Scotland Yard's botched anti-terrorist operation in Forest Gate, east London, which led to the shooting of an innocent Muslim man, was based on the word of petty criminal serving a sentence for dishonesty offences unconnected to terrorism.
Official sources have told The Independent on Sunday that prison officers believed the informant was "operating out of his league". Yet Special Branch continued to give him special phone favours even after his intelligence proved false.
The raid in 2006, involving 250 officers, worsened community relations and sparked a national debate on police tactics. Scotland Yard, backed by the Government and the police watchdog, the Independent Police Complaints Commission (IPCC), has always maintained it had credible and specific intelligence. But the informant and his information were never independently assessed.
The revelation will further undermine the Government's case for extending police powers to detain terror suspects without charge from 28 to 42 days.
Leading lawyers say alarm bells should ring when intelligence is received from prisoners. Hugh Tomlinson QC, an expert in claims against the police, said: "It's extremely unreliable, because they're willing to say anything to help their own position."
There is also concern that intelligence claims are beyond legal scrutiny. "If the police say 'we had information from a reliable informant', the law will not allow us to go behind the intelligence to identify the informant and work out whether they are reliable or not," said Mr Tomlinson.
During the raid, armed officers in chemical suits burst into adjoining houses at 4am. Abdul Kahar was shot in the shoulder and detained with his brother, Abul Koyair, for seven days before being released without charge. Nothing was found linking the brothers or their family to terrorism.
The raid was prompted by claims that there was a "dirty bomb" on the premises. The police, unusually, disclosed that the intelligence was based on the word of a single informant and have continued to protect both his identity and how the intelligence was evaluated. However, the IoS can disclose that he was an Asian prisoner at HMP Bullingdon in Bicester, Oxfordshire.
As a reward, the informant received phone credits for personal calls. Prison intelligence officers monitored these calls to the informant's partner, which were explicitly sexual, and passed the tapes to Special Branch.
"[Prison officers] couldn't believe why [Special Branch] thought he was so credible, when they thought he was so unreliable," said the source.
After the Forest Gate raid, the informant continued to use the mobile and receive phone favours while an IPCC investigation was launched into the shooting.
Police documents show the intelligence had inexplicably hardened during two briefings just hours apart on the morning of the raid. Firearms officers were initially told they were looking for a single "improvised explosive device containing cyanide". Later, they were warned to expect "an active terrorist group intending to mount a bombing campaign in London". The IPCC concluded that the police had been forced to act in the interests of public safety. But the watchdog did not assess the credibility of the informant, though its final report last year said it received "full access" to the intelligence.
The Met has used the IPCC report to resist a civil claim for compensation by the brothers. A police spokesman said the raid "was necessary and proportionate and had at its heart a commitment to protect the public".Reuse content