The BBC “fell short of the high standards of integrity and transparency which are its hallmark” in a subsequent investigation, according to a report by Lord Dyson.
The former master of the rolls and head of civil justice was appointed to look into the circumstances surrounding the explosive 1995 interview, which famously featured Diana saying: “Well, there were three of us in this marriage, so it was a bit crowded.”
Bashir breached BBC rules by mocking up fake bank statements and showing them to Diana’s brother, Earl Spencer, to gain access to the princess, the report said.
In response to Lord Dyson’s findings, Bashir apologised, saying the faking of bank statements was “an action I deeply regret” but added he felt it had “no bearing whatsoever on the personal choice by Princess Diana to take part in the interview”.
Senior BBC executives were criticised over a 1996 internal investigation which examined the mocked-up documents relating to the earl’s former employee, as it tried to determine whether or not the princess had been misled, with a key piece of evidence, a note from Diana, suggesting she had not.
The report said: “Without justification, the BBC fell short of the high standards of integrity and transparency which are its hallmark by covering up in its press logs such facts as it had been able to establish about how Mr Bashir secured the interview and failing to mention Mr Bashir’s activities or the BBC investigations of them on any news programme.”
Former director-general Lord Tony Hall, who was director of BBC news and current affairs when the Diana interview was screened, has apologised that the inquiry “fell well short of what was required”.
He said: “I have read Lord Dyson’s report, and I accept that our investigation 25 years ago into how Panorama secured the interview with Princess Diana fell well short of what was required.
“In hindsight, there were further steps we could and should have taken following complaints about Martin Bashir’s conduct.
“I was wrong to give Martin Bashir the benefit of the doubt, basing that judgment as I did on what appeared to be deep remorse on his part.
“Throughout my 35-year career at the BBC, I have always acted in ways I believe were fair, impartial and with the public interest front and centre.
“While Lord Dyson does not criticise my integrity, I am sorry that our investigation failed to meet the standards that were required.”
Diana’s Panorama interview in 1995 sent shockwaves through the monarchy with details about the state of her marriage to the Prince of Wales.
Earl Spencer claimed that in the weeks before the programme, Bashir showed him forged bank statements that related to alleged payments made to his sister’s former private secretary Patrick Jephson and another former royal household member by the security services.
The documents falsely suggested the individuals were being paid for keeping the princess under surveillance.
He also showed him mocked-up documents, relating to a former employee of the earl, that Bashir also used as he tried to gain access to the princess.