The Daniel Morgan Murder 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
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.”
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 deregulate itself. The old days of Fleet Street were coming to an end and, with that, came a managed decline in proper investigative journalism. What replaced it used, and indeed enhanced, those same methods of investigation but now began to deploy them as a form of control and entrapment as it sought to assert ever more dangerous levels of political influence. In the midst of this, came a spectacular crime that provided a catalyst for all these elements.
In 1983, an armed robbery of the Brinks Mat warehouse near Heathrow Airport netted over £26 million in gold and sparked a long and controversial police investigation. The majority of the gang involved in the actual heist were soon apprehended, but it was the tracking down of the disposal of the proceeds – what was to become known as the ‘Gold Conduit’ – that was to prove labyrinthine.
A new type of criminal was emerging, connected through a global underground network to a rapidly expanding drug business, and able to launder cash through offshore financial systems and international property deals from the Docklands to the Caribbean. And what this amount of money meant in terms of bribes, when a corrupt ‘firm in a firm’ still existed, made any police operation extremely vulnerable.
Scotland Yard’s Criminal Intelligence department, C11, began extensive surveillance on the Gold Conduit, sending one of its officers, Detective Constable John Fordham, to spy on the property of low-profile criminal Kenneth Noye in 1985 – with tragic results. Noye killed the man and claimed self-defence.
When interviewed by the senior investigating officer, Detective Chief Superintendent Brian Boyce, Noye offered him a £1 million bribe. Boyce had responded to a Masonic handshake, misleading Noye into believing that he was ‘on the square’ and that they could talk in confidence. Instead, Boyce reported the conversation. Noye also mentioned another senior police officer, Commander Ray Adams, as someone that could vouch for him. From the 1970s, Noye had been a registered informant of Adams when he worked for the regional crime squad operating in south-east London and Kent. And they were fellow freemasons.
The aftermath of Fordham’s death saw a major reorganisation of the Brinks Mat investigation, the Gold Conduit was now targeted by a specialist operations task force, led by Detective Chief Superintendent Boyce and C11 Commander Phil Corbett. A nexus of offshore finance and reinvestment of money in the cocaine trade centred on Florida. The task force choice of senior officer to go out and investigate this was a controversial one. A pioneer of the supergrass system, Detective Chief Superintendent Tony Lundy had faced allegations of corruption in the past. Throughout 1986, a television documentary had been in production about his relationship with a drug trafficking informant. In July of that year, a special agent of the Florida Department of Law Enforcement recorded a British member of a US cocaine cartel claim that they had an inside man in Scotland Yard. Many suspected Lundy, though he has always vigorously defended his reputation and asserted that a Masonic conspiracy between criminals and bent detectives used him as a scapegoat.
Back in London, the Brinks Mat Task Force was facing a more homegrown form of sabotage. Micheal Relton was a criminal lawyer who specialised in defending police officers accused of misconduct and corruption throughout the Robert Mark purge and Operation Countryman, including two brothers John and Michael Ross. They were acquitted in 1982 though subsequently sacked by a police disciplinary board. John Ross reinvented himself as a ‘freelance reporter’ using his police contacts to sell tips to the tabloids and a conduit for bribes from Fleet Street to serving officers. By the mid-1980s, one of his chief contacts was Alex Maranchuk at the News of the World.
Michael Relton was also embarking on a change in career and moving into property development. In 1984, he set up Selective Estates which laundered Brinks Mat money by investing in London’s Docklands, often using the Conservatives’ new law of ‘right to buy’ to secure a discount on council properties.
By August 1986, the investigation into the Gold Conduit caught up with Relton, but he was now on the run. Task force detectives were aware of how well-connected Relton was with bent officers and feared that he might have been tipped-off. But what followed was a baffling game of cat and mouse.
In September, the task force received information from Ross that Relton was in Florida and ready to turn informant. By chance, Lundy was flying out there and he tried to make arrangements to meet the crooked lawyer and bring him back. In fact, Relton was in Paris with Ross. Lundy only learnt of this on his return to London when he was approached by a junior officer claiming that he had been offered £100,000 to go easy on the inquiries into Relton. This was later retracted and Lundy felt that this was another attempt to compromise him. Relton was finally arrested in October, for a while turning supergrass then withdrawing his cooperation.
Boyce was furious when he learned of the Paris meeting. Commander Phil Corbett cited this “flagrant breach of police protocols”, along with a whitewash of an internal inquiry into Freemasonry, as reasons for him to resign as head of C11.
It was suspected that there was a concerted effort to undermine the Brinks Mat investigation, both inside and outside of the police, centred around south-east London.
Detective Constable Alan ‘Taffy’ Holmes was better known for his skills as a social organiser and ‘tribe scrounger’ for the Brinks Mat task force than as a busy, proactive detective.
An official report refers to how “he enjoyed his squad life and the glamour that surrounded such a posting”. A heavy drinker, he led a precarious life, dividing it between his home and family in Croydon and his mistress Jean Burgess, the ex-wife of professional villain Henry ‘Chick’ Burgess.
Although in 26 years of service he had not risen far in the job, he was a senior Freemason, in 1986 becoming Worshipful Master of his local Lodge of Bensham Manor, and by the end of that year seemed to be privy to a goldmine of information.
He confided to a friend and fellow local officer, PC Derek Haslam, that he had come across a potential conspiracy to import £100 million worth of cocaine that involved corrupt senior police officers and customs officials and that he was planning to sell the story to the press for £250,000. When Haslam questioned the wisdom of such a move, Holmes insisted that he was working with an intermediary – someone with good press connections – a private investigator called Daniel Morgan.
Daniel Morgan had set up Southern Investigations in Thornton Heath in 1984 with Jonathan Rees as fellow director. Rees had some contacts in the local underworld and had spent a lot of time cultivating a network of police in the area, particularly plainclothes detectives. Morgan complained to his brother Alastair Morgan that “I’ve driven 40,000 miles this year and Jon just props up the bar drinking with his police mates”.
Things had come to a head in 1986 when, behind Daniel’s back, Rees had done a private job for Belmont Car Auctions – a cash-in-transit security job that they were not fully insured for. Rees had used a friend, Detective Sergeant Sid Fillery; and his two brothers-in-law Glenn and Garry Vian, freelance heavies with criminal connections. The money had been stolen under dubious circumstances and Daniel suspected a scam, as did Belmont, and Southern Investigations was sued for the lost money. At the beginning of 1987, Daniel told his brother that he was ready to break up the company. In the meantime, he was planning to go to the press with the story Taffy Holmes had fed him.
February 5 1987 saw the end of the Wapping dispute, the last great exercise in union-bashing of that decade. Riot police had come down heavily on the pickets so that not a single day’s production had been lost. As the Murdoch empire had now secured itself in a new deregulated fortress, it clearly owed a debt of thanks to the Met. And, the day after the end of the strike, there was a very curious shuffle occurring on the fifth floor of Scotland Yard.
There had been much internal debate about a suitable replacement for Phil Corbett as he resigned from C11. Head of Criminal Intelligence is a crucial appointment and those factions that were concerned about corruption in the Met were keen that his successor should not only be beyond reproach, but also not part of the Masonic network that had so often been used by bent officers in the police service. Commander Thelma Wagstaff was the highest-ranking female officer in the country and had an impeccable service record. But, on being offered the top post at C11, she was told that one of the reasons for her appointment was that, as a woman, she could not belong to the all-male Brotherhood of Freemasonry. However, on the first day in her new job, to her astonishment, she was informed that she had already been replaced by another officer.
The new head of C11 was Commander Ray Adams, Kenneth Noye’s handler and very definitely a Freemason. Indeed, he attended the same lodge that Taffy Holmes was now Worshipful Master of. They were neighbours after all, though Adams lived in considerably more splendour in a mansion that backed onto Addington golf course, with a lavish lifestyle that he attributed to the fact that his wife, a statuesque Norwegian model, was independently wealthy.
He was a high flyer and controversial figure – who had been subject to 11 complaints between 1965 and 1985, all either unsubstantiated, withdrawn or not proceeded with – and renowned as an informant handler. He had cultivated professional relationships with many villains, including Chick Burgess, and had worked his way up through the febrile world of south-east London, having served with many local officers such as Sid Fillery. He was now, in effect, the most senior detective in the Met as C11 oversaw most covert operations and the handling of high-level informants.
There is evidence that, by March 1987, Daniel Morgan had been talking to journalists about a story of police corruption and was also becoming increasingly worried about his own security. His partner Rees had developed his own press contacts. Alex Maranchuk at the News of the World had just become the deputy news editor and would go on to use Rees as well as other conduits for police information like John Ross. Meanwhile, Daniel confided to his brother Alastair and other associates increasing disquiet about bent coppers, particularly in his own neighbourhood. On 9 March, Fillery’s crime squad arrested a murder suspect, meaning that the detective sergeant was now free to be involved in the next murder investigation on his patch. That night, Fillery met Rees and Daniel at the Golden Lion pub and a heated argument was witnessed between Fillery and Morgan. The following evening, Daniel and Rees met at the same pub to meet a third party who never turned up. Rees left about 9pm, Daniel a few minutes later. He was murdered in the car park by an assailant with an axe.
Corruption’s Poisonous Spread
Sid Fillery severely undermined the inquiry into Daniel Morgan’s murder. He destroyed evidence and connived to persuade Alastair Morgan, who had early suspicions about Rees’ involvement in the crime, to leave London. The investigation continued to be compromised, even as it finally targeted Rees and Fillery. Tipster John Ross inveigled his way into the incident room and news of their impending arrests for 3 April leaked, giving Rees and Fillery foreknowledge of it. They were quickly released with all charges dropped.
On the same day of the arrests, Derek Haslam apprehended drug dealer Raymond Gray who he had targeted as part of an operation he was running out of Croydon. Haslam got Gray to turn informant on a south-east London gang with links to the growing drugs trade in that area. Gray told him that they had a high-ranking bent detective in Scotland Yard and, in a taped interview, gave him a name: Ray Adams. The anti-corruption squad CIB2 was called in to investigate allegations that Adams and other south-east London detectives had been on the take, and that Adams had planned to act as middle-man in the proposed bribe by Kenneth Noye to DCS Boyce over the Brinks Mat operation. But the CIB2 investigation was soon compromised by interference coordinated by a close friend and fellow Mason of both Haslam and Adams: Taffy Holmes.
At a Lodge meeting, Holmes told Haslam that Adams wanted access to the tapes that incriminated him. Threats were made via Taffy’s lover Jean’s ex-husband Chick Burgess. Haslam tried to protect Taffy from the inquiry, knowing that he could be in serious trouble through his actions on behalf of Adams. But, by now, CIB2 knew that there was a leak and went after Holmes.
Facing grave charges, Taffy now believed that he had been betrayed by Haslam and told a colleague he planned to kill him. It was this threat and others that forced Haslam to move house more than once. As a known whistle-blower on police corruption, he was now in constant danger. In an increasingly distressed state, Taffy was now minded by a close associate of Adams, Detective Sergeant John Davidson. On 28 July, Taffy Holmes was found dead in his home from a gunshot wound to the chest. The official verdict was suicide.
Derek Haslam had already informed the senior investigating officer on the Morgan murder of Daniel’s plan to sell a story on police corruption with Taffy Holmes. Three officers followed up this line of inquiry only to be mysteriously dropped from the investigation that summer.
Operation Russell cleared Ray Adams from any allegations of corruption or of interference in the investigation itself. But an internal report by Thelma Wagstaff on the circumstances surrounding Taffy Holmes’ death was extremely critical of how the inquiry was conducted by CIB2.
In March 1988, the inquest into Holmes’ death withheld information about the corruption inquiry and that Taffy had been under investigation. The official line was that he had committed suicide due to turmoil in his private life. At the Daniel Morgan inquest, one month later, shocking allegations were made by Southern Investigations’ bookkeeper Kevin Lennon. He alleged that Rees had told him that he planned to have Daniel killed and replace him with a new partner: Sid Fillery. The latter claim at least was proved correct, as Fillery had just retired from the police service and was now working at Southern Investigations. But the inquest was to conclude that there was no evidence that could link anybody to the killing.
In July 1988, Michael Relton went on trial and faced the consequences of giving up his supergrass status and remaining quiet about police corruption surrounding Brinks Mat. He was convicted and sentenced to 12 years.
As for the new partnership of Jonathan Rees and Sid Fillery, business was booming as they offered ever more dubious investigative services. The so-called ‘dark arts’ of phone-hacking, data theft, information blagging, entrapment, and break-ins had become the norm on Fleet Street, but it was always best to make sure such things were contracted out.
It was a lucrative trade. In one year alone, they received more than £166,000 from the News of the World. Southern Investigations also became a major conduit of information between corrupt police officers and the media. Any proper examination of the dark arts by the Met could expose some uncomfortable truths about its own organisation so it backed off. And, as the Murdoch press cultivated contacts at Scotland Yard, it nonetheless showed little concern for the criminality of its business associates – employing Rees even after he had been jailed for a conspiracy to take a woman’s child away by planting cocaine on her.
In 2007, the editor of the News of the World, Andy Coulson, resigned to become Prime Minister David Cameron’s communications director. A criminal media nexus now exerted political influence. It was the ultimate ‘firm in a firm’, with a new and very resilient variant of corruption. 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.
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