterprises to steal information, to try to identify potential sources that are giving information against them, to identify competitors, to find out where competitors keep drugs," the former detective said.
"And they are used by the underworld to try to infiltrate law enforcement to find out what law enforcement knows. It's always been like that, in fairness, but information was never in the plentiful state that it is now."
Investigators like Salgado-Reyes say their less scrupulous counterparts are tainting the industry.
"I know for a fact that there are some people convicted of offences who are working as PIs," he told Reuters. "If PIs are providing services for organised crime, then I think we are talking about people who are already part of the criminal world."
That could now change. An advocacy group called Hacked Off that campaigns against press intrusion is demanding that the most notorious snoopers face an official inquiry into the hacking scandal, where their testimony might pose a threat to figures in Britain's establishment. It could also lead to tighter laws around the industry, which is currently unregulated.
"These are criminals masquerading as investigators," said Tony Imossi, president of the 98-year-old Association of British Investigators (ABI), the oldest representative body of private detectives in Britain.
"ALERT, CUNNING AND DEVIOUS"
One detective in particular may hold the key to the News of the World scandal and even the political fortunes of Prime Minister David Cameron. Jonathan Rees, a convicted criminal who was once acquitted of a murder charge, regularly sold information to the News of the World and other newspapers, according to police documents obtained by anti-corruption researcher Graeme McLagan.
In the 1990s, Rees was a super-broker of scurrilous information. Unusually prolific, he tended not to use the voicemail hacking most closely associated with the News of the World. (The Guardian newspaper reported on July 4 that the voicemail of murdered schoolgirl Milly Dowler had been hacked by a News of the World investigator, triggering a public outcry.)
Rees's speciality was buying information from cops and civil servants and arranging drug stings, according to McLagan, author of "Bent Coppers," a study of graft inside London's police, also known as Scotland Yard. Rees would then tip off both police and press to strengthen contacts and make money, he wrote.
Asked to respond to the allegations, Rees's lawyer, Nigel Shepherd, told Reuters by email that it was "not only News International that was implicated in unlawful enquiries... the media think only in terms of a witch hunt against News International." He did not elaborate.
According to the Guardian, Rees's targets have included members of the royal family, central bank officials, rock stars Mick Jagger and George Michael, the family of Peter Sutcliffe, a notorious serial killer dubbed the Yorkshire Ripper, and leading politicians.
Rees even tried to undermine the Yard's internal efforts against corruption by spreading rumors about some of the people associated with it, McLagan reported.
"They are alert, cunning and devious individuals who have current knowledge of investigative methods and techniques which may be used against them," said an internal police report into Rees and his associates cited by McLagan.
"Such is their level of access to individuals within the police, through professional and social contacts, that the threat of compromise to any conventional investigation against them is constant and very real."
Rees has not been convicted of an offence in relation to his illicit news-gathering for the media. But he has emerged as a key figure in the scandal because he resumed working for the News of the World in 2005 after serving a jail term for conspiracy to pervert the course of justice in a child custody case.
By then, the News of the World was edited by Andy Coulson. Coulson was forced to quit in 2007 when the newspaper's royal editor and another private investigator, Glenn Mulcaire, were jailed for hacking into voicemail messages of aides to the royal family. The editor, who has always maintained he had not known about the phone-hacking, went on to work as Cameron's communications chief.
"CONFIDENCE IN JUSTICE AT STAKE"
In April 2008, Rees and three others were arrested on suspicion of the murder of Rees's former business partner, Daniel Morgan, who had been found dead outside the Golden Lion pub in Sydenham in March 1987.
Morgan was lying beside his BMW with an axe sticking out of his head.
His family says he had discovered information about police corruption in the weeks before his killing -- a development it alerted police to more than 20 years ago. In the weeks before his murder, Morgan had repeatedly expressed concerns over corrupt police officers in south London, they say.
Rees was charged with conspiracy to murder, but the case remains one of Britain's longest unsolved murder inquiries, in part because of police malpractice. In March 2011, commenting on the failure of the case, Detective Chief Superintendent Hamish Campbell said the initial probe had been flawed and "police corruption was a debilitating factor."
The case against Rees failed due to procedural flaws: the prosecution said it could not guarantee that police could satisfy rules protecting the right to a fair trial.
Documents the defense wanted to see had gone missing. And on two occasions, material not disclosed to the defense was found in the police's possession. The judge said the police had had ample grounds to prosecute but the decision to pull the case was principled and right. He recorded a 'not guilty' verdict.
Shepherd, Rees's lawyer, told Reuters: "We would point out that Mr. Rees has been found wholly innocent of this charge, having been acquitted on 11th March 2011."
MPs now want to know what Coulson knew about Rees's past. Coulson resigned from his job with Cameron in January this year just as a new police investigation into phone-hacking gathered pace. He did not respond to a request for comment sent through his lawyer.
The Prime Minister says any warnings of Coulson's possible links to phone-hacking never reached him. But since Rees's past had been known to several senior policemen as far back as the 1990s, critics ask, why did no one in government raise the alarm? What happened to warnings from Alan Rusbridger, editor in chief of the Guardian, or Cameron's coalition partner, Liberal Democratic Party leader Nick Clegg, both of whom say they alerted Cameron's office to Coulson's link to Rees?
Rebekah Brooks, Coulson's predecessor as News of the World editor, told lawmakers on Tuesday she had never met Rees but agreed it "seems extraordinary" that he was rehired after his conviction. She said she did not know what he did for the company.
"Public confidence in the criminal justice system is at stake," Jenny Jones, a member of the Metropolitan Police Authority, which oversees the force, told Reuters. Jones argues the judicial inquiry into the News International affair will need to probe the role played by private eyes.
"I don't think any of the (Metropolitan Police Commissioners) have really tackled it successfully and we still need to clear this up," said Jones. "The time of Jonathan Rees is exactly how far back we need to go to address corruption involving officers in the Met and private detectives."
Alastair Morgan, Daniel Morgan's brother, told Reuters the "recent revelations have shown how rotten our culture is -- the police culture, the political culture, the culture inside News International. This whole episode has shown what sort of dirt we live in."
"MUTUAL ADMIRATION SOCIETY"
John O'Connor, former head of the specialist detectives unit known as the Metropolitan Police Flying Squad, wrote in the Independent newspaper that the roots of police and News International cooperation on stories go back to the 1980s. In an era of tension between employers and labor unions, he said, the police would help the company get its papers to market during strikes.
In the process, Scotland Yard and company executives formed friendships, he wrote.
"This mutual admiration society worked very well for a time. Information passed freely both ways. The police benefited from undercover operations run by the newspapers, and in return the papers got their exclusive stories. ... The culture of police officers mixing with journalists was encouraged, and little thought was given to the potential of misconduct."
Soon the papers were using their own private detectives like Rees and Mulcaire, the snoop who listened in on Milly Dowler's phone.
In May 2006, the Information Commissioner (ICO) published a ground-breaking report into the trade in illicit data. The state-backed watchdog monitors how Britain handles confidential personal information. Its report detailed what it called "evidence of a pervasive and widespread 'industry' devoted to the illegal buying and selling of such information."
In a study of just one private detective, Steve Whittamore, the ICO discovered that 305 different journalists had instructed him to obtain about 13,343 different items of information over a three-year period.
While it is not illegal for newspapers to use private eyes, the ICO said it suspected that around 11,345 of the items were "certainly or very probably" in violation of data protection laws.
A second ICO report in December 2006 identified the publications that had contacted Whittamore. The top five buyers among news media were the Daily Mail, Sunday People, the Daily Mirror, the Mail on Sunday and the News of the World.
The offence of deliberately and willfully misusing private data in Britain is punishable only by a fine. Since 2004 the ICO has prosecuted at least 14 cases of private detectives obtaining information illegally, but fines seldom go above a few hundred pounds.
The ICO has recommended judges be given the option to jail offenders, but five years on, that proposal has gone nowhere. In a joint submission to the ICO, newspaper proprietors said custodial sentences would have "a serious chilling effect on investigative journalism."
"DO ME A Favor: CAN YOU CHECK IT?"
The publicity surrounding the role of private detectives in the phone-hacking scandal infuriates many mainstream operators who say regulation is long overdue.
"If money is exchanged from journalists to serving police officers it's abhorrent," said the ABI's Imossi, who estimates there are 3,500 private investigators in Britain, of whom only about 500 are members of his organization. It vets new members and tests their expertise.
Imossi says friendships can blur the choices that otherwise honorable serving and former police detectives make in handling data, but they should have the discipline to avoid temptation.
After a few pints together in the pub, he says, "someone says 'do me favor, I'm interested in this registration number of a vehicle, can you check it?' The serving officer should have the discipline to say 'No you're bang out of order. It's not going to be done.
"But four pints of lager later their judgment is impaired and, 'Yes, it's no hassle, I can do it.' It's a difficult situation. They have my sympathy. But I'm sorry, it's the law of the hand. If you break it, that's it."
Private investigator Salgado-Reyes says he believes most in the business are honest. "I know for a fact that there are some people convicted of offences who are working as a PI ... So regulation would address that," he said.
"Having said that, if you are prepared to break the law, you can get away with it. So therefore you need some kind of team to go after these people."
ABI General Secretary Eric Shelmerdine says there is a legitimate need for private sector investigators. "Fraud in the UK alone runs into billions every year. If you took the professional private investigators out of the picture then the losses would be even greater," he said.
Mark Button, a Reader in Criminology at the University of Portsmouth, told Reuters the detectives need regulating.
It is "perverse" that under UK law a security man who sits and monitors CCTV screens all day needs a license, whereas a private detective who gathers information does not, he said.
Powerful new spy technology is easily available -- legal to buy but often illegal to operate, due to anomalies in legislation -- making the danger that much greater.
"There's greater potential now because they've realized that information is a very valuable commodity not just to protect themselves, but from which substantial amounts of money can be earned," the former Metropolitan Police detective said.
Police surveillance bugs are subject to close oversight, he said: a private investigator "can do as he likes."
Salgado-Reyes says the News International scandal has unfairly stigmatized his trade.
"Hacking, blagging -- we've been tarred with that brush. But most PIs are working in an ethical manner. Why would I cut a corner by using illicit methods, when I am being paid by the hour to do the job correctly and legally?"
(Editing by Simon Robinson and Sara Ledwith)