By Chris Buckley
BEIJING (Reuters) - A woman at the center of China's biggest political scandal in two decades, wife of deposed political leader Bo Xilai, had once dressed as a military commander last year in a bizarre episode that shines new light on the collapse of Bo's inner circle.
Bo, ambitious former leader of China's biggest municipality Chongqing, was sacked in March after police began investigating his wife, Gu Kailai, on suspicion of murdering a former family friend, British businessman Neil Heywood, in a row over money.
News of Bo's removal and the murder allegation against his wife, who is a lawyer and businesswoman, emerged only a month ago, but new details uncovered by Reuters show the house of Bo was already in chaotic decline at the time of Heywood's death.
The new details, provided by sources with knowledge of the police case against Gu, include that she is alleged to have poisoned Heywood after the Briton demanded a 10 percent cut for his role in organizing a large, illicit money transfer for her.
A few days after Heywood was killed in Chongqing, southwest China in November, Gu strode into a meeting of police officials wearing a military uniform and gave a rambling speech in which she told the startled officials that she was on a mission to protect the city's police chief, Wang Lijun, the source said.
"First she said that she was under secret orders from the Ministry of Public Security to effectively protect Comrade Wang Lijun's personal safety in Chongqing," said the source, adding that she wore a green People's Liberation Army (PLA) uniform with a major-general's insignia and bristling with decorations.
"It was a mess," he said of Gu's speech, which circulated among some police and officials. "I reached the conclusion that she would be trouble."
It was not clear to those present why Gu, who had never served in the military, had put on a PLA uniform or what she was trying to convey with her vow to protect Wang, the source said. The incident, on or about November 20, left the officials even more bewildered about her mental state, he added.
At that time, Heywood's family had been told that there were no suspicious circumstances and that he had died of a heart attack brought on by excessive alcohol consumption.
Only later did Wang begin probing Heywood's death, treating it as a poisoning and identifying Gu as chief suspect. He revealed his suspicions to Bo at an explosive meeting in January, sources said. The police chief then fled to a U.S. consulate in February, hiding inside for more than 24 hours before leaving into the custody of central government officials.
Wang had been the spearhead of Bo's anti-corruption drive in Chongqing, a plank in the politician's barely concealed campaign to enter the topmost ranks of the ruling Communist Party.
HEYWOOD 'DEMANDED 10 PCT'
Gu's appearance in PLA uniform was part of a cascade of extraordinary events that have led to China's worst leadership crisis since the 1989 Tiananmen Square crackdown, months before the party anoints a new generation of top leaders.
There had been rumors circulating in elite circles that Gu had been assigned a military rank, but officials dismissed them as an attempt to brandish her authority and background.
Her uniform was of the same rank as her father's, a PLA leader who fought the Japanese occupation in the 1930s and 1940s, and might have been given to her out of "respect for her father", said a second source with knowledge of the incident.
Even if Gu was somehow entitled to the uniform, which the sources doubted, the civilian setting in which she showed her apparent military rank made her performance disturbing and politically troublesome, they said.
"That was clearly a violation of disciplinary rules, a serious one," said the first source with ties to Bo and his family, referring to talk among officials that Gu had assumed a military title. "Even her background gives her no right to do anything like that."
Gu and the family's 32-year-old aide, Zhang Xiaojun, have been named as the main suspects in the murder of Heywood, whose body was found in a Chongqing hotel room on November 15. Chinese authorities say he was poisoned.
Bo, who was suspended from the elite Politburo last month, could later face a police investigation as well.
Neither Bo nor Gu has been allowed to answer the accusations in public. Heywood's family has also declined to comment.
Chinese government ministries have not responded to written questions about the case against Gu.
A source citing details from Wang's testimony to investigators said Gu became angry and increasingly distrustful with Heywood after he demanded "at least 10 percent" to move a large sum abroad for her.
Sources had previously said Heywood demanded an unspecified proportion of the deal that Gu considered too large.
"It was a large amount, probably from a dirty deal, and Heywood was also nervous about handling it," said the source. He said he did not know the size of the offshore transaction.
It remains unclear how Heywood might have helped Gu shift money offshore. Chinese citizens are only allowed to transfer $50,000 out of the country each year.
Long before Gu's alleged falling out with Heywood, Bo voiced misgivings about her involvement in business, according to another British businessman who had dealt with Gu and Heywood.
"He hated what she was doing," said Giles Hall who dined with Heywood and the Bo family on a visit to China a decade ago, recalling a heated conversation overheard between Bo and Gu.
"There was an agitated conversation going on. There were a few threats being made. We were a bit nervous. We were in this restaurant. We said (to the interpreter) 'What's the problem?' and the interpreter said 'Her husband does not like her business dealings'. So he wasn't happy with it."
Hall, who was trying to tempt Bo to set up a tourism venture involving a hotair balloon, said Gu showed a ruthless streak.
"You couldn't cut her up (cross her) that was for certain. She said to me 'You cross me - never come to China, you'll never get out of jail'. There was no mucking about."
(Additional reporting by William Maclean in LONDON; Editing by Bill Tarrant and Mark Bendeich)