Diana 'feared Al Fayed bugging'

Lady Sarah McCorquodale believed the Dodi relationship was ending

Princess Diana thought Mohamed Al Fayed was spying on her on his luxury yacht, an inquest into her death has heard.

Her sister Lady Sarah McCorquodale said Diana raised her suspicions on the phone days before she and Dodi Al Fayed died in a Paris car crash in 1997.

Lady Sarah said Diana's former butler Paul Burrell was given a box containing sensitive documents not seen since.

She also said she thought Diana might have married heart surgeon Hasnat Khan whom she had had a relationship with.

'Boat bugged'

Ian Burnett, for the coroner, asked Lady Sarah if the princess spoke to her from the boat about bugging.

She told the inquest at London's High Court: "Yes, she thought the boat was being bugged by Mr Al Fayed senior."

I don't think she believed the relationship was ended or she hoped it wasn't Lady Sarah McCorquodale

Lady Sarah said that from her last phone conversation with Diana she believed the relationship with Dodi was coming to an end.

She said Diana was also distraught because she felt she had been misquoted in a French newspaper so it appeared she was criticising the government about landmines.

Lady Sarah suggested that Diana should speak to Dodi but she said the Princess replied "that would be a waste of time".

Relationship hope

She told the court: "From that, I just did not think that the relationship had much longer to go."

Asked about Diana's relationship with Mr Khan, Lady Sarah said: "I believe there was a strong possibility that they might have married."

On the couple's split in the summer of 1997, she said: "He couldn't take - if that's the right word - her lifestyle, and was a very committed surgeon and the two didn't go together.

"I don't think she believed the relationship was ended or she hoped it wasn't."

Lady Sarah said there was no suggestion from Diana about an engagement to Dodi or being pregnant by him.

Wooden box

Asked about a wooden box Diana kept sensitive property in, Lady Sarah said she was "100%" confident there were no letters from the Duke of Edinburgh inside.

Lady Sarah and her mother Frances Shand Kydd shredded some documents belonging to Diana found at Kensington Palace after her death.

She told the inquest: "We agreed beforehand that anything that was sensitive or would be distressing to the boys then, or in 30 years time, should be destroyed and that's what we both did because there was a lot of correspondence."

It's an unanswered question, yes Roger Milburn Scotland Yard detective

Mr Al Fayed believes Diana was killed by MI6 on the orders of the Duke of Edinburgh because she was about to get engaged to Dodi and was pregnant with his child.

He believes letters from Prince Philip may hold the key to their deaths.

Items listed

Roger Milburn, an acting detective inspector who investigated Diana's former butler Paul Burrell, told the inquest about the contents of the box the princess kept at Kensington Palace.

He said he had discussed the box at a meeting with Lady Sarah in November 2000.

Mr Milburn was investigating Mr Burrell, who was suspected but later cleared of stealing property from Kensington Palace.

Lady Sarah showed Mr Milburn a box which she said had been Diana's, and requested police ask Mr Burrell about missing items.

Mr Milburn's notes from the meeting listed in abbreviated form four items that have never been found.

Matter of concern

They included a signet ring from James Hewitt, letters from the Duke of Edinburgh, and former private secretary Patrick Jephson's resignation letter.

There was also a tape called Confessions of George Smith, a former valet who later alleged that he had been sexually assaulted by another man.

Mr Burrell was tried in 2002 but the case was dropped following intervention by the Queen.

Michael Mansfield, representing Mr Al Fayed, asked Mr Milburn whether it was a matter of concern to him that the items were still missing.

Mr Milburn said: "It's an unanswered question, yes."

The hearing continues.