An official inquiry has opened into allegations that Gibraltar’s most senior policeman was forced to leave the force after investigating alleged government fraud.

Headed by a retired UK High Court judge, the inquiry held its first public session in the British overseas territory on Monday, tasked with probing the circumstances leading to the early retirement of former police commissioner Ian McGrail.

Mr McGrail, whose 36-year-long career ended only halfway through his term in the Royal Gibraltar Police (RGP)’s top job, has claimed that he was pressed into early retirement in June 2020 after seeking to execute a search warrant against a person who had a close relationship with Gibraltar’s chief minister, Fabian Picardo.

Mr McGrail’s lawyers will tell the inquiry that their client was “muscled out” after looking into “misconduct and corruption” at the highest levels of government.

Mr Picardo’s government insists that there was no conspiracy and that Mr McGrail left his job because he had lost the confidence, not just of the chief minister, but also of the then-interim governor of Gibraltar, the only official who had the power to ask for the police chief’s resignation.

Since its formation, the McGrail inquiry has generated a swirl of accusations of wrongdoing that have rocked Gibraltar’s highest echelons of power.

The government has provided a list of incidents it argues were handled badly by Mr McGrail, who has also faced, and been acquitted of, a sexual assault charge since his resignation.

Meanwhile, authorities have been accused of mounting a campaign to discredit Mr McGrail, who claimed to have an unblemished record when he stepped down.

Police officers have been given written assurances, signed by Mr Picardo, that they can speak out against Mr McGrail and be guaranteed continued work in case of reprisals.

Counsel to the inquiry, Julian Santos, said on Monday that it was not a criminal or civil trial. He said it was important to shed light on the issues involved in the case after a “cacophony of public commentary”, which has been “painful for Gibraltar”.

One of the incidents during Mr McGrail’s time as police chief that will be scrutinised is a 2020 collision at sea between an RGP vessel and a boat whose two Spanish occupants were killed.

The incident turned out to have taken place in Spanish territorial waters and an inquest ruled that the two men from Ceuta, a Spanish exclave in North Africa, had been victims of unlawful killing.

The Gibraltar government has drafted a bill granting it powers to suspend or end a public inquiry, which is due to be approved in an express legislative procedure this week.

The bill was proposed just before the inquiry chair, Sir Peter Openshaw, announced that the investigations would include whether 19 current or former police officers who have filed witness statements containing negative evidence against McGrail “were offered incentives in exchange for the giving of the evidence to the inquiry”.

Gibraltar’s opposition party has accused Mr Picardo’s government of manoeuvring to prevent a full and fair inquiry from taking place after it used its new powers to restrict public references to the security forces during the inquiry.

“Gibraltar should not be fooled at the window-dressing that is going on here,” the Gibraltar Social Democrats party said.

Mr Picardo has said his government “has no intention to use the power to stop or delay the current inquiry into the retirement of Ian McGrail”.

The start of the inquiry was already delayed after UK police were called in last year to investigate a data breach.

The investigation into fraud led by the RGP under Mr McGrail saw three people charged with conspiracy to defraud, but the trial was ditched under a rare legal concept called nolle prosequi in which the UK attorney general decided the public interest was best served by not proceeding.