Mohamed Al Fayed insisted that the crash that killed his son, Dodi, and Diana, Princess of Wales, was a plot or assassination within seconds of receiving the news, their inquest was told yesterday.

The Harrods tycoon told Franz Klein, president of the Ritz Hotel in Paris, who broke the news of the fatal car crash to him: “I know more than you know, more than you think.”

Giving evidence to the inquest in London, Mr Klein also said that Dodi told him during the summer of 1997 that the couple were going to get engaged. He claimed that Dodi told him of plans for the couple to settle in Paris at Villa Windsor – the house where Edward VIII and Wallis Simpson lived in exile after the abdication.

According to Mr Klein, Dodi had chosen a ring from the Repossi jewellers’ engagement range hours before the crash in the early hours of August 31, 1997. Breaking down in tears as he gave his evidence, he told how he called Mr Al Fayed in London from his holiday home in Antibes, southern France, to relay the news about 20 minutes after the crash had happened.

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“I said ‘Mr Fayed, very sorry to disturb you, there has been a terrible accident . .. Dodi passed away and the driver’.”

Mr Klein said that Mr Al Fayed had asked about the condition of the Princess, and that he replied that she was alive. He added that he said it was an accident. “Mr Fayed, very calm, said to me, ‘Frank, this is not an accident, this is a plot or an assassination’. I said, ‘You cannot say that, it’s an accident’, and he said, ‘Frank, I know more than you know, more than you think’. Then I think the conversation was over.”

Mr Klein said that he had been contacted soon after the couple’s deaths by a woman who claimed that rumours were rife among staff at the hospital where the Princess died that she had been pregnant. The woman said that her nephew was a male nurse at the Pitié-Salpêtrière. He said that he passed the name to police but did not know what the outcome had been.

He also recounted how the departure of Dodi Fayed’s coffin from Paris on August 31 was held up for about an hour after a call from London suggesting that Scotland Yard had information that the deaths were suspicious. He said that the claim was made in a call from John Macnamara, Mr Al Fayed’s head of security, who said he had been told as much by Michael Burgess, the Surrey Coroner who was, at one point, due to oversee the inquests.

Mr Klein also spoke at length about Henri Paul, the man who was at the wheel of the Mercedes in which the couple were killed. French and British investigators concluded that Mr Paul was over the drink-drive limit and was going too fast when he crashed. But Mr Al Fayed believes that his alcohol levels were falsified and that Mr Paul was in the pay of MI6 and was acting on orders from spies.

He said that Mr Paul’s job – as acting head of security at the hotel – had never included driving guests. But he said he believed that he had volunteered to drive the couple as part of a decoy plan to evade the paparazzi.

In an extraordinary exchange with Mr Al Fayed’s lawyer, Michael Mansfield, QC, he said that he would not have been surprised if Mr Paul had links with foreign security services. But he did not know if he had been in contact with British spies in Paris.

He told how he learnt of the discovery of 12,565 French francs (about £1,250) that was being carried by Mr Paul that night. Asked by Mr Mansfield whether this was the kind of money he was likely to have received in tips, he replied: “Not at all.”

The inquests continue.

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