A former police officer claims he passed on a tip-off to his superior Don Hancock that a notorious eastern states underworld figure killed prominent brothel owner Shirley Finn in 1975, but was told to "leave it alone".

The Perth Coroner's Court is conducting an inquest into Ms Finn's death, after the Special Crime Squad reviewed the case when significant new evidence was presented to them.

The Finn case has haunted Western Australia, and is shrouded in rumour and speculation there was police and even political involvement in her death.

Ms Finn was murdered just three days before a tax hearing, at which she was threatening to blow the whistle on illicit dealings by politicians, businessmen and police.

Despite two cold case inquiries her murder remains unsolved.

Former police officer James Boland told today's hearing he was the second officer to attend the scene of the crime, at the Royal Perth Golf Course in South Perth, where Ms Finn was found wearing a full-length ball dress and slumped in her Dodge, with four bullet holes in her head.

He identified her body.

Mr Boland was questioned about information he had been given from a member of the public soon after Ms Finn's death — that notorious Sydney underworld figure Arthur Stanley "Neddy" Smith had killed her.

Smith is a convicted double murderer, serving life sentences in a Sydney jail for the killing of two men, one in 1983 and one in 1987.

Shirley Finn was found in her Dodge car with four bullet holes to her head. ( Supplied )

Finn 'fancied' underworld figure

Detective Boland told the Perth Coroner's Court he arrested a man known as Harold Brian Stevens in 1975 while working in the fraud squad, for dropping bad cheques, about five weeks after Ms Finn's murder.

Mr Boland said the man's boyfriend, known variously as Keith Allan Lewis, Kevin Patrick Parker and Kevin St Claire, approached him and asked to cut a deal for the charges to be reduced, in exchange for information about Ms Finn's murder.

Sorry, this video has expired Rumours of police involvement in Shirley Finn's 1975 murder have been rife from the outset.

The court heard Mr Lewis told Detective Boland he knew Smith, who had approached him about running prostitution in Western Australia, but he declined the offer.

Mr Boland said Mr Lewis told him Smith had flown to Perth using his mother's maiden name, the night of Ms Finn's murder.

He had arranged to meet with her, at a hotel near the Perth Concert Hall.

Apparently Ms Finn had "other arrangements", but cancelled them because she "fancied" Smith.

'Just don't do anything with it'

Mr Boland told the court he approached his superior Don Hancock, who ultimately rose to become officer in charge of the CIB in the late 80s, asking if he should cut a deal.

Mr Hancock authorised the deal, but when Mr Boland passed on the information he was told by Mr Hancock "just don't do anything with it".

Mr Boland identified Ms Finn's body, the court was told. ( ABC News: Rebecca Trigger )

Mr Boland told the court he thought that meant someone more senior or a team would investigate.

"Someone must have worked on that information," he said.

He said he confirmed some of the information with the airlines, but dropped it when told to do so by Mr Hancock.

When asked if anyone else followed up with him, he said no, and that he had only spoken to Mr Hancock.

Mr Hancock died in a car bomb with his friend Lawrence Lewis outside his Lathlain home in 2001. Bikie Sid Reid was convicted of his murder.

Brothel 'containment policy' questioned

Mr Boland was asked whether he was aware brothels operating in Kalgoorlie were part of a "containment policy".

Mr Boland denied any knowledge of police officers "on the take" in exchange for ignoring prostitution.

He was also asked if he was aware in 1975, of the allegation that former WA Premier Ray O'Connor, who was police minister at the time, was friends with one of the officers investigating her death, Bernie Johnson, and Ms Finn was going to "drop them in it", if they did not help her with her "tax problem".

Earlier this year Ms Finn's driver Leigh Beswick confirmed long-standing rumours, telling the ABC Ms Finn was in a relationship with then police minister Ray O'Connor, who went on to become WA Premier, and died in 2013.

In 2015, Labor MP John Quigley revealed while he was working as the police union lawyer, a senior police officer told him the bullets retrieved from Ms Finn's body matched those from a gun stored in WA Police's firearms branch.

Mr Johnson now has dementia, but was reported as previously denying any involvement in Ms Finn's death.

Former colleague claimed Boland confessed to killing

Officers inspect the scene at the Royal Perth Golf Course where Shirley Finn was found dead in 1975. ( Supplied )

Mr Boland told the court he was prompted to come forward when he heard about a cold case review and was interviewed in 2015.

The court heard Mr Boland accompanied detectives in the initial squad formed to investigate Ms Finn's murder, and attended her house in the aftermath of her death.

The court was also told a former colleague at Pardelup Prison Farm, where he went to work after leaving the police force, gave a statement in 2007 saying he told her he had killed Ms Finn.

Mr Boland said that was "absolutely ridiculous" and he "never said anything like that".

The court heard the claim was not taken further.

Mr Boland told the court under questioning from QC Tom Percy, who is representing Ms Finn's daughter Bridget Shewring, he owned three guns, including a Smith and Wesson, Bruno repeating rifle and an air gun at the time of Ms Finn's killing.

He said in 1984 he inherited guns from his father including the same make of rifle that was used to shoot Ms Finn.

He emphatically denied killing Ms Finn.

Ms Finn's daughter Bridget Shewring, who was only 12 when her mother died, said outside the court today she hoped all witnesses called "told the truth".

The inquest will continue next month.