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In a corporate-spying lawsuit brought against News Corp’s NDS Group by rival satellite television service DISH Network Corp., mild-mannered hacker Christopher Tarnovsky testified in court this week that a News Corp unit hired him to develop pirating software for them.

Though he denied using it to penetrate DISH’s security system, it is being implied that that is exactly why he was hired to develop the software.

After an introduction as one of the “two best hackers in the world,” Tarnovsky told the court that he was paid on a regular basis by Harper Collins, a publishing arm of News Corp, for 10 years, and that his first payment was $20,000 in cash hidden in electronic devices mailed from Canada.

NDS, which provides security technology to a global satellite network that includes satellite TV service DirecTV, denies the claims. They are calling it a case of reverse engineering, i.e. – looking at a technology product to determine how it works, a standard in the electronics industry.

Tarnovsky said he was asked to develop a pirating program to make DirectTV more secure, but DISH Network lawyers are accusing him of trying to “hack into DISH’s satellite network, steal the security code, then flood the market with pirated smart cards costing DISH $900 million in lost revenue and system-repair costs.”

Turns out, Tarnovsky did built a device called “the stinger” that can communicate with any smart card in the world…but never got paid.

The suit was launched by EchoStar Communications, which eventually split into two companies, DISH and EchoStar Corp, with DISH being the primary plaintiff.

“I never got money for reprogramming Echostar cards,” Tarnovsky said. “Someone is trying to set me up.”

DISH attorney Chad Hagan asked, “This is all a big conspiracy?”

“Yes,” Tarnovsky answered.

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