Senior Yard detectives deny that any police officers were involved in a conspiracy to 'frame' the fugitive tycoon but concede that officers were apparently misled by the pair. Officers are said to be confident they will be able to prove they were not involved.
Wendy Welsher and Michael Francis claim that from 1991 they tried to implicate Nadir in a plot to bribe his trial judge with pounds 3.5m. They allege that officers knew of their activities from the start. Ms Welsher, a north London businesswoman, was such an important witness to the police that she was given protection.
Both are now in northern Cyprus claiming that they were frightened for their safety in the UK; both deny being paid by Nadir. Nadir was charged with false accounting and theft following the demise of Polly Peck. He was arrested twice after being charged with these offences during the course of the inquiry into allegations that he was conspiring to pervert the course of justice. Last May he jumped his pounds 3.5m bail.
Senior Yard sources admitted that Mr Francis, despite his criminal record, worked as an informer before becoming involved in the Nadir case. They said Mr Francis had made contact, claiming he had information regarding a plot involving Nadir. They said this took place in autumn 1992.
The two witnesses claim they were put in touch with officers from the Serious Fraud Office much earlier than this - in January 1991.
Sources acknowledge that the Yard was misled by the two for a prolonged period. It was fabricated evidence produced by the two on which the police based a well- publicised investigation.
Asked why the police chose to pursue inquiries on evidence produced by Mr Francis, a known confidence trickster, Yard sources argued that they had a duty to take his information seriously, and deny that they were gulled by him.
They said the investigation had not been closed; it ran into difficulties because Mr Francis frequently went to ground and failed to produce evidence he claimed to have. Mr Francis had received modest expenses.
Mr Francis alleges that police initiated the attempt to frame Nadir.