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The shooting of Danny Smith, wanted in connection with an attempted murder in Essex in 2007, shows that the coast around Marbella is still the favourite destination for criminals from Britain who want to escape the long arm of the law

It could have been a scene straight out of a bad British geezer film. A dark-haired young man having a drink on the terrace of a Spanish resort bar on a balmy Mediterranean night. A motorcycle cruises along the street. Suddenly six shots ring out. Bystanders hit the ground. Screams. The motorcyclist speeds off with his gunman accomplice clinging on behind him. The young man lies dying, three shots to the head.

But the shooting at the Lounge Bar in Mijas, near Marbella on the Costa del Sol, last Saturday night belongs in the non-fiction section. The death of Danny Smith, 26, from Billericay in Essex, is the latest murder of a foreigner to be investigated by Spanish police in what has become a world of expat mayhem and one that reinforces the image of this once magical part of the Iberian peninsula as the Costa del Crime, a nickname acquired nearly 30 years ago.

Smith was on borrowed time. He was on the run from British police who were seeking him in connection with the shooting in Stock, near Chelmsford, Essex, of businessman Doug Turner in 2007. That in itself was a bungled hit, with Turner the wrong target. Smith fled, leaving two associates to face the music. Then in December last year Essex police, having received intelligence that he was in Spain or northern Cyprus, issued an appeal for further information.

Working by day in the building trade, drinking by night in the bars, Smith was apparently unworried by the possibility of arrest. Earlier in the evening he was said to have been involved in an argument in the bar with a man who was harassing some of the women customers. The shooting followed. Essex police said yesterday that they were awaiting formal identification from the Spanish authorities. A young Irishman has already been arrested for the murder and is in custody.

But why was Smith there in the first place? The original reason British criminals came to the Costa was the collapse in 1978 of a long-standing extradition agreement, originally drawn up by Benjamin Disraeli, between the UK and Spain. The latter complained that Britain was making it too difficult to retrieve Spanish fugitives and duly ended the arrangement. Suddenly the coast became a magnet for men if not quite on the run then certainly travelling at jogging pace. Up to a hundred major villains settled. Bars with names like Sinatra's and El Bandito catered to the new arrivals and the stretch of coast became a European Miami: sunny, decadent, dangerous. It was a good place to hide, with 100,000 or so Britons making a first or second home there. By the time the extradition loophole was closed in 1985, the area was established as "the bit of Europe that fell off the back of a lorry".

In the 1990s a corrupt local mayor, Jesús Gil y Gil, happy to stuff his pockets and turn blind eyes to illegal construction, made it all the more attractive. The money slopping around from the drugs trade had to go somewhere, and the booming construction business which saw house prices double in a decade was an obvious place for it. By the time Gil died in 2004 the damage was done.

Now up to a million Britons have homes in Spain, although the number is dwindling as the recession tightens and the pound weakens against the euro. While many are law-abiding retirees, courted in the spring by David Cameron as potential Tory voters, a fair proportion are duckers and divers, with a smattering of serious professional criminals, and they have spread along the coasts. Drive down the Costa Brava and someone will point out where Kenny Noye, now serving life for murder, supposedly ordered bullet-proof glass for his swimming pool.

Last September, Crimestoppers, in association with the UK's Serious Organised Crime Agency (Soca), issued its latest most wanted list as part of Operation Captura, an attempt to track down British criminals hiding out in Spain. Last month Martin Smith became the 34th name on that list of 50 to have been caught, when he was grabbed in Barcelona.

There have, of course, been more momentous shootings than that of Danny Smith. In April 1990 Charlie Wilson, the great train robber, was slicing cucumbers for a salad at his villa in Llanos de Nagüeles, near Marbella, when a young man in a baseball cap arrived on a mountain bike, asked Wilson's wife, Pat, for a word with her husband, and then shot him and Bobo, the family alsatian, before escaping over the back wall.

This was a time when Ronnie Knight, wide-boy former husband of the actress Barbara Windsor, acted as the underworld's ambassador to the area. He had property in the hills outside Fuengirola which he described in his autobiography, Black Knight, as "paradise found", missing only a decent Indian restaurant to make it perfection. When he went back to stand trial at the Old Bailey in 1995 on charges of handling stolen money, his barrister, the late Richard Ferguson QC, told the judge that his client's image as a "swashbuckling figure basking in the sun in Spain" was an exaggeration.

Some criminals seeking safety have long since buckled their swashes and headed to more secure bolt holes. Turkish-occupied northern Cyprus, which is not recognised by the UK and therefore has no extradition treaty, provides sanctuary for some. After Britain's biggest cash robbery, of the Securitas depot in Tonbridge in Kent in 2006, it was to northern Cyprus that detectives flew in search of suspects and some of the missing £53m. There are only around 5,000 British expats there, so blending in is not such an easy option.

The authorities claim that northern Cyprus does not deserve its reputation. "I would say to people in Britain â€" don't believe everything you hear," said the prime minister's spokesman when the Tonbridge hunt was on. "This is a democratic country and our legal system is like the British one. It's very easy for people to say, 'we can't find the criminals; they must be in northern Cyprus'."

Another hideout destination is Thailand, with Pattaya the favoured spot. The attraction here â€" apart from the obligatory full English breakfast, thriving counterfeit goods market and bar girls â€" is that bogus IDs are easy to get, the extradition process can be slow and fugitives can slip across the border into Cambodia. But nothing compares with Spain for convenience and comfort.

The Spanish government is concerned about the way the country has become a honeypot for international criminals: there are 27,000 foreigners in jail, more than a third of the prison population, and an increase of 242% in the past decade. A law was introduced in April to close loopholes used in money-laundering and to impose new obligations on lawyers and estate agents when large quantities of cash are involved. Criminals who use casinos to launder money now face a new, if minor, hurdle; more than €2,000 in chips can only be obtained with identification.

British villains have been joined by their Irish counterparts, partly as a result of the Irish authorities' increased activity in hunting down criminal assets. Last month Christy Kinahan, from Dublin, named by the Garda as a major player in drugs and arms, was arrested at his apartment near Marbella, in a co-ordinated series of raids across Europe that saw 11 properties in Spain turned over. There is also a powerful eastern European criminal presence: Russian, Romanian, Bulgarian, Albanian. Simultaneously, the Galician coast in the north-west of the country became the European gateway for the Latin American cocaine trade. Spain now has the highest percentage of cocaine use in Europe.

The 2001 film Sexy Beast epitomises the tanned and complacent British villain in Spain. It was preceded on the screen in 1984 by Stephen Frears's The Hit, in which Terence Stamp played a supergrass on the run from his former colleagues, and followed in 2005 by the less celebrated The Business. Danny Smith, remembered now with flowers to "Tall Dan" outside the lounge, may have had only a walk-on part in the latest Costa drama, but he will not be the last young Briton to slump to a barroom floor with a bullet in his head.