John Kapp loaned Anthony Mitchell, jailed yesterday at the Old Bailey for eight years, more than £6,000 in three installments between 1993 and 1995.

Mitchell, who had been a tenant of the Brighton and Hove councillor for ten years, told him the cash was for a mortgage to buy a house and refurbish it.

But the Argus can reveal that Mitchell had received an £18,000 redundancy settlement from an engineering firm in Crawley by the time the final loan was given in 1995.

By this stage Mitchell had set himself up as a legitimate firearms dealer but was illegally supplying pistols to a fellow shooting enthusiast, Robert Bown.

Today Coun Kapp said: "I had no idea he was given the money by his ex-employers. If I had known I would never have lent him it.

"I suppose it is possible he used my money to start his operation."

The two first met when Coun Kapp agreed to let out one of his flats in Highcroft Villas, Brighton, to Mitchell in 1983.

In the early Nineties, when Mitchell's hours were cut to a three-day week, Coun Kapp reduced his rent in exchange for odd jobs around the property.

In 1993 he suggested Mitchell would be better off buying his own home rather than renting and lent him £3,000 in June for a deposit.

Coun Kapp made a further payment of £2,500 in October with the agreement Mitchell would repay the loan, at eight per cent interest, at the rate of £220 a month. The final loan of £1,000 was given in March 1995.

The Old Bailey heard how Mitchell had started reactivating guns after being made redundant in 1994.

Appearing as a character reference during the case, Coun Kapp, 63, described his former tenant as "honest and reliable".

He said: "He was somebody who I willingly lent money to believing he would honour and repay it, as indeed he did."

Speaking after sentence was passed, he said: "I thought he was fixingmotorbikes. That was the story he always told me.

"But it seems he was just a good actor. Still, I just judged him on how I found him and he was one of my best tenants.

"I only found out last week what he was charged with because I didn't want to prejudice my own thoughts of him as a landlord speaking to the court."

Coun Geoffrey Theobald, leader of the authority's Tory group, said: "Anybody in life can make a mistake. We are not infallible are we?"

Converted for the new archive on 30 June 2000. Some images and formatting may have been lost in the conversion.