Sir Frederick Barclay's nephews bugged the conservatory of the Ritz hotel after becoming "seriously concerned" that Sir Frederick was "posing a significant risk of harm" to the family business, according to documents lodged with the High Court.
The 85-year-old businessman is involved in a bitter High Court battle with three of his twin brother Sir David's sons over 94 hours of secret recordings made over a number of months as part of what his lawyers have described as "commercial espionage on a vast scale".
Sir Frederick and his daughter Amanda are suing Alistair, Aidan and Howard Barclay, Aidan's son Andrew, and Philip Peters, a director of a number of companies in the Barclay Group, after the "elaborate system of covert recording" was discovered in January.
On Monday, all five defendants filed their formal defence, in which they said they thought it was "necessary and reasonable" to bug the Ritz in order to protect the Barclay Group.
All five admit that "the recordings contained private and confidential information of the claimants" and accepted that Sir Frederick and Amanda are "entitled to general damages" for breach of confidence, misuse of private information and breach of data protection laws.
But the defendants deny that their actions caused any loss to "the claimants' economic and/or financial interests". In a statement, a spokesman for the defendants said: "As set out clearly in our defence, we do not dispute that the recordings were made and discussed between us.
"The actions we took were the result of serious concerns about aspects of Sir Frederick's conduct and were taken in the belief that they were necessary and reasonable to protect the Barclay Group's business interests from potential damage.
"We have never made, and never intended to make, any of the recorded information public."
Last month, Sir Frederick released footage appearing to show his nephew Alistair handling a listening device which is said to have been used to capture more than 1,000 separate conversations.
The High Court has also previously heard that the Ritz was sold for "half the market price" after conversations between Sir Frederick and a Saudi investor, who was offering £1.3b for the London landmark, were secretly recorded.
But Aidan and Howard Barclay hit back at that allegation in a public statement last month, accusing Sir Frederick of "consistent, misleading and damaging briefing to the media against us and our family businesses".
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