Detective Constable Alan "Basher" Breakwell, 47, was to have faced a police disciplinary hearing on other charges, but took early retirement after doctors said he was suffering from ill-health.
DC Breakwell was suspended in March 1996 as part of Operation Gunter, a big anti-corruption inquiry. Three other drug squad officers were sacked from the force earlier this year after facing disciplinary hearings.
The West Midlands Police has a history of major corruption inquiries and 10 years ago its Serious Crimes Squad was closed down.
A BBC Panorama investigation to be shown tonight reveals that many of the Operation Gunter allegations came from other serving police officers.
The programme also interviewed two of DC Breakwell's informers, who claim the detective asked them to sell heroin he provided on the streets. One informer, Steve Russell, now serving a nine-year sentence on unrelated drug offences, said he was asked to sell 25 ounces of heroin worth pounds 20,000 for Mr Breakwell.
The case prepared by Operation Gunter against DC Breakwell, who had been in the force for 29 years, was that he tried to steal money, and that a quantity of drugs in his possession had gone missing. As with the allegations against the three other officers, the Crown Prosecution Service decided not to institute criminal charges.
The CPS said last night there was "no realistic prospect of conviction" of any individuals investigated by Operation Gunter.
Mr Breakwell was ordered to attend a disciplinary hearing, but was under so much stress from the investigation that doctors judged him unfit to face the tribunal. Under current regulations there is nothing West Midlands Police can do to make him face a tribunal if he retires on the grounds of ill-health.
The Chief Constable of the West Midlands, Edward Crew, said he was "offended" that DC Breakwell had been able to avoid the disciplinary hearing: "It can't possibly be right that an officer who becomes ill, genuinely or otherwise, after discovery of serious misbehaviour can be perceived to have been rewarded for what he or she did.
"It isn't fair to the officer either. Mr Breakwell's never had these allegations tested against him."
Mr Breakwell has refused to talk about the claims.
The Operation Gunter corruption inquiry, based at a West Bromwich police station, was set up after worried officers in the drug squad blew the whistle on their colleagues three years ago. The man in charge of the operation, Detective Superintendent Mick Ferris, told the programme: "I've been a detective for a number of years, a police officer for 25 years. I'd never experienced these kind of allegations."
Detectives accused fellow officers of stealing drugs, drug money and informers' rewards. Suspects were also said to have had drugs planted on them. Eight detectives came under suspicion.
After a two-year investigation, cases against a number of the accused officers were sent to the Director of Public Prosecutions in 1997. But after it was decided not to prosecute, West Midlands Police brought disciplinary charges. The cases were heard in June before the Chief Constable of Merseyside, Jim Sharples.
Detective Sergeant Dick Houston, 42, who had spent 18 years in the force, was charged with stealing pounds 100. He was sacked for disreputable conduct, neglect of duty and falsehood; Detective Sergeant Kim Robotham, who served 21 years on the force, was accused of misappropriating a substance believed to be skunk cannabis.
He, too, was sacked; and Detective Inspector Pat Sullivan, 41, who had 22 years' service and was head of a drug team, was dismissed for disreputable conduct.
The suspension of DC Breakwell also led to two people accused of dealing in drugs being cleared. Tracey Whelan, 30, a mother-of-four from Coventry, went to court after DC Breakwell said he found cannabis in her house. She was given a suspended two-year sentence in 1996, but was cleared by the Court of Appeal after claiming she was framed.
A case against a third man for possession of cocaine collapsed when the evidence disappeared. "We believe DC Breakwell was the last officer to have the drugs," said Det Supt Ferris. "It was his case, and had he not been suspended he would have been the officer that would have been presenting those drugs in court."
The sacked officers have announced they are appealing against the decision, and DI Sullivan has told a local newspaper he is "totally innocent and confident of being reinstated".
"To Catch a Cop", Panorama BBC1, 10pmReuse content