Wife of Chinese politician Bo Xilai 'killed British businessman' Neil Heywood

China's most sensational political purge of recent years took a dramatic new twist yesterday after police accused the wife of an ousted Communist leader, Bo Xilai, of murdering a British businessman.

Neil Heywood, an associate of Mr Bo's wife, Gu Kailai, died in November in Chongqing, supposedly of alcohol poisoning, with his body immediately cremated without an autopsy.

Rumours began to circulate soon after Mr Bo, the populist party boss in Chongqing, was cast into the political wilderness by the party on 15 March.

"According to reinvestigation results, the existing evidence indicated that Heywood died of homicide, of which Bogu Kailai and Zhang Xiaojun, an orderly at Bo's home, are highly suspected," the official Xinhua news agency reported. Bogu Kailai is the formulation to describe Ms Gu's married name.

"Bogu Kailai and Zhang Xiaojun have been transferred to judicial authorities on the suspected crime of intentional homicide," the news agency said.

The report said Mr Bo, Ms Gu and their son – whom Mr Heywood mentored – were on good terms with Mr Heywood, but "they had conflict over economic interests, which had been intensified". The rumours started almost immediately after his death, but British authorities had appeared to accept the official version.

Mr Heywood's 74-year-old mother, Ann, said at her home in south London that she had been told by Foreign Office officials that he had died of a heart attack that could have been brought on by heavy drinking.

That changed after American diplomats passed on to their British counterparts a Chinese police forensic file on Mr Heywood's death which showed that it may have been due to poisoning. It had been passed to them by Wang Lijun, a senior security official, who was seeking asylum at the US consulate in Chengdu. He also named Mr Bo's wife, Gu Kailai as the prime suspect.

Whitehall officials said they immediately asked the Chinese authorities to investigate the death, but this does not explain why the issue of Mr Heywood's death had not been raised with Beijing, despite his friends pointing out that he was only a moderate drinker.

The officials deny that Mr Heywood, who has been referred to in the US media as a "former MI6 officer", was involved in collecting intelligence on behalf of Her Majesty's Government. They refused to comment on reports that William Hague has asked to be kept informed of developments, adding if this was indeed the case, then it was just an example of the Foreign Secretary's concern over the suspicious death of a Briton abroad.

The inferences that the Old Harrovian Mr Heywood may have been involved in spying came from work he had undertaken for Hakluyt & Company, a corporate intelligence firm that has a number of former MI6 officers on its books.

Founded 17 years ago by former SAS and MI6 officer, Christopher James, and Christopher Wilkins, a businessman who had served in the Welsh Guards, its London headquarters is in Brook Street, Mayfair, and its offices are in New York and Singapore.

Yesterday's Xinhua report also said: "China is a socialist country ruled by law, and the sanctity and authority of law shall not be tramped."