My fellow campaigners were paranoid, or so I thought. They would never arrange anything over the phone. Meetings would take place in back gardens or in dank, north London pubs where the singing of the local drunks would drown out our discussions. We had to take the batteries out of our mobiles and we had code names for various government buildings, such as "Mandelson's Helmet" for the Dome.

This was life in the Campaign Against Arms Trade where, for two years from May 1998, I was campaigns co-ordinator. I could see the point: arms companies do design and build the world's most sophisticated surveillance equipment. Yet I also found it faintly amusing. Would the multimillion pound international arms business really bother about a few grubby lefties plotting to splash red paint around outside shareholder meetings?

But it now seems that the conspiracy theorists were right. For most of the 1990s, the organisation was infiltrated. According to the Sunday Times Insight team, an investigation agency was paid £120,000 a year by the UK's largest arms company, BAE Systems, then British Aerospace, and was running at least six "agents" who were posing as campaigners. They are said to have copied private letters, rifled through diaries, monitored staff and volunteers, and downloaded a copy of our database, along with names, addresses, donations and bank account details, which were offered for sale at £2.25 a name. The World Development Movement was also targeted, according to the Sunday Times, because of its anti-arms trade campaign. At the height of our "Stop the Hawks to Indonesia" campaign, information was being passed to BAE on a daily basis. BAE has denied encouraging anything illegal.

The Campaign Against Arms Trade has always been open about its support for non-violent direct action against arms companies and government targets - lying in front of directors' cars, for example, or unfurling banners from the roofs of company buildings. It also knew it was being monitored. When activists occupied the offices of an arms exhibition organiser in the late 1990s, they saw bookshelves lined with back copies of our newsletter, plus our reports, leaflets and briefings. During a week of action against another arms fair, someone tipped us off that the telephone engineers sitting in a van across the road were actually Special Branch officers.

I should have known at the time that the monitoring had progressed to infiltration. As soon as we arrived at South Bank University, planning to heckle a lecture by Sir Richard Evans, chairman of BAE, the company's heavies sat down next to us. And at BAE's shareholder meeting every year, I did wonder how the board had such ready answers to all our questions.

All this James Bond stuff is initially exciting: "Wow, an arms company has files on me!" But once the thrill has worn off, the implications sink in - not just the betrayal by people we trusted as fellow campaigners, but also for democracy. If the Sunday Times's allegations are true, one of the world's richest companies, which receives millions in government contracts and subsidies each year, resorted to underhand tactics when it was unable to win the arguments made against it.

Yet the affair could have positive outcomes. The journalists' favourite question at the demonstrations outside the recent arms fair in London - "Do you think this will make any difference?" - has been answered. BAE clearly thinks campaigners do make a difference. And with all the publicity, anti-arms trade campaigns can expect donations and support to increase. BAE may have gained some mostly irrelevant insider information from a small but feisty organisation. But in the long run, we've won the day.