Mirror Group Newspapers have paid out £40,000 plus costs and apologised to a charity worker who the Sunday Mirror falsely accused of being involved in child trafficking.

Sinisa Nadazdin was forced to withdraw from charity work in Montenegro after the allegations, made in January 2004, destroyed his reputation and led to suspicion amongst co-workers.

The initial story, by freelance journalist Dominic Hipkins, also implicated the Christian charity Smile international, though the paper later moved to exonerate the organisation from involvement following a complaint to the Press Complaints Commission. At that time, the Sunday Mirror stood by the original claims.

Nadazdin’s success owed much to the efforts of MediaWise, the media ethics charity and consultancy, whose Director, Mike Jempson, is a member of the NUJ’s Ethics Council.

MediaWise was approached for assistance the day after the story was published and undertook research to expose the facts of the case as well as negotiating with lawyers, finally finding a firm which agreed to act on a no-win no-fee basis.

It emerged that, far from being a criminal snared in an undercover sting, Nadazdin had willingly co-operated, believing that he was helping to expose the scandal. His efforts may yet leave him and Hipkins liable to prosecution for “defaming the good name of Montenegro”.

Nadazdin said: “"I thought that by assisting Hipkins I was helping to protect children. I could not ever have believed that things would turn out in the way they did."

The story was widely circulated as fact on websites around the world.

Reacting to the success, Jempson said: “It is to be hoped that lessons will be learned all round about the importance of integrity in journalism, especially when dealing with society’s most vulnerable groups, wherever they live.”