Deutsche Telekom has hired a retired senior German judge to review allegations it snooped on board members and journalists in an attempt to plug media leaks, Europe's biggest telecoms company said yesterday.

Gerhard Schaefer will also draw up a new strategy for safeguarding confidential information at the company, which is under fire for tracing phone calls between directors and reporters.

Chief executive Rene Obermann called Mr Schaefer (70) "a proven and renowned expert in data security and media freedom", adding the judge will start work on Tuesday and report directly to senior management.

The scandal threatened to widen when a German newspaper alleged that Telekom had also spied on the bank records of board members and journalists as well as details of phone calls. Prosecutor Friedrich Apostel said officials had no evidence thus far that Telekom had delved into banking records.

The Sueddeutsche Zeitung newspaper reported that Telekom had not just compiled and reviewed the telephone records of journalists and board members to hunt the source of media leaks, but had also examined their banking details.

Separately, Financial Times Deutschland reported, without revealing its sources, that a German private security firm, Desa Investigation and Risk Protection, spied on its staff in 2000. It reported that the managing director and company founder of Desa are both said to be former employees of the East German intelligence service "Stasi".

Desa is reported to have been contracted for the work by business investigation agency Control Risks Group, which is said to have been appointed by the corporate security department of Deutsche Telekom.

Prosecutors said on Thursday that Mr Obermann - who has acknowledged he knew of the call tracing but did not make this public - was not a target of their investigation and that they were focusing instead on former company leaders - former chairman Klaus Zumwinkel, who quit in February after becoming embroiled in a tax-dodging scandal; ex-chief executive Kai-Uwe Ricke; and others.

Telekom this week acknowledged illegal monitoring of phone records. The affair has caused outcry in Germany, where personal data protection is a hot topic. - (Bloomberg/Reuters)