The bare bones of the story are straightforward: Mr Fayed was approached by a man claiming to have proof confirming the Harrods owner's darkest suspicion: that the car crash in which Diana, Princess of Wales and Dodi Fayed died was murder.
The man wanted to sell the proof for pounds 10m. This was a sting. The documents are 99.9 per cent certain to be forgeries. Oswald LeWinter, the 67-year- old American made the offer, turned out to be a renegade agent the CIA has long wanted to bring down.
Mr LeWinter is, by many accounts, the most formidable confidence man in the world today, and last week, at a meeting in Vienna with Mr Fayed's security officer, John McNamara, he was arrested on fraud charges and carted off screaming to jail.
THE CIA immediately descended on Vienna in force. First, to make sure Mr LeWinter was properly bagged, then to debrief a man who has helped journalists who believe the CIA is implicated in the 1988 bombing of Pan Am 103 over Lockerbie. The other reasons the CIA was in Vienna were to make sure that the man led to it by Mr Fayed did not slip through its grasp as a result of Austria's known laxness in high-profile espionage cases, as well as Mr LeWinter's possible connections with East Europe's organised crime.
"LeWinter is an example of a brilliant mind gone to the bad," former CIA counter-terrorist expert Vincent Cannistraro said in a conversation about the man two years ago. "His father was a professor at Columbia University. He grew up in a New York City suburb with all the privileges. It is amazing how far he has fallen."
Beyond this, however, facts about Mr LeWinter are hard to come by. When I dealt with him in 1996 - spending a week with him at his Mojave Desert home in California - for a Channel 4 documentary that never made it into production, the psychological warfare he waged against me left me uncertain about almost everything concerning him.
Spy buffs know Mr LeWinter as a former CIA operative. A Vienna tabloid last week quoted Rodney Stich, author of Disavow - a CIA Saga of Betrayal, as saying that Mr LeWinter worked for more than 30 years for the CIA under the codename "Razine"; he was recruited in the Sixties, during the Vietnam war, as a college professor, and acted first as an informer on students.
Mr LeWinter told me he had become involved with the CIA while a college professor. "I was invited to go on a lecture tour to eastern Europe, to talk about Shakespeare," he said. "The CIA approached me. I became one of their fish." He claimed he had become a deputy director of the agency under the late James Angleton, its legendarily paranoid counter-espionage expert. But a former Washington DC police intelligence chief pointed out flaws in his account of his CIA career that cast serious doubt on this and other claims.
His personal life is also hard to pin down. He told me he had married an heiress to the Humble Oil fortune with whom he had two sons - one now a successful executive, the other a beach bum - but the marriage had foundered and in the Eighties he married a German woman, an executive at the German software firm SAP. They have a daughter.
He told me that from 1979 he worked for the CIA at Itac, the Brussels- based intelligence coordinating arm of Nato. In theEighties he was arrested and convicted of drug dealing in Germany. His admission that he served a prison term in Germany - for moving amphetamines from Libya to the US - is qualified by his insistence that the operation was one of Oliver North's secret missions. It was after this miscarriage of justice, he said, that he became a renegade.
In 1995 Mr LeWinter appeared in The Double Maltese Cross, a documentary which argued that the Libyans had nothing to do with bombing Pan Am 103, which was done by Syrian drug dealers doubling as CIA sources. This film was financed by Tiny Rowland. It was meant to open the 1995 London Film Festival, but it was dropped at the last minute. It was shown in the House of Commons under the auspices of the Labour MP Tam Dalyell. In it Mr LeWinter was identified as a former CIA agent.
Shortly after The Double Maltese Cross faded from the news Mr LeWinter rang me, introduced himself, said he had a document that might be of interest, and agreed a meeting at Frankfurt airport. He turned out to be a squat, barrel-chested man with straggly grey hair sticking out of a baseball cap. He was in his sixties and constantly perspired. He was suffering, he said, from Epstein-Barr Syndrome, an immune deficiency disease. He spoke with a tough-guy New York accent. He championed the cause of Israel. Later, this advocacy metamorphosed into hints that he was an agent for the Mossad. He was the best-informed person I have ever met on intelligence matters. His views on everything from geopolitics to literature were sophisticated.
The document he plonked down on the airport bar looked like a field report from a US Drug Enforcement Administration agent based in Switzerland. It suggested that Mark Thatcher had been involved in an arms-for-drugs deal with a Syrian named Monzer al-Kassar. Mr al-Kassar is known to spy buffs because he was arrested in Spain for supplying weapons to the hijackers of the Achille Lauro cruise ship who murdered the passenger Leon Klinghoffer. Later, however, he was acquitted of all charges in a trial in Madrid.
DURING my week in California waiting for Mr LeWinter to provide corroborating evidence for his document - corroboration which never came - he showed me coded messages he said he had stolen from the CIA, read me selections from a book of poetry he said he was soon to publish, talked of his friendship with Norman Mailer, and claimed he had run for a US relay team in the 1956 Olympics. His genius was to make each story credible even though, as they piled up, the atmosphere became increasingly surreal.
After showing the document about Mark Thatcher and his putative arms- for-drugs deal to the Drugs Enforcement Administration, the FBI via the former Washington DC intelligence chief, and the US District Attorney's office in New York, I concluded it was a fake. After that Mr LeWinter rang me once to complain that the DEA had visited him to ask about the Thatcher document. That was the last time I spoke to him. I had all but put the acutely unpleasant experience of being the target of one of his stings out of my mind when I read that the CIA, with Mr Fayed's help, had finally run him to earth.
According to the Vienna press, Mr Fayed was first approached about three weeks ago by a prominent Beverly Hills lawyer and a reporter from a Hollywood scandal sheet. He was told that there were documents proving that the CIA and MI6 were responsible for the deaths of his son and the Princess. A meeting was arranged between Mr Fayed's security chief, Mr McNamara, and Mr LeWinter, who got a $25,000 advance to cover expenses. Mr LeWinter arrived in Vienna on 20 April and checked into a modest, two-star hotel, the Hotel Stadt Bamberg, not far from the city's red-light district.
The booking at the hotel was made by Karl Koecher, who is well known to the Austrian security forces from his previous career as a Czech agent. Mr Koecher is famous in the spy world for being the man who walked east over the Potsdam Bridge in Berlin in 1985 when, in a Cold War exchange, the Soviet dissident Natan Shcharansky walked west.
Mr LeWinter and Mr McNamara met once, then a second time. As he was dragged out of the hotel where the meeting was held, Mr LeWinter screamed that his five accomplices would make sure that Mr Fayed met the same fate as his son. A search of Mr LeWinter's hotel room turned up a batch of documents, of which four sheets were considered relevant. Two of them were in code. The Austrian fraud squad says they are forgeries.
Mr LeWinter is now said to be co-operating with authorities. He has reportedly named his accomplices. The Austrian authorities managed to keep Mr LeWinter's arrest on 25 April secret until last Tuesday, when Peter Grolig, one of Austria's best crime reporters, broke the story in the Kurier newspaper.
Mr Fayed's spokesman at Harrods declined to comment. "Our Austrian lawyers have put a gag on us," he said.
However, Mr Fayed spent much of last week in Vienna. The man who has for so long been the scourge of much of British life deserves some credit - if only to remind us all that, in an age of buttoned-down global markets, there is still business to be done, and even fortunes made, by operating on the wild side of the commercial life.
Additional reporting from Vienna by Sue MastermanReuse content