To his neighbours in the Yorkshire village of Newton upon Derwent, Gary Hyde, 43, was a respectable figure. A former special constable, he lived with his wife and two children in an attractive cottage near where he was born. Local people considered him a pillar of his East Riding community. His reputation was bolstered in the 1990s when he received a citation for helping to foil an armed raid during which a shotgun was pointed at his head. "It was terrifying – the worst moment of my life," he said at the time.

The experience did not deter him from pursuing a career as a gun dealer, his trajectory similar to that enjoyed by the UK's many other "lords of war" who broker huge weapons shipments without ever visiting the unstable countries they supply to see the consequences of their actions at first hand.

After leaving school in 1985, Hyde took a job at a local store, York Guns, that sold everything for field sports and shooting enthusiasts. When he became the store's managing director, his business acumen was eagerly sought. Indeed he was considered such an expert on international arms laws that, according to documents obtained by the Observer, he attended exclusive briefings at the United Nations Institute for Disarmament Research. He won contracts from the Ministry of Defence to bring in decommissioned weapons from conflict zones, and from the American government to supply anti-Saddam forces in Iraq.

But just like Robert Louis Stevenson's Mr Hyde, this was a man with two very distinct sides. And on Wednesday he will be sentenced at Southwark crown court after being found guilty of illegally supplying what prosecutors described as a huge shipment of arms from China to Nigeria.

The deal involved shipping 80,000 weapons, including AK-47s and Makarov pistols and 32m rounds of ammunition, a transaction that would have required 37 sea containers, each 6 metres long. It involved transactions stretching across Germany, China, Poland and Dubai.

According to documents obtained by the Observer, the $10m (£6m) Nigerian deal was supposed to earn Hyde more than $1m, which he intended to hide in a secret family trust in Liechtenstein controlled by a company based in the British Virgin Islands.

Ironically, Hyde's downfall owed much to a misplaced confidence that by structuring his deals offshore he could stay outside British law. As he protested upon his arrest, "I do not believe that I engaged in any activity in the UK which I understood required a licence."

However, following a search of his business premises and home, investigators from HM Revenue & Customs found emails on Hyde's computer confirming his role in the deal. Mobile phone records proved that he was in the UK when the shipment arrangements were made. It was a crucial breakthrough because it meant Hyde required a UK control licence, even though the guns never came into this country.

"UK legislation controls transfer of arms and military goods from one third country to another," said Elspeth Pringle, a Crown Prosecution Service (CPS) lawyer who specialises in arms prosecutions. "He failed to apply for a licence from the UK licensing authority. In this instance it didn't matter that the arms were not leaving the UK."

Hyde's arrest and conviction, following a five-year investigation, was a coup for the CPS and HMRC. "It was one of the largest cases I've ever come across in relation to the quantity of arms and ammunition," Pringle said. "It was unusual, too, in that it was a single deal. Other cases have often involved multiple deals to multiple customers or clients."

Documents suggest there was no shortage of companies offering to sell Hyde AK-47s – the world's favourite, and most poorly regulated, killing machine, according to Amnesty International, which estimates that there are 100m in circulation. What other deals did he broker? Only last year Hyde was arrested in connection with the alleged illegal importation into the US of almost 6,000 AK-47 magazines.

Confidential US embassy cables reveal that in 2008 York Guns tried to ship 130,000 AK-47s to Libya. Hyde acted as an intermediary in the deal, which, the cable noted, "raised eyebrows in diplomatic circles, as Libya has only 70,000 ground-force troops and these would be unlikely to use a weapon as dated as the AK-47". The export licence was rejected amid fears that the weapons would be re-exported to rebels in Sudan and Chad.

In 2007 the Observer first drew Hyde's activities to the attention of the UK authorities, reporting that companies in which he had an interest had sold tens of thousands of guns to Ziad Cattan, a former pizza parlour owner who became Iraq's head of military procurement, without the appropriate arms brokering licence. Many of the weapons shipped to Iraq disappeared after delivery.

"We could never nail down that the missing weapons went to insurgents, but some likely went astray because it appeared to us nobody was checking and monitoring them properly," said Oliver Sprague of Amnesty. Amnesty had flagged concerns about York Guns a year earlier, after it had imported thousands of assault rifles and machine guns from Bosnia for reasons that remain opaque.

A repeated failure by the international community to agree binding arms controls means there will be many other dealers like Hyde who will continue to broker huge weapons deals with impunity. But Pringle believes the Hyde case should be a warning to the UK's dealers. "The number of arms dealers in the UK is quite small," Pringle said. "They all know each other. This [conviction] sends out a signal that if you don't have the correct paperwork and you ship directly from the UK or from one country to another you will be prosecuted."

York Guns's files reveal that on 11 September 1995 Hyde dispatched a 9mm Browning pistol to a customer in Scotland who bought it for £304. Days later the buyer returned the weapon and phoned Hyde to say he was unhappy with its condition. "I then asked him if he would like it if we tidied it up a little bit and put in a few extra bits and pieces … and we would reduce the price, give him a part refund and send the gun back to him," Hyde recalled under questioning.

Asked at the Dunblane inquiry how much of a refund he had given to Thomas Hamilton, the former Scout leader who used the Browning that Hyde had sold him in a killing spree that left 15 children and their teacher dead, he paused. " … It was about £50," he replied.