Two men who stole a memory stick from Pippa Middleton were rumbled after they tried to sell photographs they found of the Duke and Duchess of Cambridge to the Sun, the Leveson inquiry has heard.

The memory stick was stolen from Middleton's car in 2008 and when the thieves discovered photographs of the royal couple they rang the Sun asking for £25,000.

The paper's royal editor told the Leveson inquiry on Monday how a member of the public had phoned his newsdesk claiming he had photographs of the royal couple on holiday in the Caribbean, but he had become suspicious when he had failed to show up for an initial meeting at Paddington station.

Duncan Larcombe said: "He didn't sound like an Old Etonian on the phone, so I was confused as to how he would have got these pictures."

Larcombe explained that in the wake of the death of Princess Diana, the paper had a policy of checking the provenance of all photographs taken of the duchess, so he rang Clarence House.

Eventually the man turned up with another individual looking for £25,000 and at this point the Sun took a memory stick of the photographs to assess them further.

The paper then got a call from the police to say Pippa Middleton's car had been broken into that morning and in the back was a camera. The paper handed the memory stick over to the police and two men later admitted theft.

Although the Sun did not use the pictures, it did publish an article describing what duke and duchess were doing and wearing in some of the photos.

In his written witness statement, Larcombe told how there were "rules to ensure there was no repeat of the 'dark days' when Princess Diana was aggressively pursued in 2007".

He said he had played a role in the drawing up of an internal policy at the Sun in which it was "agreed not to publish pictures of Kate Middleton unless she was with Prince William and they were under the protection of trained officers".

He defended the paper's decision to publish a photograph of the duchess pushing a shopping trolley around a supermarket in Angelsea shortly after the royal wedding.

He said there was a public interest defence in that the picture showed Kate was behaving like "just a normal, down-to-earth person" who was happy to go shopping on her own days after two billion people had watched her become part of the royal family.

If she had been on honeymoon, the paper would have treated it differently because they would have considered that to be an invasion of privacy, Larcombe said.

He added that the paper had since turned down photos of Kate Middleton shopping in Tesco taken by a member of public.

He also told Leveson the paper frequently turns down pictures if there is any suspicion of invasion of privacy such as pictures of Prince Harry on holiday in the US or recent pictures of a royal dancing on a table at a London nightclub.

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