Was this loyalist murderer in the police's pay?

He was involved in the machine-gunning of a Catholic bar in Greysteel, Co Londonderry, in 1993, when eight people died. He also took part in another attack in which four Catholic workmen were shot dead.

The idea that such a notorious figure could have been working for the security forces has deepened the unease about the role of the Special Branch in the underground "dirty war". According to unconfirmed reports, Knight was paid £50,000 a year for passing on information.

The police say they will not comment on any allegations about who might or might not have been an informer. The Chief Constable of the Police Service of Northern Ireland, Sir Hugh Orde, has said that regulations concerning undercover agents have been tightened in recent years.

But a series of unconnected cases have created suspicions that, during the Troubles, the Special Branch routinely concealed information from other parts of the police.

Knight, who is now in his thirties, was convicted as one of the members of the Ulster Defence Association (UDA) who burst into a Catholic bar on Hallowe'en night in 1993 to stage an attack in retaliation for an IRA bombing. After one of the gang shouted "Trick or treat", gunmen raked the bar, leaving its floor and walls splashed with blood, while Knight, armed with a shotgun, stood at the door. The eight people killed included an 81-year-old man while 19 others were injured.

Knight received eight life sentences for this, together with four more for the murders of four Catholic workmen killed seven months earlier in Castlerock, Co Londonderry. He served seven years in prison before paramilitary prisoners were granted a general release under the Good Friday Agreement. Unconfirmed rumours that Knight had been a police informer had been in the air for some time. Suspicions have been voiced by John Dallat, a campaigning politician who is a member of the nationalist Social Democratic and Labour Party. Mr Dallat, who says he was in touch with police about Knight before the Greysteel and Castlerock attacks, claims they might have been prevented since it was known Knight was an extremist.

This week brought a piece of evidence that is seen as strengthening the informer theory. In 2000, after his release from prison, Knight is said to have attracted the attention of staff at a bank where he was withdrawing large amounts of money from an account into which £50,000 a year was being paid. The bank's concern was that Knight was "laundering" illegal money, but, when police were contacted, an assurance was given that everything was in order. The money being paid in was said to be from a Scottish engineering firm. However, the account was hastily closed down.

If Knight was an informer, his role clearly did not provide him with immunity for his killings since he was charged and jailed for them.

In some cases informers have been allowed to commit various offences but have been charged when they carry out "unauthorised" acts such as murders. But the appearance in this instance is that even his convictions for 12 killings did not stop the Special Branch paying him large sums of money after his release.

The further allegation made by Mr Dallat is that a rifle used in the Greysteel incident was one of two weapons found by anglers after the Castlerock shootings but before the Greysteel attack took place.

The weapons were not recovered. Mr Dallat said he had been telephoned by a member of the security forces who claimed the guns were moved by a member of the Special Branch who was protecting Knight.

Mr Dallat has referred the case to the office of the Police Ombudsman, which is investigating the saga. He said: "I hope the investigation team are successful in gleaning why the UDA ran amok for so long before finally being caught."

The Dirty War and informers

* IRA

Denis Donaldson, a senior Sinn Fein administrator, admitted recently that he had been a Special Branch informer for up to 20 years, sending shockwaves through the republican community.

Freddie Scappaticci, senior IRA "enforcer", was outed as a security force informer in 2003, though he has not admitted this. He is said to be living in Italy.

* LOYALISTS

William Stobie, a loyalist charged with the murder of solicitor Pat Finucane, sensationally revealed in court that he had been a police informer. He was later shot dead by his organisation.

Brian Nelson, a senior loyalist intelligence-gatherer, was unmasked as an Army informer in 1990. He served a prison sentence and has since died.