By Paul Burnell
BBC File On 4
Soldiers Dean Cooper and Daley Schofield thought a friend was taking them for a drive in a high-powered car around the town of Celle, in Germany, when they found themselves arrested on suspicion of attempted murder.
Daley Schofield (pictured) and Dean Cooper are suing the MOD
The friend pulled into a pub car park and left the car, before both men were seized by German Police and the Royal Military Police (RMP).
What the pair, who did not drive or own a car, did not know was that their friend was an informer in a covert operation for the RMP and was given one of the force's covert cars to drive them to the pub.
"I didn't have a clue what was going on," Mr Schofield, who has now left the army, told BBC File On 4.
The pair claimed they were just humouring their friend when he suggested "doing some damage" on a barmaid he said had been informing on them to the RMP investigation into drug taking and drug dealing in the army.
In reality he had given the names of 100 members of their unit to the RMP, including Pte Cooper and Mr Schofield who both deny any involvement in drugs.
But the case collapsed when expert reports revealed that taped conversations, between the informer and the two men, had been tampered with.
It also was also alleged that the informer, who had a history of drug use and small-time dealing, had been offered the inducement of a position with RMP if he produced a good case.
A former investigator in the case told The BBC this was "absolutely amazing".
He added: "It's just inconceivable that an organisation charged with upholding good order and military discipline and all the other policing functions should seriously be considering recruiting into its own ranks a self-confessed criminal."
The trial judge ordered an enquiry into why the prosecution failed.
He commented: "We have been misled by the documents, which have been produced to us by the Covert Operations unit with regard to the informant's status and the question of the evidence given by the informant handler."
The former investigator also spoke about concerns over the fact that the men were driven in an RMP car by the informant. He said: "The RMP supplied one of their own covert cars to the informant so that the murder plot would have wheels. Because of the logistics, a vehicle was absolutely crucial to making any murder plot work."
Pte Cooper, from Birmingham, and Mr Schofield, from Sunderland, served eight months in a military jail before the case fell apart and both are suing the Ministry of Defence.
Next month the RMP's investigation methods come under further scrutiny when judges in London begin a judicial review of claims by five Iraqi civilians they were tortured by British forces and they heard other Iraqis being executed.
The officer from the Cooper and Schofield case, who has left the RMP, believes the case illustrates the force's problems.
"I believe the RMP remain an incompetent police service," he said. "Look at the number of high profile investigations and prosecutions arising out Iraq, look at 'Conifer' (the operation that investigated Cooper and Schofield) in detail and that can only tell you one thing - they're massively wanting in their integrity, impartiality and competence."
The head of the RMP Brigadier Colin Findlay would not go into detail about the Cooper and Schofield case but said the force was more than capable of carrying out covert operations. He added that its operations had reached the national benchmark required by Her Majesty's Inspector of Constabulary (HMIC).
"All of my detectives are trained to Home Office standards... so I am perfectly satisfied that the competence levels and technical training are adequate. HMIC found the same thing."