The blame game: Will Tory leader's PR chief survive?

At the heart of Fleet Street's phone-tap affair lie some serious allegations. David Randall disentangles the conflicting claims

In the next few days, the crux of the News International "phone-tapping" saga will be a little clearer. Forget, for the moment, the largely partisan fuss over the fate of David Cameron's spindoctor, Andy Coulson; it is in the office of the Director of Public Prosecutions that the substance of the matter will live or die. For it is there that a decision will soon have to be reached on whether any reporters and executives of Rupert Murdoch's red-top titles will be charged with breaking the law in pursuit of stories. An update from the DPP is promised early this week, but clever money is increasingly on sighs of relief at Wapping.

It has been, for connoisseurs of rivalry, a golden week. The Guardian's breaking of the story about sums paid to victims who had their privacy breached by News International has set up a clash between two of Britain's most powerful media groups. Neither presents an entirely beguiling face, either inside the industry or out. And so what we have, essentially, is a battle between a deep blue sea and some species of devilry – the Islington Sanctimonious Front vs the Sinners' Party, if you like. And, this weekend, there are grounds for being wary of sporting the favours of either side too enthusiastically. Aspects of the version presented by The Guardian merit scepticism, and there are certainly also now reasons to doubt the statements by News International, made at the time of the events that gave birth to all this: the trial of the News of the World's royal reporter Clive Goodman and his electronic helpmeet, Glenn Mulcaire.

There are several things to get straight at the outset. First, the phrase "phone-tapping" is misleading, since live conversations were not listened to. "Voicemail burglary" would be more apposite, as it was the illegal entry to, and eavesdropping on, voicemails that was the subject of the 2006 trial. Second, The Guardian, at least in the initial Nick Davies article, has, with a sweep of its righteous broom, put into a confusing heap things that are, for the purposes of precision (especially regarding a possible prosecution), better kept apart. There is the voicemail plundering, but also a host of other questionable, amoral or downright illegal activities of investigators beside Mulcaire. These included various ways, such as impersonation, to con personal information out of phone companies, doctors, the DVLA and tax offices, and were made known in a report by the Information Commissioner, Richard Thomas, in 2006. This named 32 papers and magazines, including The Guardian's sister title, The Observer, as using some of these methods in breach of the Data Protection Act. For all the obvious skulduggery of these activities, nothing new has been learnt about them in the past week.

The core of The Guardian's story – and it was fresh and serious material – was that News International had paid out around £1m in damages and costs to three people whose voicemail boxes had been tapped into. Two of them have been named: Gordon Taylor, chief executive of the Professional Footballers' Association, and Jo Armstrong, a legal adviser at the PFA. Both sued News International for breaches of their privacy. Mr Taylor received £400,000 in damages, plus £300,000 costs; the settlement of Ms Armstrong's case, and one other, cost Murdoch's company a further £300,000. All litigants signed a confidentiality agreement, hence their silence this, or any other, week.

The significance of these revelations was that, until last week, the only phone felonies that News International had coughed to involved the eavesdropping of the voicemails of Prince William and sundry royal officials by royal reporter Goodman and his partner in crime Mulcaire. Both were charged, convicted and jailed.

But the large payments to Taylor and Armstrong almost certainly mean other News International reporters were involved. Goodman – an exclusively royal reporter – would not be fishing in football's murky waters for stories. The size of the payouts – in the case of Taylor, nearly seven times the sum awarded to Max Mosley for filming him at an S&M gathering – triggered the queries: why so much? What were News International so afraid of that it should pay out this kind of cash?

The answer, if there is one, lies in the documents that the DPP is now reviewing, and part of which Gordon Taylor's lawyers obtained under disclosure in the course of his privacy action against the publishers. These documents detail the police investigation – conducted in 2005-06 by the Met's anti-terrorist branch. Senior police sources told The Guardian (whose reporters have not themselves seen the documents) that, according to the paper, "the full police file shows that several thousand public figures were targeted by investigators". These included, the paper went on, John Prescott, Tessa Jowell, Boris Johnson and Gwyneth Paltrow. The implication of The Guardian's reports (although they have avoided pointing fingers at specific News Int reporters) is that the News of the World organised, condoned and made wide use of illegal voicemail accessing techniques in order to investigate, or go on fishing trips for, stories about the private lives of politicians, footballers, royals and other celebrities.

And yet, a closer reading of The Guardian articles tells you that to "target" does not necessarily mean to "breach the voicemails of". It may have been these figures' messages on others' phones that were listened to (or the deployment of other dubious techniques) – and so we have one of the divides between accuser and accused.

News International stalled any response for several days, but then, on Friday evening, delivered a lengthy, detailed and emphatic statement, based, it said, on a "thorough investigation" since The Guardian story broke. It read: "From our own investigation, but more importantly that of the police, we can state with confidence that, apart from the matters referred to above, there is not and never has been evidence to support allegations that:

":: News of the World journalists have accessed voicemails of any individual.

":: News of the World or its journalists have instructed private investigators or other third parties to access the voicemails of any individuals.

":: There was systemic corporate illegality by News International to suppress evidence."

It continued:

":: It is untrue that officers found evidence of News Group staff, either themselves or using private investigators, hacking into 'thousands' of mobile phones.

":: It is untrue that, apart from Goodman, officers found evidence that other members of News Group staff hacked into mobile phones or accessed individuals' voicemails.

":: It is untrue that there is evidence that News Group reporters, or indeed anyone, hacked into the telephone voicemails of John Prescott.

":: It is untrue that 'Murdoch journalists' used private investigators to illegally hack into the mobile phone messages of numerous public figures to gain unlawful access to confidential personal data, including: tax records, social security files, bank statements and itemised phone bills.

":: It is untrue that News Group reporters have hacked into telephone voicemail services of various footballers, politicians and celebrities named in reports this week.

":: It is untrue that News of the World executives knowingly sanctioned payment for illegal phone intercepts.

"All of these irresponsible and unsubstantiated allegations against News of the World and other News International titles and its journalists are false."

This is either chutzpah of the first order, or the words – hand-crafted over several days – of an organisation confident that the accusations against it cannot be proven. But, for all its persuasive assertions, one matter above all still nags: the issue of Mulcaire's money. He was contracted to provide "services" in return for around £2,000 a week. He also earned bonuses. These fees were reportedly paid in batches of £500 as "expenses". Even in a publishing outfit as flush with resources as NI, these sums would need to be signed off by someone on higher than a reporter. Whom? We have never been told, and executives' collective look of pained innocence remains unconvincing. Senior Murdoch executive Les Hinton is likely to be asked to explain this by MPs when he is called before the culture, media and sport committee.

Where the truth lies is impossible to gauge. That papers indulged (and indulge) in methods many readers would find underhand, or that some journalists would find distasteful (or beyond their paper's pockets) is not in doubt. But this swathe of activities seems to have been conflated with the specific issue of voicemail tapping that may – or may not – form the basis of an indictable case.

There is no doubt that red-tops are not places for the unduly squeamish to earn their living. And it is not unknown for journalists on rival papers to play mild games of industrial espionage to find out what the other news desk is running. But readers, at least of the papers in question, care rather more for the substance of the stories than the means by which they were obtained. Every survey ever done on the subject has shown widespread condemnation of the very papers and stories that are consumed most avidly. They are not called the popular press for nothing.

There is also the position of Cameron's adviser Andy Coulson, who, as editor of the News of the World at the time of Goodman's antics and trial, took responsibility and resigned, even though he denied any knowledge of the voicemail burglaries. He may yet face some awkward questioning by MPs, but, having carried the can once, he is – new revelations apart – unlikely to be required to carry it again.

But one other issue will not be so effortlessly dealt with: the umbrage taken by John Prescott at his phone messages possibly being intercepted. Yesterday, he said his solicitors were writing to the DPP, Keir Starmer, urging him to apply to open material which was reportedly "sealed" in a case the paper's publishers settled with Gordon Taylor.