An inquiry has been ordered by a chief constable into an allegation that officers encouraged a local businessman to lend a known criminal money to buy a gun.
The case came to light at Teesside Crown Court
Sean Price, chief constable of Cleveland Police, ordered an investigation into the circumstances surrounding the murder of Lee King in Middlesbrough in January 2000.
Claims about the loan to known criminal Keith McQuade emerged during legal argument in the collapsed trial of a gang of alleged drug dealers at Teesside Crown Court earlier this month.
At the same court, McQuade had been cleared of murdering Mr King but was jailed for life for a separate offence of possession of a firearm with intent.
On Monday, Cleveland Police Authority chairman Councillor Ken Walker called for an investigation into the apparent authorisation for the loan and how any subsequent surveillance of McQuade was handled.
Officers had planned to keep McQuade under armed surveillance after the loan was given, but had lost him within days.
A month later McQuade was arrested and charged with murder following the shooting of Mr King on the Park End estate in Middlesbrough. He was later acquitted.
It since has emerged that at the time of the trial, the jury was not told McQuade had tried to buy guns weeks before the shooting.
The inquiry will also look at the way informants were handled in the case.
Mr Walker said: "There are a significant number of issues that need to be addressed.
"I make no apologies for making crystal clear my own position - I am deeply disturbed by the issues which apparently came to light during legal argument prior to the staging of the trial."
The chief constable said the inquiry would be led by his deputy Ron Hogg who will report back to the police authority in three months.
Mr Price said: "He will have full autonomy in the conduct of the investigation and choice of the investigation team.
"I have absolute faith in him. He has only very recently come to Cleveland Police so he has that added value of independence.
"I have told him he has a complete free hand in relation to this inquiry and who he can select to be part of his investigation team, be them from within Cleveland Police or outside."