Archer pays back £1.5m to 'Star' for libel award

Jeffrey Archer's disastrous week did not improve yesterday, when more than £1.5m of his money was paid to the Daily Star. Express Newspapers announced that the disgraced former Tory party deputy chairman – now in Lincoln jail after breaching open prison rules – had settled his libel case debt.

Fifteen years after the millionaire author was awarded £500,000 in a high-profile libel action against the newspaper, which claimed he had sex with Monica Coghlan, a prostitute, he returned the money and a "majority of the substantial legal recovery costs".

With £750,000 in recovery costs and £300,000 in legal fees, the total is believed to amount to more than £1.5m. The out-of- court settlement, however, is said to fall "far short" of the amount Express Newspapers was seeking. The case was due to go before a High Court judge today where the Daily Star's lawyers were expected to claim £3.6m in interest and legal fees.

Despite the amount falling short of expectations, an Express Newspapers spokesman said last night: "We are satisfied with this outcome."

Archer, 62, was given a four-year jail sentence at the Old Bailey last July for what the judge described as the most serious perjury he had known or read about in law books. After deliberating for more than 23 hours, the jury found the peer guilty of two charges of perjury and two of intending to pervert the course of justice at the 1987 libel trial. The court was told he had used a fake diary to win his case and had asked Ted Francis, a friend, to provide an alibi. Within minutes of the verdict, the Daily Star issued a writ against Archer.

"Express Newspapers announced today that Lord Archer has settled his debt with the Daily Star," the group said in a statement last night. "Archer ... has repaid the newspaper the original sum, plus the majority of the substantial legal recovery costs. The 1987 judgment against the Daily Star, and its then editor, Lloyd Turner, has been set aside by the courts as it was obtained by fraud."

The news comes at the end of an extraordinary week for the disgraced peer, who was transferred from North Sea Camp open prison to a closed category B jail for failing to seek permission to attend a party with his wife at the home of Gillian Shephard – a former Tory secretary of state for education – while he was on day release.

The Prison Service described his failure to inform the authorities as a "serious breach of trust". The situation was compounded after it discovered he had had lunch with an off-duty policewoman and a senior prison officer at Lincoln last Wednesday while working at a local theatre.

The officer has since resigned and the policewoman is the subject of a professional standards investigation. Archer is expected to be moved to another open prison soon.