Outside the system

The Daniel Morgan Murder and Police Corruption: The Evolution of the ‘Firm within a Firm’

From the Dirty Squad’s Soho days to Andy Coulson in the heart of government, Jake Arnott explains how bent coppers moved on from trading in porn and gold bullion, to information and kompromat

From the Dirty Squad’s Soho days to Andy Coulson in the heart of government, Jake Arnott explains how bent coppers moved on from trading in porn and gold bullion, to information and kompromat 

Corruption is not a thing but a process, that by its own nature is extremely devious and resilient. Like a pernicious virus continually producing variants, it evolves and adapts so that any understanding or treatment of it has to be vigilant and ongoing. 

The dark forces that surrounded Daniel Morgan’s murder have been characterised as a ‘criminal media nexus’ – a combination of elements within the Metropolitan Police, the press, the private investigation industry, and organised crime that connected to the murder and continued to obscure any proper investigation of it. To shine any light on this world, it is crucial to understand its history, context and evolution.


Corruption Rears Its Ugly Head

In 1969, two journalists from The Times newspaper investigated a small-time south London professional criminal who claimed that police officers were blackmailing him. They covertly recorded a series of 13 tapes, on one of which a detective talked of a ‘firm in a firm’ – referring to a network of corruption within the Met. This exposé shocked the nation. 

Police corruption was a taboo-breaking subject back then and any treatment of it tended to see it in isolation; the ‘one bad apple’ theory. Now, there was proof of an endemic, institutional problem and the following decade saw a series of press investigations by broadsheets and tabloids alike, as well as reporting teams from television companies. This was a thriving era of investigative journalism and it uncovered systematic corruption in many of the specialist units within the Metropolitan Criminal Investigation Department (CID): the Drugs Squad; the Flying Squad; and most notably the Obscene Publications Squad (OPS), which dealt with the growing pornography trade in Soho.

Aptly nicknamed the ‘Dirty Squad’, the OPS was corrupt from the top-down. Tasked with policing a growing trade where even the law itself was unclear as to what was legal or not, the ‘Dirty Squad’ developed its own response to the ‘permissive age’. Colluding with underworld figures in Soho, it issued unofficial ‘licenses’ to favoured sex shops in return for considerable sums of money. In one case, the head of the Squad, Detective Chief Inspector Bill Moody, charged pornographer Jimmy Humphries a down-payment of £10,000 and then £2,000 a month for protection (estimated now to be worth £250,000 and £600,000 a year). The equivalent of millions of pounds in today’s money changed hands, some of which ‘went upstairs’ to more senior detectives at Scotland Yard. It was the UK’s biggest criminal racket of its time and it was being run by police officers at commander level.

Whereas before, it had fed upon a black market of sought-after but non-essential commodities such as pornography and drugs; now it preyed upon an evil trade in a much more precious thing: information. 

A press investigation uncovered it almost by chance. The Sunday People newspaper was running a crusade against the pornography trade; a ‘morality through the keyhole’ exercise whereby a prurient interest in obscenity could be used to both outrage and titillate the readership in equal measure. In an early version of the ‘fake sheikh’ sting, it used a freelance investigator posing as a rich Arab businessman who had come to London to buy porn wholesale. But it was the People that was stung. At a Hilton Hotel meeting, pornographers turned up with their own photographer and a lawyer threatening to sue. There had been a leak and eventually journalists at the People traced this back to the Dirty Squad.

Scotland Yard’s initial response to press investigations into police corruption was to completely deny the published story. The Times journalists that had uncovered a ‘firm in a firm’ were themselves investigated and put under surveillance by the Metropolitan Police. 

Eventually, the Home Secretary Jim Callaghan brought in a provincial officer Frank Williamson, one of the inspectors of constabulary, to oversee an inquiry. But, he was constantly undermined by the Met – not least in the appointment of his deputy. As second in charge and in operational charge of the inquiry was Detective Chief Inspector Bill Moody, who was later exposed as one of Scotland Yard’s most corrupt officers. The result was seen as containment of the problem. Just two low-ranking detectives were prosecuted. A third, the very officer who had first made the ‘firm in a firm’ comment, left the country under mysterious circumstances. 

Williamson’s resignation in 1972 coincided with The Sunday People’s Dirty Squad investigations and criminal trials of senior officers in the Drugs Squad. That year also saw the appointment of Robert Mark as Met Commissioner, a man determined to clean up the force with his memorable maxim: that “a good police force is one that catches more crooks than it employs”. 

He set up A10, the first designated anti-corruption unit that would later become CIB. And he made systematic changes. For the first time (and possibly the last), Scotland Yard was treating police corruption as an institutional problem. Assembling senior officers of CID he was blunt: “I told them that they represented what had long been the most routinely corrupt organisation in London, that nothing and no one would prevent me from putting an end to it and that, if necessary, I would put the whole of CID back to uniform and make a fresh start.” 

Three of the “Porn Squad”, accused at the Old Bailey of 27 counts of conspiracy and bribery in 1977 Photo: PA Images/Alamy Stock Photo

Mark’s tenure lasted five years and, in that time, 50 police officers were prosecuted and more than 400 left the Met either after, or anticipating, disciplinary procedures. It seemed that this purge might cure corruption in the Met once and for all. But, by the end of the 1970s, it was clear that the ‘firm in a firm’ was still in business.

A growing disquiet with the ‘supergrass’ system, whereby detectives ran high-level criminals as informants in return for reduced sentences or even immunity, and allegations of corruption surrounding three major robberies in the City of London jurisdiction led to the most ill-fated anti-corruption inquiry in British police history. 

‘Operation Countryman’ was led by the Dorset Constabulary and, once more, an investigation by provincial outsiders was undermined by their London counterparts. Security was compromised and there was a general disdain and metropolitan elitism towards the Dorset squad. Corruption still existed on a senior level at Scotland Yard and Freemasonry was clearly a factor, with bent officers using this secret society for their own ends and criminals and detectives often belonging to the same lodges. 

Operation Countryman ended not with a bang but a whimper: with 2,000 statements taken; 200 allegations pursued; and 41 reports to the Director of Public Prosecutions; but only four prosecutions were finally sanctioned and two convictions secured. There was an air of triumphalism at the Yard, having seen off an outside force, and the failure of Countryman was seen by Deputy Assistant Pat Kavanagh as “an argument against independent investigations rather than an argument for”. The Met’s regained sense of superiority asserted itself in arrogance and complacency.


The 1980s Evolution

The following decade saw a combination of social changes that provided opportunities for corruption at every level of society on an unprecedented scale. 

Politically, the move to monetarism and an unbridled free market meant that there were many more chances for the unscrupulous to make easy money. Financially, it was hard to see what was bent or legal any more. And, in an atmosphere of division and social unrest, the police became more powerful and were subject to less scrutiny as officers were given free rein to deal with inner city riots and industrial disputes. Organised crime began to move into narcotics. Just as the illicit pornography trade had provided both a ‘moral panic’ and an incentive for bent and greedy policemen in the 1970s, so drugs became the new variant for the corruption in the 1980s. 

The press was also changing. Led by the Rupert Murdoch empire, there was a move to break the print unions and to deregu