This arc begins a year after the last, as all the others have, in 1 BBY. Kleya (Elizabeth Dulau) and Luthen (Stellan Skarsgård) receive an urgent message from Lonni (Robert Emms) asking to meet. For the first time, Luthen and Lonni meet in public rather than in their secret elevator hideout in the depths of Coruscant.
Lonni begs for safe passage for him and his family in exchange for the information he has, claiming that he's been burned and that the Empire will likely be after him soon. Luthen agrees to take them to Yavin, giving Lonni just enough hope to spill what he knows. Lonni starts by warning Luthen that Dedra Meero (Denise Gough) knows he's Axis and is trying to covertly assemble a team to apprehend him.
Then Lonni reveals what really has him shaken up - the truth about the Emperor's Energy program. After holding on to Dedra's code cert for a year, he finally dug through her files and found out about Krennic's (Ben Mendelsohn) secret weapon program a.k.a. the Death Star. He says that the massacre on Ghorman, and the Imperial occupation of Jedha and Scarif are all connected. He tells Luthen all about the Kyber crystals on Jedha, Galen Erso's involvement, everything that the Rebel Alliance needs to start looking into this.
Luthen kills Lonni after he shares this information, presumably paranoid about the Empire finding out what he now knows. He relays all of this to Kleya and urges her to flee and get this information to the others as quickly as possible. He stays behind and starts destroying their comms relay when Dedra appears.
She comes alone, cocky and confident that she has him on the ropes, but Luthen isn't going to go out so easily. While Dedra is waxing poetic about how she finally has him, Luthen stabs himself with a nearby relic. Dedra attempts to keep him alive by transporting him to a hospital, but Kleya is able to sneak in and take him off life support, as she knows he would want.
Even though Dedra is finally successful at capturing Luthen, we find out that her "victory" came at a cost. As soon as she gets Luthen to the hospital, she's arrested by the ISB and Krennic is brought in to interrogate her. He asks who she told about the secret project and how she heard about Galen Erso's involvement. He also assumes that she gave Lonni her code cert. She denies this, but also admits that there were intel bundles that were forwarded to her office by mistake. Instead of reporting them, she sifted through them for information that could lead her to Axis. But that also left the information readily available for Lonni to steal.
In the final moments of episode 12, we see Dedra is now a prisoner in an Imperial prison like Cassian once was. We don't know for sure that this is Narkina 5, the Empire is a fan of uniformity after all, but it's pretty safe to assume that it's at least a similar work camp environment. The Empire turned on her as soon as she outlived her usefulness and because her desire to capture Axis put the Death Star plans at risk.