The canoeist who came back from the dead was in custody on suspicion of fraud last night as police admitted that they may have been duped by a master conman.

John Darwin, arrested early yesterday at his son’s home in Basingstoke, was driven to face questions at a police station in the North East.

Today, detectives will attempt to fill a 5½year hole that stretches from Mr Darwin’s disappearance at sea in March 2002 to his extraordinary return from the dead last weekend.

At Cleveland Police headquarters in Middlesbrough, Detective Superintendent Tony Hutchinson said that Mr Darwin had seemed “in apparent good health, tanned, well nourished and dressed” when he walked into West End Central Police Station in London four days ago.

Mr Darwin, who claims to have no memory of anything since June 2000, was able to give the police his name and date of birth. He said he understood that police “may be looking for him”. Mr Hutchinson, who read from a police statement entitled “Lazarus Press Conference”, said that the 57-year-old’s reemergence had “raised a lot of questions”.

One of the most significant, he said, was prompted by the discovery of a photograph of Mr Downing posing happily with his “widow”, Anne, believed to have been taken in Panama in July last year.

It would, Mr Hutchinson agreed, “defy belief” to suggest that a man with no memory, last seen in a small canoe in the North Sea, could have stumbled upon his wife four years later while she holidayed in a Central American country.

Mr Hutchinson said that the police may seek to extradite Mrs Darwin from Panama, with which Britain has an extradition deal.

Before that, detectives will be asking Mr Darwin, a former teacher who became a prison officer, whether it was a coincidence that his wife sold their family home in Seaton Carew, near Hartlepool, and emigrated from Britain six weeks before her husband’s dramatic reappearance. When Mr Darwin was reported missing off Seaton Carew by his wife, an air and sea search was launched. His paddle was found in 24 hours and the kayak was apparently washed up six weeks later. Six months later, police issued a statement on his wife’s behalf in which she talked about her sadness at having no grave where she could mourn for her husband. An inquest was held in April 2003 at which the coroner declared Mr Darwin dead and recorded an open verdict.

“No doubt,” Mr Hutchinson said, “he was as surprised as everyone else at the events of recent days.”

But were the police genuinely surprised that Mr Darwin was still alive?

Mr Hutchinson said that officers began to make inquiries three months ago after some information was reported suggesting there was something suspicious about his disappearance.

He also confirmed that in 2002 police had doubts about the drowning story. These were prompted in part by information from Holme House prison, Stockton-on-Tees, where Mr Darwin had been an officer for ten years. Concerns had been raised about his alleged relationship with inmates who were serving jail sentences for fraud.

Mr Darwin arrived at Kirkleatham police station in Cleveland last night to face police questioning.

An international fraud inquiry is now under way. It will seek to establish whether Mr Darwin had substantial debts that were wiped off when he was declared dead.

Officers are also in contact with financial institutions to establish what payouts were received by Mrs Darwin as a result of her husband’s apparent death.

Tax heaven

Does Panama have a long history as a tax haven? Yes, until suffering in the late 1980s under the regime of General Noriega. In the 1990s, it gradually regained its former position as one of the most attractive offshore tax havens. It is one of the the principal channels for funds into and out of Latin America

How does the tax system work? It is very simple, says Justin Rix, an international tax specialist with Grant Thornton, the accountant. “You pay tax in Panama only on income which is judged to have arisen in Panama. So if you are living in Panama you can receive income from all other parts of the world and pay no tax on it”

Does Panama have other financial advantages? Yes. Mr Rix says there has, for many years, been a general lack of transparency about ownership of assets. So if you set up trusts or companies in Panama it is very hard for outside tax investigators to discover what they contain

How much does it cost to buy a flat there, and is it easy to do? Panama is considered an easy place for foreigners to buy property, primarily because of the affordable prices and the fact that there are almost no restrictions on owning land in most areas. Luxury apartments in the centre of Panama City range between just £20,000 and £100,000. The Panamanian Government also regularly offers incentives to expatriates on mortgage repayments

What kind of lifestyle can a resident lead in Panama? For expatriates, Panama holds a number of attractions. English is commonly spoken and the American dollar is almost universally accepted. Panama City has numerous tourist attractions including hotels, restaurants, a picturesque old quarter, cathedral and museum

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