Murdoch empire will still pay disgraced detective's damages

News International has not cut its financial ties with Glenn Mulcaire despite the insistence by Rupert Murdoch's media empire that it would do so by no longer paying the legal fees of the disgraced private detective.

According to a previously protected High Court document obtained by The Independent, the company is still on course to pay any damages awarded against Mr Mulcaire in dozens of civil phone hacking claims.

Mr Murdoch's son James told Parliament in July that he was "surprised" to learn his company was still paying Mulcaire's legal bill and that the arrangement would be terminated with "immediate effect".

News International had previously refused to answer questions about who was paying Mr Mulcaire's lawyers bill. The private investigator lodged a lawsuit last month against the company, claiming that its decision to stop paying his legal fees, which had reached nearly £250,000, breached a long-standing contract.

The claim document, lodged in the Chancery Division of the High Court, details the close-knit legal relationship that existed between Mr Mulcaire's legal team and the Murdoch UK media company.

Until Mr Murdoch ended the legal fees deal, Mr Mulcaire was still co-operating with the News of the World's controlling company, News Group Newspapers (NGN), and had been giving them "access to confidential and privileged information to which it would not otherwise have had access", according to the claim. He was also allowing NGN to prescribe the ways in which he "conducted the telephone interception litigation", and to choose the barrister to represent him.

News International's agreement with Mr Mulcaire includes his appeal against a High Court ruling that directed him to answer a list of questions drawn up by hacking victims who are suing NOTW.

The court document lodged on 17 August by Mr Mulcaire's lawyer, Sarah Webb, states that NGN had no right to end the legal fees arrangement with her client because he had performed everything NGN had asked him to do. The document describes letters from NGN's solicitors to Mr Mulcaire denying that it had agreed to pay his legal costs.

The claim alleges that in a letter dated 11 August NGN said it would pay Mr Mulcaire's costs "up to the date that our client made its position clear". This refers to James Murdoch's promise to MPs on 20 July that NI would terminate the deal.

But it goes on to state that the letter "did not to purport to withdraw the indemnity in respect of damages" – meaning that a previously unacknowledged undertaking by News International to pay any cash settlements against Mr Mulcaire remains in place.

Dozens of civil damages claims have now been filed against the owners of the defunct Sunday tabloid, naming both NGN and Mr Mulcaire as co-defendants. New International has signalled its intention to settle claims wherever it feels they are justified and has already paid £100,000 to the actress Sienna Miller. Settlements have also been reached with the football pundit Andy Gray and the television actress Leslie Ash and her family.

News International has set aside a fund of at least £20m to settle the damages claims against it.

Mr Mulcaire was jailed for six months in 2007 after he admitted hacking into the voicemails of royal aides and celebrities including the supermodel Elle Macpherson and the Liberal Democrat MP Simon Hughes. But he continues to be at the centre of the scandal as Scotland Yard detectives go through records seized from his home detailing further alleged voicemail interception.

He recently issued a public apology for the "hurt and upset" caused by his activities but said NOTW had placed him under "relentless pressure".

News International last night said it did not accept it had any indemnity to pay legal fees or damages for Mr Mulcaire. A spokeswoman said: “We have no agreement whatsoever with Glenn Mulcaire.”

A done deal?

* On 28 July, just after James Murdoch expressed surprise that News International was still paying Glenn Muclaire's legal bills, NI's solicitors wrote to the former News of the World private investigator ending the deal. Another letter dated 11 August denied that NI had agreed to pay Mr Mulcaire's legal costs and stated it was no longer picking up the bill. However, in the same 11 August letter the company said it would meet the costs of any legal bill incurred prior to Mr Murdoch's public termination. This could have been the point at which NI severed legal links with Mr Mulcaire. But it did not. Instead, there was no mention it would not pick up the potentially substantial bill for the damages Mr Mulcaire could face in phone-hacking civil actions as a co-defendant with News Group Newspapers.