The financial escapades of one of our men in Yemen beggar belief. Chris Blackhurst explains
Within the Foreign Office, Sanaa in Yemen is regarded as an unglamorous posting: hot, dusty, medieval country, constant threat of war, long way from home, not many visitors, not big on the world stage.

It was here that Gerald Ryan, 42, arrived with his French wife, Daniele, and their young daughter in January 1989 to take up the post of second secretary at the embassy. Over the next four years, Mr Ryan carved out a name for himself - a name that, after its airing this week before the Commons Public Accounts Committee, will live long in the annals of the Foreign Office and Whitehall.

In 1972, after 10 years in the Royal Navy, and newly married, Mr Ryan decided to quit seafaring and settle down. He joined the Foreign Office and worked his way through the ranks, with spells in Baghdad, Paris and back in London, before heading for Yemen to the humdrum job of second secretary in charge of embassy management and consular advice.

Like all embassies in such places, Yemen had two bank accounts: one in sterling and one in the local currency, rials. When Mr Ryan arrived, the local account was topped up with a monthly standing order from the sterling account. Mr Ryan stopped that. He drew cheques from the sterling account made out to "cash" or "bearer", cashed them and paid the rials into the rial account.

Nothing wrong with that, except when he cashed the cheques he did so at the unofficial, black market rate - often four times higher than the official rate - and pocketed the difference. Over four years, along with Mohamed al-Duais, a local accountant who managed the embassy's books, he made £700,000.

There was more. Mr Ryan started an affair with a local woman. When she fell ill, with nephritis, he signed out the drugs she needed - he was in charge of the medical supplies - from the embassy store. His wife left him and went back to France, but he continued to claim expenses for her and their daughter. The British taxpayer also footed the bill for sending their belongings to France.

Finding himself out of furniture, our man in Yemen ordered some from London - paid for from the embassy's account. When the lease on the ambassador's residence ended, his second secretary got him a new one: just five bedrooms but at a total rent of £1.35m over five years - plus $50,000 from the landlord in the back pocket of Mr Ryan - making it one of the most expensive British ambassadorial residences in the world.

The embassy needed decorating. The ever-efficient Mr Ryan arranged it, handing the contract to the highest bidder, in return for another something in his back pocket. For two months in late 1993, the vice-consul, responsible for issuing visas, was on leave. Mr Ryan, who else, filled the void, issuing visas in return for bribes.

Nobody suspected anything. They should have done, with hindsight, and two successive ambassadors to Yemen, Mark Marshall and Douglas Gordon, have had their careers cut short. But the region was a hot-bed of intrigue, there was a Gulf War in the north to worry about, civil war was looming, Yemen thought it had discovered oil, British companies wanted to do business there - in his office, Mr Ryan was left on his own to get on with it.

In London, officials were worried. They kept hearing reports about the crazy atmosphere in the place, the lack of interest being shown in the 500 British expatriates by some of the staff, the feeling that something was wrong. No fewer than 17 separate visits were made to Sanaa by different sets of officials. They remarked on the lack of management controls and the indifference of the ambassador and his senior staff towards them. But they did not suspect the second secretary. His books balanced, everything seemed OK.

In March 1993, the security services cast an eye over him for positive vetting before his planned return to London to take up a new job as head of the Foreign Office's East European "Know How" Fund. They compared his expenses claims with his personal life and discovered his wife was no longer with him.

Alarm bells rang and the Foreign Office's internal audit team moved in. What they found appalled them. In June 1993, when Mr Ryan returned to London, Mr Duais, his accomplice, fled Yemen and has not been seen since. Disturbed that he had at last been rumbled, Mr Ryan's mental state deteriorated. Ever helpful, and still not sure what exactly he had done, his bosses arranged counselling.

The process of investigation was slow and agonising. Layer by layer, the Foreign Office and then a team from Scotland Yard uncovered his crimes. On Christmas Eve, on police bail, he could stand it no longer and shot himself. In Whitehall, although they would never admit it, his bosses heaved a sigh of relief.

Over 40 per cent of Britain's missions round the world have four or fewer staff, while 9 per cent are manned by just one person. They have all been sent warnings about the Ryan case and the rules are being tightened. But out there, far away, there must be a few who secretly take their hats off to him.