Peter Wright said Wednesday he was "uncomfortable" to learn his employees had paid investigator Steve Whittamore $30,697 to trace information on people, The Guardian reported.
Wright told the so-called Leveson panel his newspaper, officially called The Mail on Sunday, still sanctions cash payments but as far as he knew the biggest in recent years was about $5,000.
The panel is investigating the culture, practices and ethics of the British press.
Earlier, Wright was questioned about a news article dealing with a $12 million home purchased by Lord Peter Mandelson.
Mandelson argued that because he was no longer in politics, there was no public interest in publishing such a story.
"I think there's a public interest in knowing how somebody who until a year previously had been a government minister on a generous, but not over-generous, salary was able to afford such a house," Wright told the panel.
He said the story was obtained by proper means from a member of the public.