Sun head of news Chris Pharo said he was shocked when then Sun editor Rebekah Brooks admitted paying police officers when she appeared before MPs in 2003.
But he said that nothing changed at the newspaper as a result.
Facing questions at Kingston Crown Court, where he standing trial along with five colleagues over payments to public officials, he said
“It caused a great deal of shock and consternation in the office and in the wider industry,” he said.
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“It came as a shock to me that Rebekah would blandly state such a thing.”
Pharo said he was too junior to take any action about it at the time.
“There was nothing I could do about it in 2003 or during the rest of my career”, he said.
“There was a policy to have a cash payment system and Rebekah Brooks was the all-powerful head of the organisation.
“I had a great job that I wanted to keep at that company, it was a very important job that I was very proud of.
“I was prepared to go along with the company policy.”
Pharo denied he was trying to shift the blame on to others, but admitted he does resent the way evidence was passed by News International to police.
“I don't entirely blame the company, but I wish I had the foresight to see where this would all end up”, he said.
3m missing emails at News International
“What really grates me is the company has provided a fraction of the evidence in the case and we fitted the bill to be handed over.
“I would question where a great deal of the evidence has gone, with 3m missing emails, with evidence which took our efforts to uncover the company payments requests.”
Defence lawyer Richard Kovalevsky asked: “Rebekah Brooks went in front of the Select Committee and said yes, we do pay police officers.
“After that statement, we do pay police officers, did anything change at The Sun.”
Pharo replied: “No.”
He told the court he was dismayed when Mrs Brooks turned down the MP expenses information being offered for sale to the highest bidder by a public official.
“It informed me, disappointingly, the then-editor, Rebekah, was disinterested in stories of that caliber”, he said.
"I thought she had made a dreadful mistake which she, three days later, agreed with when it dawned on her the scale of it.”
Pharo said he has been assessing internal emails allegedly showing reporters revealing their sources to him as pubic officials.
But he replied: “You can't trust a journalist's description of who their sources are and frequently their expenses.
“I didn't invent tabloid journalism or the way they big up their sources.”
Prosecution lawyer Peter Wright: “So you can't trust what a journalist tells you?”
Pharo replied: “Yes.”
“To be frank it came down to whether the story is in the public interest, whether I thought it was an important story, and the amount of money being asked for, and the rest I didn't concern myself with.”
Pharo said if he challenged reporters on their sources, he would face a series of rows that would stop him doing his job.
“The journalists make requests for cash payments, the only options is to have a full scale row with the journalist or accept the premise they have a source who requires payment”, he said.
“If you are going in to a full scale battle with every journalist as to who the source is and where the money is going, I would never have got a day's work done.”
Judge Marks asked how many times Brooks, as editor, had turned down the payment requests taken to her by Pharo.
“A very very small percentage, two or three per cent”, said Pharo.
“You might get a protracted process of her stalling on the payment because she suspected that too much money was spent or it might end up in the wrong place.
“In two or three percent, she would tear the form up and block it.”
The court has heard Brooks took sole charge of approving cash payment in February 2006, despite Pharo's pleas that this would “dramatically increase my workload”.
He said Brooks would sometimes be unavailable and the cash requests would stack up on his desk.
“It will mean if you can pay cash for information, then they will ring another newspaper that will pay them cash.”
However, he said payments to public officials also had to be judged on the public interest of the information they are leaking, and they would not necessarily by break the trust of the public.
He said: “I believe for that trust to be broached, the misconduct has to be serious enough and involve the leaking of confidential information that was damaging to the public good.
“In a free society, journalists find out the truth and they write about it.”
'The vast majority of payments did not go to public officials'
Chris Pharo said that the “vast majority” of payments he is accused of approving to police officers and prison officials did not go to public officials.
Facing cross examination at Kingston Crown Court, where he standing trial along with five colleagues, he said: “Public officials have been paid but I don't believe the vast majority of cash payments in these bundles have ended up in the hands of public officials.
“I think it's possibly been used to pay other sources, and some has ended with the journalists.
“It was unchallengeable, the cash payments system was unchallengeable for more than a decade and a half.
“It was a system the company wanted the newspaper to run.
“In these circumstances, the system is ripe for abuse, I concede that.”
Peter Wright QC, prosecuting, argued that Pharo did not question who the sources were as long as the stories were good enough.
“You didn't care who they were, you didn't care what they were doing, so long as you got the story”, he said.
Pharo said: “I accept I may have been reckless on occasions, but I did care.”
He added: “I accept that public officials were paid on occasions, to my knowledge.
“What I can't say is when, whom, or how, with any certainty, because of the cash payments system and a journalist's right to protect their sources.”
Wright said Pharo had not paid public officials while a junior reporter in Bracknell, asking: “What changed when you became a journalist at The Sun?”
“The newspaper offered cash for stories with an advert on page two, saying we pay cash for stories”, said Pharo.
Wright countered: “You knew in the way you conducted yourself as a young journalist that you didn't pay policemen for stories – what changed?
“Paying police officers became acceptable to you.”
Pharo said: “No it didn't.”
Wright continued: “The fact is these papers are littered with references to paying police officers.
“The point you are trying to make is a deception to the ladies and gentlemen of the jury.”
He accused Pharo of arrogance by assuming he and his Sun colleagues can decide what is in the public interest.
Wright said: “You were prepared to spill whatever you felt was in the public interest across your newspaper, irrespective of whether it was confidential or not.
“You don't think it is a little arrogant that you assume the mantle of assuming what you report will make the public safer.”
Pharo replied: “No I don't.”
Wright suggested a story about the Mumbai terror attack may have revealed confidential details about police response times and possible targets that were being protected.
“Did it ever occur to you that the terrorist would realise they had a three minute window of opportunity”, he asked.
Pharo replied: “I think any terrorist capable of carrying out an attack, armed to the teeth, is more sophisticated than needing to read about it on page 19 of The Sun.”
And he fended off claims from the prosecutor that he had stayed silent at the police station in order to concoct a defence later.
“When you stayed absolutely silent at the police station, it bought you time to come up with a cock and bull story”, said Wright.
At the time you were being asked these questions, the truth is you had no answer to give.
“You knew journalists and staff at The Sun had indeed agreed between you to pursue a course of conduct that involved the commission by public officials of the offence of misconduct in public office.”
Pharo replied: “That's not true.”
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