Stalker's friend 'accepts pounds 1m' to drop police claim

Kevin Taylor, the businessman who claimed he was maliciously prosecuted in a conspiracy to discredit John Stalker, the former deputy chief constable of Greater Manchester, last night dropped his legal action against the force in a reported pounds 1m settlement.

Last night, Mr Taylor, who is believed to have turned down a pounds 625,000 offer from Greater Manchester Police Authority in January, said he was "unhappy" with the conclusion of his long-running battle with the force and its retired chief constable, Sir James Anderton. It is believed Mr Taylor was seeking pounds 10m.

Mr Taylor, who was due to begin giving evidence yesterday in the seventh week of the High Court hearing in Liverpool, said he had been forced to accept the offer or lose his legal aid. He said his counsel had considered the offer reasonable and said it would be reported to the Legal Aid Board if he rejected it. "I am not satisfied," he said. "It is a fraction of what my claim was." He claimed that the offer from the force's insurers was made yesterday to prevent him making serious disclosures.

Mr Taylor claimed John Stalker, a close friend, had already shown there was a conspiracy to discredit him because of the potential embarrassment of his investigation into an alleged shoot-to-kill policy in Ulster. Mr Taylor, said the second part of the legal strategy was to show there was also a conspiracy against him.

Mr Stalker was suspended in 1986 following allegations about his links with Mr Taylor. After a disciplinary inquiry he was reinstated but resigned later.

David Wilmot, Sir James's successor, said last night it was "a matter of regret" that the case had been settled "on commercial grounds". The cost of defending the case had become prohibitive, a police spokeswoman claimed. She said the payment was made "on the basis that Sir James Anderton's denial of liability is maintained, repeated and continued". She refused to comment on claims that the sum agreed was pounds 1m.

Mr Taylor, 63, of Baxenden, Lancashire was prosecuted in 1990 for allegedly defrauding the Cooperative Bank of pounds 200,000. The case collapsed in court. Mr Taylor had claimed the police fabricated evidence.

Last month, Mr Stalker was subpoenaed as a witness for Mr Taylor. But Sir Patrick Mayhew, the Northern Ireland Secretary, moved to stop much of Mr Stalker's evidence. Ian Burnett, counsel for the Crown, said some of Mr Stalker's evidence would be "contrary to the interests of public security".

He suggested that evidence about Mr Stalker's investigations could endanger the peace process. Mr Justice Owen partly upheld the application, ruling that much of Mr Stalker's evidence could not be heard.

Later, Mr Stalker told the court that he had been removed from the inquiry into the RUC because his report could be embarrassing to those who appointed him.

He suggested Tom King, then Secretary of State for Northern Ireland, and Douglas Hurd, then Home Secretary, may have sanctioned measures to stop him concluding his investigation.