A Co Tyrone man on the verge of bankruptcy has said police offered him £200,000 to "set up" a prominent dissident republican.

Francis Carty said a PSNI officer promised his £200,000 debts and mortgage would be cleared if he spied on Kevin Murphy, a 32 County Sovereignty Movement member previously acquitted of Real IRA offences.

In a bizarre turn of events, Carty handed the PSNI man's contact details to Murphy and other dissidents who phoned the officer three times, pretending to be Carty, and taped the conversations.

The Sunday Tribune was sent recordings of two conversations in which 'Carty' was told his financial situation would be "sorted" once he "came across". A man, who identified himself as a PSNI officer, asked 'Carty' to meet police at a McDonalds restaurant, opposite the Asda supermarket in Cookstown.

During the conversations last Tuesday, 'Carty' expressed concern that his life would be in danger from dissidents should he do so, but was told not to worry. So keen were police to recruit him that the officer volunteered to pay for a taxi to drive him from Coalisland to Cookstown, rather than wait to meet him the next night.

Having misled the PSNI officer, the republican pretending to be Carty then revealed his identity and other dissidents shouted "w***er!" down the phone at the officer.

Carty is related to ex-Provisional IRA prisoner Kevin Murphy (38) who, in February 2003, was acquitted of Real IRA membership and possessing a rocket launcher with intent to kill police.

His lawyer argued he'd been set up by Gareth O'Connor, a Special Branch informer. O'Connor disappeared in May 2003. Two years later, his body was found in Newry canal.

Murphy told the Sunday Tribune that, over the past four months, 21 people had contacted the Sovereignty Movement claiming police had attempted to recruit them to spy on him or set him up.

He said nine people had made statements to solicitors.

"Those approached have been fellow republicans or neighbours and relations with no politics. They've almost all been employed in the building trade and are in financial trouble.

"The cops are using the recession to try to force people to become informers. Police know the exact debt people owe banks or building societies, right down to the last penny."

Murphy alleged such approaches showed dissidents had been gaining recruits and the PSNI's campaign to encourage nationalists to pass on information voluntarily was failing.

Francis Carty (29), who recently lost his job as an engineer, said: "On 25 June, I was stopped by police at 10pm near Edendork. I produced my licence. The officer said: 'I'm not interested in your car. You run around with Kevin Murphy and the dissidents. I want you to talk to me about Murphy before there are more deaths. I want you to set up Murphy.' The policeman said I owed £200,000 and couldn't pay my mortgage. 'We can sort that out. If you help us with Murphy, you won't have to worry about money again,' he promised."

Carty said the officer was from Belfast and in his early 40s, with grey hair. He claimed the policeman threw a small strip of paper with a printed mobile-phone number into his car. He gave Murphy the number.

Murphy said: "We decided to play along. Three of us bought a new mobile phone and rang the number on Tuesday. We did it from a car because our houses are bugged and the cops would have caught on. One of us pretended to be Carty.

"We wanted to arrange a meeting and film it secretly. But once 'Carty' agreed to meet the cop, the area was swamped with police and we couldn't get near the meeting point. So we 'outed' ourselves to the cop on the phone and laughed at him."

A police spokesman declined to comment on the details of the incident but said: "The PSNI's policy relating to the use of covert human intelligence sources is strictly governed by the Regulation of Investigatory Powers Act and is fully compliant with human-rights legislation."

The SDLP's Alex Attwood said: "MI5 has primacy for national security but the PSNI still runs agents. Police clearly have the right to gain intelligence on terrorist organisations which may save lives.

"However, safeguards were meant to be in place regarding agents' recruitment and management. If police are approaching financially vulnerable people to become agents, that's very worrying."

Ex-British intelligence handler, Martin Ingram, said: "To offer £200,000 to someone with access to a prominent republican is in keeping with previous recruitment practices. That amount of money is chicken-feed to the intelligence services."

Murphy and Carty are forwarding the phone recordings to their solicitors.