It begins, as so many mysteries do, with a corpse. An Old Harrovian called Neil Heywood, 41, and in hitherto robust health, is found dead in a Chinese hotel room.

His body is rapidly cremated, the family grieve, and there the sad matter might have rested. Except that this is China, and Heywood had connections. Important connections. One is said to have poisoned him; others have disappeared, and, this weekend, yet more layers of apparent intrigue were added with fresh revelations that jealousy and sex may explain all. Or, rather, that's what the authorities want us to believe.

This is, as yet, a puzzle with too many pieces and no clear picture of where they belong. But one thing must be understood at the outset: China is this year having a once-in-a-generation transfer of power. For all its economic vigour, there is jitteriness here. Seven places on the country's nine-man inner ruling elite are due to be changed, and, among the candidates until recently, was Bo Xilai, the party chief in the huge, sprawling city of Chongqing.

It was to Bo that Neil Heywood hitched his commercial wagon when he began to wheel and deal in China. Heywood wrote to a number of rising young Chinese movers, Bo responded, and the Old Harrovian began to build a relationship with him and his family, second wife Gu Kailai and young son Bo Guagua. Bo Xilai was then mayor of Dalian, a city where Heywood met and married his wife, Lulu. When Bo went to Beijing, Heywood followed. When Bo became boss in Chongqing – a city of some 30 million people – Heywood was involved. Among the tasks that Heywood carried out for the Bo family were helping with investments, making introductions to foreign firms trying to start up in the region, and apparently also helping smooth the path of Bo Guagua's English education at Harrow and Balliol College, Oxford.

Heywood by now had two children, and lived the life of a successful fixer in a gated community on the outskirts of Beijing, sailing at weekends, wearing a linen suit, smoking cigars, and driving a silver Jaguar. Like many players in places such as Russia and China, he trailed behind him a certain air of intrigue, leaving the vague impression that he might have intelligence connections. Indeed, he was known to have worked on occasion for Hakluyt & Company, a consultancy firm co-founded by a former MI6 officer. Best not to ask too many questions, old boy.

In the last year or so, Heywood's relationship with Bo and his wife waned. This may have had something to do with Gu's behaviour. She is reported to have suffered from depression and panic attacks, and she started requesting that members of the family's inner circle, including Heywood, divorce their wives and swear an oath of loyalty. Heywood, understandably, refused. Bizarre, but an alleged explanation was to emerge.

Meanwhile, Bo's regime in Chongqing was far from low-key. He was a boss who combined wheeling and dealing to lure Western business to his city with a populist line in Mao-era nostalgia that included organising public sing-songs of revolutionary songs. He had also led a ruthless purge of organised crime which involved torture, and the trial and execution of his rivals. He made money, big money, but he also made enemies, and his grandstanding style made him dangerously conspicuous in the conformist world of Chinese politics.

And so we come to the moment in November 2011 when Heywood was summoned to Chongqing. He checked into a hotel, which is so far unnamed, and it was here that he was found dead. The Chinese told British diplomats that this modest drinker had died of excessive alcohol, but informed his family he had succumbed to a heart attack. Either way, no one raised any suspicions about the sudden death of a 41-year-old, and his body was cremated, reportedly at the request of, or at least with the agreement of, his family.

It is unusual for the Chinese authorities to conduct no post-mortem examination, to so swiftly dispose of a body, and, curiously, to have two policemen at the cremation. A foreigner's death is always problematic for the Chinese police; the usual reaction is inertia, as officers kick the problem upstairs. The role, if any, of the British embassy in all this is not known.

The next material development involves Wang Lijun, Bo's deputy, head of security, and the man in charge of Bo's extirpation of organised crime. In February, Wang went to Bo and told him that Heywood's death was murder, and the suspects were Madam Gu and one of her domestic staff. The city boss's reaction was to relieve Wang of his duties, a move that, given Bo's wide powers, made the now ex-police chief fear for his life. On 6 February, he contacted the British consulate, made an appointment he never kept, and instead drove 170 miles to a US diplomatic outpost in Chengdu. There he spilled his considerable store of beans, telling the Americans not only of the alleged killing of Heywood, but much else besides.

The Americans listened, took notes, accepted the as yet unspecified documents he handed them, declined to give him protective shelter, and, a day later, Wang emerged into the waiting arms of the Beijing authorities. He was detained and has not been seen since.

The Chinese – Wang presumably having unburdened himself – now acted. First Bo was stripped of all positons, then Madam Gu was held and charged with poisoning Heywood. The motive, it was said, was that she and Heywood "had conflict over economic interests, which had been intensified". But why would she kill a prominent member of the British community because of a wrangle over commission? After all, her husband had reportedly made merry as city boss, she was a successful lawyer in her own right, and her sisters controlled a business empire worth about £80m. Last night, Mandarin websites claimed it was not business that was the motive, but jealousy: Gu was having, or had had, an affair with Heywood, and Bo ordered the Briton killed.

Just as likely – if Heywood's death was murder – is that it was to do with what he knew of the couple's business dealings. It's very difficult to work out how much money Bo Xilai has, but it probably runs through a web of family members and associates. Very little can be traced back to the man himself, but his wife would have leveraged his high position into major business opportunities. Certainly the party hierarchy thinks so – or wants others to think so. The People's Daily hinted at this when it said that she made use of her closeness to power.

Corruption allegations have hung around Bo and Gu for many years. There were lots of rumours of corruption during his tenure as mayor of Dalian in the 1990s, but a journalist who made allegations about graft in the family, Jiang Weiping, was jailed. He says he was abducted on the orders of Bo's minions, and he has lived in exile in Canada since 2009. Jiang has made other allegations about Gu, including that she has both a Hong Kong ID and a Singapore green card.

The idea that Bo Inc had major funds was supported by debates about how he afforded the very high school and college fees for his son on a politician's salary of a reported £75,000. Bo has always insisted Guagua was a scholarship boy, but he certainly did not behave like one. At Oxford, he was known as a party boy, and was warned to spend more time preparing for exams. While his father was pushing "red" cultural activities in Chongqing, Bo Guagua was supposedly driving a red Ferrari. Whatever happened, he managed to get into the John F Kennedy School of Government at Harvard (fees, $70,000), where he lived in a $3,700-a-month apartment and drove a Porsche. He is now in the care of US officials.

And then there is the man who has barely been mentioned so far: Xu Ming, China's eighth-richest man. He is the founder and chairman of the Dalian Shide chemical group, and one of Bo's closest allies. He has also been detained, on 15 March, for alleged economic crimes. Bo, meanwhile, has not been formally charged with corruption, but it can be only a matter of time.