The British government is resisting demands for a public inquiry into the military's undercover intelligence-gathering Force Research Unit, fearing that loyalists could reveal the identity of 'Steak Knife' - the Army's most important agent inside the IRA.
Suspects in the murder of Belfast solicitor Pat Finucane have threatened to disclose 'Steak Knife's' identity if they are forced to give evidence to an inquiry into the killing.
The Observer has learned that members of the UDA's unit in Belfast's Highfield believe they know who 'Steak Knife' is and are prepared to name him if they are made scapegoats for the FRU's involvement in loyalist killings during the Eighties and Nineties.
The SDLP's call for inquiries into the Finucane murder, along with similar investigations into the deaths of Rosemary Nelson and Robert Hamill, are key elements of the party's pre-conditions for taking their seats on the Central Policing Board.
But it is understood the Government is concerned that a public probe into the FRU and RUC Special Branch's relationship with the UDA in north and west Belfast will lead to the outing of key informants.
Officially, the Government says it is reluctant to grant the SDLP demand because all three cases are the subject of criminal investigations. However, an inquiry into the 1989 murder of Finucane would reveal the extent of the FRU's wider relationship with the UDA in the Greater Shankill area and their role in passing on army intelligence files of republican suspects to loyalist killers.
This would inevitably lead to the events surrounding the killing two years earlier of Francisco Notarantonio, a Catholic pensioner shot dead in his Ballymurphy home by UDA assassins. FRU undercover soldiers asked their agent working inside the UDA, Brian Nelson, to dissuade his loyalist comrades from killing an IRA man whom they had been targeting for several months. Nelson was the UDA's so-called intelligence officer, whose job it was to glean information on republican activists.
Instead, the FRU passed on the details of Notarantonio, who was murdered instead of the original target. The FRU wanted to keep their agent, working in the highest echelons of the IRA's Belfast Brigade, alive and were prepared to sacrifice ordinary nationalists.
A senior loyalist commander told The Observer that the UDA in Highfield had been spying on 'Steak Knife' for several weeks, using a flat to watch their target at his home across the peaceline. 'The feeling among the UDA is that if their men are sent down for killings that took place before the Good Friday Agreement, if the Government is willing to sacrifice them, then they will tell all about their relationship with the FRU. And that includes the whole "Steak Knife" episode,' he said.
The SDLP's spokesman on policing, Alex Attwood, said there was a need for the events connected to the Finucane murder and the role of the FRU to be brought into the public domain.
'The very fact that such activities went on requires that we have these public inquiries. Events like the murder of Finucane, Rosemary Nelson and Hamill, will cast a shadow over the future unless we can throw light on these matters now.'
But the Democratic Unionist Party claimed the SDLP was 'electioneering' rather than seeking justice in its demands for further Bloody Sunday-style inquiries.
Gregory Campbell, the DUP's security spokesman, said: 'This is more about being more radical and green than Sinn Fein in the run-up to the general election. Every time I hear nationalists asking for more and more inquiries into this incident I remember John Hume's words about us all "drawing a line under the past". It seems that the SDLP have quietly dropped Hume's line in pursuit of one-sided justice.'
