Detectives have spent the last 15 months trying to discover how a criminal gang was able to acquire intimate knowledge of the council's internal accounting procedures.
Cheques totalling pounds 520,000 were paid to the gang in 13 days in December 1992. The theft forced the council to cut its educational programmes in the former Soviet Union, Czechoslovakia, Hungary, South Africa and Malaysia.
The money passed through a series of bank accounts bearing false names. By the time the council caught up with them, in February 1993, less than pounds 20,000 remained.
Three men have been charged with handling stolen money and committed for trial next January.
Earlier this year, the Commons Public Accounts Committee said it feared the fraud was so slick an insider must have been involved.
Police now believe they have found the missing link: a council official has been arrested and bailed until next month over the separate alleged theft of pounds 70,104.60.Reuse content