Telekom denies spying on staff

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Deutsche Telekom has denied allegations in a press report that it bugged its staff's phones.

But it admitted that it had hired consultants to log the details of calls made between executives and journalists in 2005 and 2006.

The investigation was set up to root out the source of leaks of sensitive company information to the press.

The firm, which owns T-Mobile, said that prosecutors were in the process of looking into the matter.

The allegations were reported in German magazine Der Spiegel over the weekend and could cause fresh problems for Telekom with trade unions.

The company's relationship with labour leaders has been tense since it embarked on a restructuring operation to become more competitive in the face of greater competition in Germany's broadband and fixed-line markets.

Another German firm, the budget supermarket Lidl, was also recently embroiled in allegations of espionage, which it also denied.

It admitted placing secret cameras in its stores and hiring private detectives, but said the measures were aimed at cracking down on shoplifting.