This is Part Three of a BuzzFeed News Investigation.

Part One: This Tory Donor Was Secretly Filmed Dropping Cash-Stuffed Rucksacks At Post Offices.

Part Two: Lycamobile’s Offshore Empire Is Embroiled In Sri Lanka’s Hunt For Stolen Assets.

Suspicious six-figure Post Office cash drops by the Lycamobile group were reported to the police as "prima facie evidence of money laundering" a year ago by the telecoms giant's biggest commercial rival, BuzzFeed News can reveal.

Lebara, a major competitor in the market for prepaid calling cards used by Europe's migrant communities, deployed a team of corporate spies to tail Lyca's bagmen all over London and reported their unorthodox cash movements to the National Crime Agency (NCA).

A major investigation by BuzzFeed News revealed this week that Lyca deploys three men to drive around in unmarked people carriers depositing rucksacks stuffed with hundreds of thousands of pounds twice a day across London. The Conservatives have accepted £1.3m from Lycamobile, and Labour MPs have demanded that the party put a freeze on any further donations from the telecoms giant and consider handing back its money.

The former director of public prosecutions Lord MacDonald QC said the cash desposits caught on film by BuzzFeed News were "deeply suspicious" and demanded an urgent investigation.

Lebara has now confirmed that it orchestrated its own wide-ranging campaign of espionage from May to September last year and passed its findings to the authorities. The operation was commissioned by the prominent law firm Mishcon de Reya, which acknowledged in a letter: "We did, on behalf of our client, engage the services of a private investigator firm to investigate in a lawful and proper manner alleged improper business dealings by Lyca.

"In the course of their investigation the investigators found prima facie evidence of money laundering which they then followed up ... After obtaining criminal legal advice, our client passed the results of the investigation to the appropriate authorities." The NCA refused to comment on what action, if any, it had taken as a result or whether the evidence had been passed to any other government agency.

Lebara insisted that its investigation was geared to probe "alleged improper business dealings by Lyca" and not to obtain commercial secrets.

BuzzFeed News has seen documents, photographs, and footage that reveal how the surveillance targeted Lycamobile chair Subaskaran Allirajah and other bosses including the firm's chief executive, Chris Tooley.

A team of private detectives – many of them former Scotland Yard detectives or government intelligence officers – also dug dirt on Lyca’s finances and political connections. They pored over its donations to the Conservative party, now totalling £1.3 million, and its links to the controversial regime of a former Sri Lankan president accused of rampant corruption and war crimes.

They examined its financial accounts and noted that the company had avoided corporation tax for years by flowing money offshore through a complex network of companies.

But the most explosive of all their findings was the discovery that three cash couriers working at Lyca’s east London depot were ferrying rucksacks stuffed full of around £250,000 a day to Post Offices across London.

Lebara's secret spying campaign illuminates the bitter battle for a growing and increasingly lucrative corner of the telecoms market. But it also shows how bizarre Lyca's practices seemed to a rival in exactly the same line of business. Lyca has said that its huge, scattered cash deposits are perfectly ordinary "day-to-day banking" – but Lebara was so surprised by what it saw on the footage gathered by its spies that its lawyers formed the conclusion its rival could be engaged in money laundering.

The investigation stalled last autumn because, sources say, Lebara got cold feet about its role and did not want it to become public knowledge that it had spied on its rival. The surveillance footage and reports produced by its investigators gathered dust for a year.

However, in May a source with knowledge of Lyca’s business practices approached BuzzFeed News with claims about unusual cash movements at its depot. Our reporters spent the next five months investigating the tip and conducted our own surveillance that showed the bagmen were pumping up to £1 million a week into the company’s Santander bank accounts through Post Office deposits. We also discovered that Lycamobile’s offshore empire is facing investigation as part of an international probe into billions of dollars of state assets allegedly looted by a former Sri Lankan president. Those revelations, published this week, came as no surprise to Lebara, which was sitting on its own incendiary evidence. Today we spill the secrets of its campaign of espionage.