For many of her 38 years, Shehla Masood had campaigned tirelessly against corruption. Glamorous and combative, she had embraced India's Right to Information Act with gusto, rattling out applications in all directions, exposing wrongdoing at the highest levels of Madhya Pradesh state where she lived, upsetting many powerful people with a great deal to lose. Judges, police and politicians from the local ruling BJP party had all come into her sights and been exposed for misusing public cash.

In recent months, she had turned her attention to mining conglomerate Rio Tinto's plans to extract 37 million tonnes of diamond-bearing ore from land in one of the finest strands of teak forest in the country.

Then, on 16 August, Shehla was found dead in her car outside her home in a prosperous area of Bhopal, with a single gunshot to her neck. More than a month later, the investigation has hit a brick wall. Even the offer of a £7,500 reward – an enormous sum for India – has failed to elicit a single witness to a killing that took place in broad daylight in a busy street.

It is Tuesday morning in that same respectable street in Bhopal. A large khaki tent is pitched opposite Shehla's house. Four police officers, posted to guard her family, sprawl inside on charpoys, fast asleep. The road leads to a large slum, whose residents pass regularly in front of the house, much as they must have done on the morning she died.

It was Shehla's father, Sultan Masood, who found her lying with her head back in the front seat of her little silver Hyundai Santro car. "I called: 'Shehla, Shehla', but she didn't speak. I took some water and splashed it on her face and then her dupatta [scarf] slipped down and I noticed the black hole in her neck. I started screaming: 'Somebody has killed my daughter, someone has shot my daughter.'"

It is almost inconceivable that no one saw the killer or heard the shot, but Shehla's fate appears to have been a warning to others to keep silent.

For Shehla, though, silence was never an option. In the past few months, she had targeted Rio Tinto's diamond plans. Environmentalists feared that the mine project in Chhatarpur district – inaugurated by the chief minister in 2009 – threatened the watershed of Panna Tiger Reserve and the Shyamri river.

In a letter to India's home minister in July, she wrote: "The Rio Tinto company began exploring in this eco-sensitive zone before being granted government permission. The officials who objected have been transferred from their positions."

The high court of Madhya Pradesh had already ordered the national and state governments to explain why mining had been permitted, according to the petition, "in gross violation of rules and regulations".

Shehla planned to launch her own legal challenge and had started to file right-to-information applications to gather evidence.

Shehla's younger sister, Ayesha, has returned from the US, where she is studying microbiology, and has been trying to make sense of what happened, ploughing through her computer hard drive, digging out her correspondence, looking for a clue. Sitting in the living room of the elegantly furnished, two-storey family home, the 34-year-old said: "She told a friend who met her five days before her death that she had information that would shake the BJP government in Madhya Pradesh to its core."

Ayesha Masood fears the killing is linked to those who stood to gain from the deal with Rio Tinto. Gopal Krishna, founder of the Delhi-based ToxicsWatch Alliance, had been working with Shehla in the weeks before her death. He said she had just started making fresh right-to-information applications and planned to launch her own public-interest challenge to the mine in the high court.

Vinita Deshmukh, a journalist and activist who has followed the case closely, said: "It was more convenient and more economical perhaps to snuff out the life of Shehla. Money and power almost always overpower the laws of this country, especially when it comes to big projects that generally throw up lucrative commissions and kickbacks to officers and elected representatives."

Madhya Pradesh's home minister, Uma Shankar Gupta, dismissed such suggestions. It was "unfortunate" that she was killed, he said, but no one in government wanted her dead: there were plenty of more capable right-to-information activists and nothing had happened to them.

As for the Rio Tinto mine, it could not possibly be illegal, he said: "If the chief minister went over and inaugurated it, it has to be legal."

Rio Tinto, which is investing £292m on what it calls the Bunder project, vehemently denies that the mine has anything to do with Masood's murder.

A spokesman said: "Rio Tinto started exploring for minerals in India in 1996 after the sector was opened for foreign direct investment. In 2004, Rio Tinto made news across the world with the discovery of significant diamond deposits at the Bunder project in Chhatarpur district of Madhya Pradesh. We are currently at the evaluation stage and doing detailed studies while our application for a mining lease is pending with the government of India. We have a very strict, transparent ethics policy that is uncompromising no matter where we operate.

"We learned through the media of the shocking death of Ms Masood, for which we extend our sympathy to her family and friends. We join with the community of Bhopal in condemning such acts of violence and the loss of life.

"We cannot understand why our name is bring linked with this tragedy. We never met nor had any contact with Ms Masood and are unaware of any communication she had with the ministry of environment and forest. We have had no communication with the CBI [Central Bureau of Investigation] so are unaware of any details about the investigation."

The man in charge of the murder inquiry, Deputy Inspector General Hemant Priyadarshy, thinks it was a professional job. All the possible motives are being considered, he said. "We are speaking to everyone. Nobody is outside the reach of the law."

His job would be simpler had Shehla chosen to tackle fewer establishment figures. "I fear for my life," she said in an interview a month before her death. "But I will continue working and carry on … It is the nexus between politicians and babus [officials] which is slowly poisoning our country. The fight is between the powerful and weak and I represent the weakest and the poorest of society."

The day she died she was due to pick up the responses to a right-to-information request on judges' expenditure, before addressing a rally in support of national anti-corruption campaigner Anna Hazare's hunger strike (she was his campaign organiser in the state) and inviting people to name and shame corrupt politicians and officials. She was winning praise from the national BJP party in Delhi through her close friendship with one of its MPs, Tarun Vijay, but that only seemed to breed jealousy and fear of her influence in the local party. Someone was spreading rumours that Shehla, a Muslim who also worked as an events organiser, was a spy for Pakistan. And then there was her acrimonious dispute with a senior police officer, whom she had accused of corruption.

Ayesha Masood sits in the living room, rattling through the list. She seems uncertain where to turn next, unsure that the police will crack the case, seeing the reward as a sign of desperation. The family demanded the local police be taken off the investigation after they initially concluded that Shehla had shot herself, despite no weapon being found at the scene. They are happier now that the CBI is in charge, but still she doubts that they will get justice. "If highly influential people are involved, India is very good at sacrificing its own citizens," she said.

There is no doubt that Shehla made many enemies during her years of anti-corruption activism. The identity of her killer may prove elusive for some time to come.