British businessman Neil Heywood privately confessed to friends that Gu Kailai – the woman now suspected of murdering him – was "mentally unstable" and behaved like an unforgiving "empress".

In conversations in the three years before his death, Heywood admitted that Gu's behaviour had grown increasingly erratic. He told one friend that Gu – wife of the leading Chinese politician Bo Xilai – was comporting herself "like an old-fashioned Chinese aristocrat or empress".

The friend was unconvinced by claims that the businessman and Gu were having an affair, and that this may have led to his murder. "I would be very surprised. He wasn't at all complimentary about her. He said she was mentally unstable and a force to be reckoned with. It didn't sound to me like the words of a man who was enamoured," the source told the Guardian.

Heywood's suspected murder has shaken Beijing's political establishment and has turned into a major international scandal. On Wednesday China's Communist party promised a full investigation after David Cameron raised the case with China's visiting propaganda chief.

The scandal has also embarrassed the foreign office. On Tuesday, amid accusations of acting too slowly, William Hague gave fresh details, saying he believed Heywood was poisoned on 14 November. His body was found at a hotel in the southwestern city of Chongqing the next day.

Much about the death remains murky. But Heywood's remarks to friends appear to bolster the official Chinese explanation of his death, with the Bos seemingly at the heart of the mystery. Gu and an employee from the family home, Zhang Xiaojun, are in custody on suspicion of his murder. Bo is the former party boss in Chongqing. He is under investigation for violations. He has not been seen since he was ousted as party secretary in March.

The friend met regularly with Heywood between 2008-2011, after bumping into him at a networking event. Typically she would see him every six weeks in Beijing, she said, bringing him Jaffa cakes from Britain at his request.

She said that the businessman painted a frank and dysfunctional portrait of Gu Kailai and her ambitious husband, a once serious candidate for the standing committee of the Politburo, the apogee of Chinese power. They presided over a small, exclusive group called the "inner circle". This group was mainly Chinese, but it included two foreigners – Heywood, an old Harrovian, and a French architect.

The friend recounted: "Neil told me that Gu had demanded that the inner circle divorce their wives and pledge loyalty to her alone. She thought that someone in her inner circle was betraying her. He said for Gu loyalty to the family was more important than anything else. He told me she was behaving like an old-fashioned Chinese aristocrat or empress."

But a precise motive for murder remains a mystery. On Monday Reuters, citing sources close to the Chinese investigation, said that Heywood was killed after he threatened to expose a plan by Gu to move money abroad. She asked Heywood late last year to transfer cash overseas and was outraged when he demanded a larger cut of the transaction, the agency suggested.

Now the friend – who declined to be named – has said that Heywood had always been "very cagey" about what his exact role was with the Bos.

The source didn't know until subsequent press reports that Heywood had helped to arrange schooling for the couple's son Bo Guagua in Britain and at Harrow. The friend remarked: "I assumed Neil was involved in funnelling finances for them overseas. The family had far more money at their disposal than a Communist party salary."

Heywood came to know Bo Xilai in the 1990s when he was mayor of the north-eastern city of Dalian. But by 2008 he had "fallen out" with the powerful couple, the friend said, and relations had dramatically cooled. Heywood never explained the reasons. Despite this semi-estrangement Heywood travelled to Chongqing a week before his death.

Of Heywood, the source said: "He was very bonhomous. Very English. He had an English prep school air about him." The source said Heywood "looked older than he was" – he was 41 when he died – and confirmed what others have suggested: that there was a Walter Mitty aspect to his personality. The friend said he was fascinated by James Bond films, and drove a Jaguar around downtown Beijing with the number plate "007" – unlikely behaviour if he were a spy, as some have suggested.

He also appeared to know every word of The Rock, she added, the Hollywood action thriller starring Sean Connery as an ex-MI6 agent.

The friend said that when she last saw Heywood the summer before his death, adding that he did not seem unduly worried. Rather, like other long-term British expatriates, Heywood seem to believe that he led a "charmed life" and that he was immune from the legal problems and other difficulties that might affect the locals. "He didn't seem to be too worried about the situation. He talked about falling out with the Bos. He mentioned coming back to the UK in the summer [2012] but only because his daughter needed to start secondary school."

There seems little doubt that Heywood's death was suspicious. Chinese authorities at first claimed he died of excessive drinking – a cause of death those who knew him say is implausible. "He wasn't teetotal but he drank sparingly. He usually drank diet coke," the friend said. "He would have one or two glasses of wine at most."

The friend added that she had some sympathy with British diplomats in China who have been criticised for only raising the alarm two months after his death: "Neil's father died of a heart attack in his 60s, and the family were telling for some time he died of a heart attack."

Heywood often talked about his Chinese wife Lulu and their two children. "He was very fond of her," the source said.