'Nazi' claim dropped in Mosley F1 sex case.

The High Court case over what the News of the World termed Max Mosley's 'sick Nazi orgy with 5 hookers' has taken a new twist, after the newspaper was forced to drop its 'Nazi' allegations and deny suggestions of blackmail.

The claims that there were 'Nazi connotations' to the ?2,500, five-hour sado-masochistic sex session in which the tabloid says Mosley participated in an underground Chelsea 'torture dungeon' have always been vigorously refuted by the embattled FIA President, who insisted they had been fabricated purely to exploit the fact that he is the son of the infamous Oswald Mosley, leader of the pre-war British Fascist Party.

Now, after a key witness proved too distressed to give evidence against him, the News of the World has had to drop the allegation. Woman E - a dominatrix enlisted by the Sunday red-top to secretly film the orgy - was the only participant who asserted that the 68-year-old had ordered a Third Reich theme.

The other four women involved all backed up Mosley's insistence that there was absolutely no Nazi element [see separate story - click here], arguing that German had only been used because it sounded 'horny' and that it was merely a prisoners-and-guards scene.

Lawyers for the newspaper revealed neither Woman E nor her husband had been called as witnesses in the privacy hearing this week - as had originally been intended. Woman E was offered ?25,000 to smuggle a secret camera into the party, but The Times reveals the News of the World ultimately paid her just ?12,000, putting the blame on the recent 'credit crunch'.

"Her (Woman E's) emotional and mental state is such that it would not be fair or responsible or reasonable to give evidence," Mark Warby, QC, for the News of the World, told Judge Mr Justice Eady. "It is a most regrettable situation."

The newspaper also elected not to call any more journalists to the witness box following testimonies from both editor Colin Myler and chief reporter Neville Thurlbeck, who wrote the shocking front page expos?. The latter has argued that it was in the public interest to plant the camera, in order to prove that Mosley had indulged in canings so bloody and violent that they could be classified as criminal assaults.

Thurlbeck contends that the military uniforms, lice inspection, intimate shaving and simulated rape are all evidence of a concentration camp scenario, with The Times stating that the court had similarly heard an audio recording of a previous S&M party attended by Mosley in which a woman begging for mercy says: 'But we are the Aryan race, blondes.'

"I don't know an English prison where inmates are beaten on their bottoms with a stick until their bottoms bleed," Thurlbeck told the court, in response to Mosley's QC, James Price, arguing that the orgy was 'clearly' akin to an English jail scenario.

"I know of no English prison where the warder will deliver those blows and count them out in German. I know of no English jail where the inmates then have sexual intercourse with the warder who has just administered the blows.

"She (Woman E) took part in lice inspection. She took part in hair-shaving. They took part in the use of fake German accents. They took part in beatings that were counted out in German surrounded by girls in German military uniform. It certainly wasn't Hansel and Gretel."

Thurlbeck also found himself having to defend his actions in having requested exclusive follow-up interviews with two of the women involved, assuring that if they agreed to his suggestion they would receive ?8,000 each and see their anonymity preserved through pixellated pictures in the paper.

"You are giving them a choice between co-operating, giving you an interview and getting paid," Mr Price, QC, said. "If they don't, they get their pictures in the newspaper in the most embarrassing and humiliating circumstances."

"I am offering money for an anonymous interview," replied Thurlbeck. "I am not blackmailing at all."

Myler, whilst acknowledging that the emails could have been interpreted as threatening, similarly rebuffed any suggestions of blackmail to the correspondence, adding that he was particularly aware of the sensitive nature of using hidden cameras from his experience as the editor of another Sunday newspaper which had once published covert shots of Diana, Princess of Wales at a gym.

Mosley is seeking record damages, with his lawyers claiming such 'gross intrusion into his private life, involving such intimate and demeaning material, is unprecedented'. The judge must decide whether the human right to privacy - part of the European Convention of Human Rights - covers sado-masochistic and paid-for sex

Pay-outs thus far in privacy cases have resulted only in modest compensation, with the highest-known sum being the ?50,000 DJ Sara Cox received for the publication of unauthorised photos of her honeymoon.

The case continues.