The man who made the Omagh bomb in which 29 civilians died, also constructed the IRA bomb which killed a leading Co Down businessman eight years earlier but he was never even questioned by police, it has been claimed.

Instead, the security services knowingly allowed him to continue his bomb-making activities, a source said.

The source, who has detailed information on the killing of Kenny Graham (46), a building company owner who supplied the security forces, came forward to the Sunday Tribune following our account last week of Graham’s murder. Graham’s daughter Manya Dickinson is one of 179 people suing Libya for supplying Semtex to the IRA. Next month, she will travel to Tripoli to ask Colonel Gaddafi for compensation. The source said that ‘M’, a man in his mid-50s who was born in Newry but now lives in Dundalk, was a British agent. “He is a protected species,” the source said.

Graham was blown to bits after a bomb exploded under his car in the driveway of his Kilkeel home in April 1990. “‘M’ made the device in the kitchen of his house in Dundalk,” the source said. ‘M’ gave the bomb to ‘J’, a man from Kilkeel who has a conviction for possessing explosives. ‘J’, whose name is also known to the Sunday Tribune, knew Kenny Graham personally. ‘J’ brought the device to the bomb team. The source said: “It contained a quarter of a kilo of Semtex. It had a home-made mercury tilt switch. A small clear plastic tube and two carpet tacks were used.

“It contained a memopart timer to protect the person planting it. The bomb was attached to the car with a sea-searcher magnet – a very strong magnet which ensured it didn’t fall off.”

The source said an agent in the IRA told his security services handler that ‘M’ had made the bomb and ‘J’ had transported it. The information was passed on after Kenny Graham had been killed. “But the RUC didn’t act upon it. ‘M’ and ‘J’ weren’t arrested and questioned after the murder even though the intelligence services had detailed information about their roles,” the source said. “‘M’, a senior IRA member, was left at liberty to bomb and kill.”

Manya Dickinson said: “It makes me feel sick to hear that the police didn’t take action. What on earth were they playing at? My father had been murdered, the police were given detailed information about two of those allegedly involved, and there were no arrests. I’m absolutely disgusted.” ‘M’ has previously served sentences on both sides of the Border. After the Provisional IRA split in 1997, he offered his support to dissident republicans.

In her investigation of the Omagh bomb, police ombudsman Nuala O’Loan was told how a British agent had reported to his handler seeing ‘M’, smelling of diesel and covered in the dust particles from home-made explosives, just three days before the explosion.

Again, no action was taken against ‘M’. There was also an alleged 59-second phone call between ‘M’ and one of those on the bomb team. The Omagh families believe that ‘M’ is a British agent.

‘M’ was a former Provisional IRA OC in Newry. He was linked with the Real IRA in the past but the organisation has no connection with him now. He is regularly seen in Newry.