A police investigation into the murder of a nationalist councillor was "wholly inadequate", with the actions of some officers indicative of "collusive behaviour", a watchdog has found.
The Police Ombudsman for Northern Ireland, Marie Anderson, said the family of Patrick "Patsy" Kelly were "failed by police".
Mr Kelly was last seen alive in the early hours of July 24 1974 as he drove away from the Corner Bar in Trillick, Co Tyrone, where he worked.
His body was found in Lough Eyes, near Lisbellaw, in Co Fermanagh, three weeks later on August 10.
He had been shot six times.
While loyalist paramilitaries claimed responsibility for the murder, the Kelly family believe the killing was perpetrated by members of a UDR patrol.
No-one has ever been charged or prosecuted over the murder.
Among the failings identified, the Police Ombudsman found that a senior investigating RUC officer showed "latent" investigative bias.
Mrs Anderson also concluded that the withholding of intelligence on potential UDR suspects from the murder investigation team and the failure to act on intelligence about an active UVF unit in the Fermanagh area was indicative of "collusive behaviour" on the part of RUC Special Branch and a police division commander who was responsible for oversight of the investigation.
Mrs Anderson said there was a series of "significant" investigative failings.
These included a failure to adequately verify the alibis of UDR members and failure to record detailed witness statements; a failure to draw links with previous attacks in the area; and forensic failure to make inquiries about footwear marks at the abduction site that appeared to be made by military style boots.
Officers also failed to recover a boat at Lough Eyes, with no record of fingerprint inquiries, and also failed to make inquiries about an anonymous letter that alleged the involvement of several UDR members, said the ombudsman.
She said the senior investigating officer displayed a latent investigative bias over his insistence that allegations about potential UDR involvement were part of a "smear campaign".
As early as July 28 1974, intelligence provided to RUC Special Branch indicated Mr Kelly had an argument with a UDR patrol a number of days before his abduction.
In early August 1975, more than a year after the murder, intelligence named two UDR members as having carried out the murder.
Both members had been interviewed as witnesses early in the RUC investigation.
Another piece of intelligence indicated that other relevant UDR members were also part of a Loyalist Defence Volunteers (LDV) paramilitary unit.
In September 1975, further intelligence named individuals as being responsible for Mr Kelly's murder.
The ombudsman said records indicate that some of this intelligence was shared with the local division commander who had responsibility for oversight of the murder investigation and that some was shared with CID.
However, there is no record of which CID officers received it.
The watchdog said there was no evidence that any of the intelligence was ever received by the murder investigation team.
The ombudsman said the senior investigating officer had consistently stated that he did not receive intelligence at any point linking UDR members and other individuals to Mr Kelly's abduction and murder and that, had he been supplied with relevant intelligence, he would have made arrests.
Mrs Anderson said she accepted that none of the intelligence gathered by RUC Special Branch was disseminated to him.
The ombudsman's investigation also established that RUC Special Branch and the 'L' division commander were aware of significant intelligence from 1975 reports that a UVF unit, assisted by RUC and UDR members, was active in the Fermanagh area at the time of Mr Kelly's murder.
However, there is no evidence that any action was taken by the division commander to act on the intelligence, which was not shared with the murder investigation team.
The ombudsman said the withholding of intelligence and the failure to act on it impacted upon the effectiveness of the murder investigation and were indicative of "collusive behaviour".
Solicitor Adrian O’Kane, of Patrick Fahy and Compay Solicitors, said the report “vindicates entirely” the reports made by the Kelly family and “indeed confirms their worst fears” that the murder was never properly investigated.
“There are further legal avenues open to the Kelly family, the most pressing of which is the request currently before the Attorney General that a fresh inquest be directed,” he said.
“Whilst today is a major breakthrough, and an emotional day for the family, their quest for the full truth to emerge shall continue.”
