A senior Chinese journalist told the BBC that police knew British businessman Neil Heywood had been murdered in Chongqing last November and that a cover-up began "immediately."
According to the unnamed Chinese reporter, police panicked when they realized the incident could be tied to popular politician Bo Xilai and his wife, Gu Kailai.
Officials in the south-western city of Chongqing had previously claimed Heywood died from alcohol poisoning.
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The journalist claims investigators on the scene knew it was murder but panicked.
Radio New Zealand said three asked to resign, according to Han Pingzao, a former People's Daily reporter in Chongqing because "they were terrified of the politician''.
From there Chongqing police chief Wang Lijun told his boss he believed Bo and Gu was involved in the murder. That led to Wang's demotion.
He fled to the US consulate in Chengdu where, according to CNN he reportedly told the Americans about the murder in a possible attempted to defect but was eventually persuaded to leave the consulate and was taken away by police and "has not seen or heard from since."
Eventually 'Bo Xilai was confronted. The BBC said he "was shocked when he heard the details... and started sweating profusely.'' He was later sacked.
Bloomberg reported that UK Foreign Secretary William Hague has been asked by lawmakers about the link between Heywood and the British government.
Meanwhile, the UK has asked China to re-examine the circumstances of his death.
The Council on Foreign Relations' Elizabeth Economy said the scandal around Bo Xilai points to long ignored corruption in the Chinese political system and has "ensured that there is no orderly power transition" this fall as the party had planned.