On a bright November day, reporter Anthony Lewis was waiting outside Jersey's Royal Court in St Helier, ready to cover a seemingly routine case of a frozen bank account. It should have been a quiet morning.
What Lewis didn't know was that this case would feature some of the most powerful people in the world, from London to the Persian Gulf, involving the international arms industry and the war against terror.
As Lewis patiently stood on the court steps with the paper's photographer, a limousine pulled up. Out stepped a well-dressed man with Arab features. Lewis approached the car to speak to the mysterious figure, but the man panicked and hid his face from the camera. He then dashed for the court and was smuggled in by the door normally used by prisoners.
Lewis was amazed - especially when he discovered the man was oil-rich Qatar's ambassador in Britain, Nasser bin Hamed al-Khalifa. Why was a senior Gulf diplomat so desperate to remain in the shadows?
He tried to investigate, but was obstructed at every turn. The proceedings were being held in camera, preventing anybody from witnessing the events. When his newspaper, the Jersey Evening Post, tried to report the case, the super-rich Gulf state won a contempt of court order effectively gagging it. At one stage, the island's authorities would not even admit that the case was going on.
Six months later, an Observer investigation has uncovered extraordinary details suggesting why so many rich and powerful individuals from Doha to London have been eager to hush up the facts of this case. This remarkable tale revolves around one of the richest and most powerful men in the Middle East - the Foreign Secretary of Qatar - and alleged payments from Britain's largest arms company.
Two years ago, an official at the ANZ Grindlay Trust bank in Jersey stumbled across strange payments by British Aerospace, now known as BAE Systems, into the exotically named Havana and Yaheeb trusts.
Under new laws introduced in Jersey to crack down on money laundering, banks must report any transaction suspected of being the proceeds of crime. The official who discovered these BAe transactions could not have guessed his diligence would lead to a major diplomatic row and one of Britain's biggest ever commercial bribery investigations.
Detectives from Jersey's financial crime unit quickly discovered the ultimate beneficiary of these secretive trusts was the Foreign Secretary of Qatar, Sheik Hamad bin Jassim bin Jaber al-Thani, uncle of the Emir of Qatar and a man of huge wealth and influence throughout the Gulf.
Investigators found more than £100 million in these trusts. They became convinced they had uncovered evidence which pointed to a slush fund into which some of Europe's largest defence companies had been paying sweeteners to the Qatar Minister to secure arms contracts.
On 16 July 2000, the Jersey authorities froze these two trusts, in operation for almost 10 years, while they investigated. Qatar's government reacted with fury and protested to the British government, refuting all allegations of corruption or any other wrongdoing - and suspending talks on hundreds of millions of pounds of export orders.
By the end of last year Qatari government insiders said the probe had brought relations between the UK and Qatar close to breaking point. The emir of Qatar refused to meet former Foreign Minister Ben Bradshaw and Defence Secretary Geoff Hoon. But senior sources in Jersey discovered BAe had allegedly funnelled one payment into these trusts totalling almost £7m. Investigators believed they had evidence to link this directly to a large BAe arms contract with Qatar.
It is not known what contracts police have been looking at, but in 1996 BAe sold a number of Hawk fighter jets as part of a £500m arms package between Britain and the Gulf state. There is no suggestion that BAe acted unlawfully. At the time when BAe was alleged to have made payments to the trusts, there was no law prohibiting British firms from paying foreign politicians.
Jersey's attorney-general, William Bailhache, now believed he had accumulated sufficient evidence that an offence may have been committed by Qatar's Foreign Minister. In addition to the money rolling into these trusts from European defence companies, investigators also discovered that the funds from these accounts were being used to purchase real estate and hotels around the world.
But after the horrific events of 11 September, Qatar was an increasingly important strategic ally for Britain and the US. The state was a moderating influence among Islamic countries and the US, worried about the stability of its military bases in Saudi Arabia, was reported to be preparing to move its Gulf HQ to Qatar.
Diplomatic pressure to heal Qatari relations was becoming intense. Then, in a startling turn of events, Jersey's attorney-general announced last Friday he was dropping the investigation.
On the surface it appeared that the Jersey authorities capitulated. But like the rest of this story the true facts lie buried beneath the surface.
While Sheik Hamad continued to protest his innocence, he agreed to pay £6m to the Jersey government to repair any 'damage perceived to have been sustained in the events that have happened'. This was very close to the £7m figure which the Jersey authorities were trying to confiscate. Jersey's attorney-general said continuing action against Sheik Hamad was not 'in the public interest'. There was also the major problem that the Foreign Minister would be protected by diplomatic immunity.
Yet with questions over what precisely the attorney-general meant by 'public interest', it is inevitable that suspicions will arise that the British government put pressure on the Jersey authorities to come to a deal. Both Jersey and the Foreign Office resolutely deny this, stressing that the British government does not have the powers to intervene in the judicial affairs of the Channel Island, which is independent of the Westminster parliament. However, lawyers in the office of Jersey's attorney-general did admit they had meetings with officials in the Foreign Office.
Liberal Democrat MP Norman Baker is not convinced. He said: 'I want absolute assurances that no undue pressure was applied on the Jersey courts to drop a criminal investigation into a major corruption inquiry because of political considerations. I will also want assurances that the British government has at no time sponsored the payments made by British arms companies into these Channel Island accounts.'
A BAe spokesman said: 'We have a strong ethical policy and comply with the law... We will rigorously defend ourselves against any allegations of wrongdoing. We have never been the subject of any investigation into these matters. We have co-operated fully with the appropriate authorities into an investigation which has now terminated. We have nothing further to add.'
Like BAe, the State of Qatar denies any wrongdoing. In two weeks the Jersey Evening Post is challenging the court's decision to hold the original hearings in secret. If the paper wins, the evidence and transcripts that emerge will detail all the payments made into Sheik Hamad's offshore trusts. Only then will more light will be shone on the dealings of the international arms industry.
