Rebekah Brooks, the former head of Rupert Murdoch's British newspaper business, authorised an illegal 4,000-pound payment for a picture of Prince William dressed as a "James Bond girl" and wearing a bikini, a London court was told on Thursday.
Brooks, the former editor of Murdoch's News of the World and Sun tabloids, also agreed cash payments to a Ministry of Defence official for a series of stories, including one about the death of William's former commanding officer in Afghanistan, the Old Bailey heard.
Former Murdoch confidante Brooks is on trial accused of an array of offences including conspiracy to hack phones and two counts of conspiracy to commit misconduct in a public office. She denies all offences.
Prosecutor Rebecca Chalkley said Brooks had approved a payment in 2006 to a soldier at Sandhurst military academy for a picture of William attending a "James Bond" themed party wearing a bikini and a Hawaiian shirt.
William trained at Sandhurst from 2005 before graduating as an army officer in December 2006.
The court heard a journalist at the Sun emailed a senior colleague asking for approval for the 4,000 pound payment "to his best contact" at Sandhurst who had obtained the picture from another soldier based there.
The email was forwarded to Brooks, Sun editor from 2003-9, who responded "OK", Chalkley told the jury.
The story appeared in the paper under the headline "Willy in a bikini!" and added that William's then girlfriend and now wife had attended the party in a wetsuit. The picture of the prince was not used and instead a mock-up of William's face above a man's body in a bikini accompanied the report.
A cash payment for the story was paid through the Thomas Cook travel agency and collected by the soldier's wife, the court heard.
A statement from royal press secretary Patrick Harrison was read to the court in which he said he had told a Sun reporter calling on behalf of Brooks that the picture should not be published as it would breach William's right to privacy.
Later the jury were taken through a series of "exclusive" military stories by another Sun correspondent from 2006 to 2009 which the prosecution said were related to thousands of pounds of cash payments to a Ministry of Defence employee.
One of these was the 2007 front page story about the death of William's instructor at Sandhurst in a roadside bombing in Afghanistan.
"Morning boss, while I was on holiday in Madrid I came up with a belting exclusive about William's major being killed by the Taliban, which was massively picked up. Would it be alright to pay the contact 3,000 pounds through Thomas Cook," the reporter wrote in an email to Brooks read to the court.
She replied: "Brilliant scoop. Of course on payments."
The court was shown more than a dozen stories by the reporter, who cannot be named for legal reasons, and heard he sent numerous other emails to Brooks asking for approval for related payments to his "number one military contact" for the exclusives which were "cheap at the price".
Most received the single word reply "yes" from Brooks, the court was told.
Brooks, who ran News Corp's British newspaper arm until 2011, is on trial with seven others. The case is expected to last until April next year.