BANGKOK -- When a Thai servant stole more than $20 million worth of jewelry from a Saudi royal palace five years ago and fled to his homeland, Thai police swung into action.

They soon arrested the Thai worker, seized his 200-pound haul and, to demonstrate cooperation with Saudi authorities, made a public show of returning the loot.

Case closed -- or so the police had hoped. In fact, much of the "jewelry" given back to the Saudis turned out to be fake, and many valuable pieces were missing. And that was just the beginning of a messy scandal that has dogged a succession of Thai governments.

Since then, the affair has left a trail of murder and intrigue worthy of a Hollywood potboiler. It has also soured relations with Saudi Arabia and cost Thailand millions of dollars in lost revenue from a Saudi ban on employing any new Thai contract workers.

Now the long-running scandal is reaching into the upper echelons of Thailand's police department. A former police chief and his deputy were officially implicated in the case Aug. 15 -- the highest-ranking of 15 police officers so far accused of involvement in the theft of the jewels and in a subsequent coverup.

And there are suspicions that the taint may stretch higher still.

The former police chief, Sawat Amornwiwat, now a Thai senator and Interior Ministry inspector general, proclaimed his innocence last week while blaming unnamed fellow officers. "I am innocent, but I am being accused by people who are themselves big thieves dressed in police uniforms," he said in an emotional news conference.

It all began in 1989 when Kriangkrai Techamong purloined dozens of gems and pieces of jewelry from the palace of Prince Faisal bin Fahd, a son of King Fahd, while the prince and his wife were away on a three-month vacation. In Riyadh, Faisal is president of a youth welfare organization and a principal backer of the Saudi soccer team that competed in the recent World Cup.

According to Saudi Arabia's top diplomat here, charge d'affaires Mohammed Said Khoja, the stolen items included diamond-studded gold watches, gem-encrusted necklaces, "rubies the size of chicken eggs" and a 50-carat diamond.

In January 1990, Thai police caught Kriangkrai and "retrieved all the jewelry," Khoja said. But when it was returned to Saudi Arabia, he said, 80 percent of the items were missing and most of the rest were counterfeit.

Meanwhile, Kriangkrai was convicted and sentenced to five years in prison. With time off for good behavior, he was released after serving two years and seven months.

Under Saudi pressure, Thailand reopened the case in June 1991 and later charged four civilians with receiving stolen property. Authorities recovered about $120,000 worth of the missing jewelry and filed embezzlement charges against a senior police officer who had initially headed an investigation of the theft.

One of the four civilians, Santi Srithanakan, is widely considered the key to the affair. A prominent jewelry merchant with high-level police connections, he received much of the stolen jewelry and can incriminate top police officials in the scandal, investigators believe.

Santi was recently kidnapped and held for three days in northern Thailand by unknown assailants, who reportedly warned him to keep his mouth shut. He currently is said to be under military protection. His wife, Darawadee, 34, and son, Seri, 14, however, were found dead in a sedan on a highway north of Bangkok on Aug. 1. They had been abducted and released earlier this year and reportedly disappeared from their home again on July 29.

An autopsy showed injuries to their heads and necks that suggested they had been hit with a heavy blunt object. Initial Thai press reports, quoting police, said Darawadee and Seri apparently had been murdered and left in the car, which was positioned where it was likely to be hit by traffic, to make the deaths look accidental.

A police forensic report was therefore greeted with widespread incredulity when it asserted that the wife and son were killed in a road accident when the vehicle was hit by a truck.

In defending the finding, the forensic commander, police Maj. Gen. Tasana Suwanjutha, denied having previously said the two were murdered. He contended that the truck's collision with the car had caused "a blunt force injury that very few laymen will comprehend."

Among those expressing doubts about the finding was the cabinet official responsible for the police, Interior Minister Chavalit Yongchaiyudh. But no one has been as outspoken as Saudi diplomat Khoja. "The forensic commander thinks we're stupid," he told reporters recently. "This was not an accident. They want to cover it up."

Khoja publicly blasted Thai police for implicating two Saudi officials -- a police captain in Riyadh and an embassy official. Thailand has requested their extradition on suspicion they were involved in filching the jewelry when they oversaw its return in 1990. Khoja strongly denied any such involvement.

Last week he publicly charged that the Feb. 1, 1990, murders of three Saudi diplomats here and the subsequent disappearance of a well-connected Saudi businessman were linked to the case of the missing jewelry. The murders of the diplomats remain unsolved. Last year, a Thai police lieutenant colonel was accused of abducting and slaying the Saudi businessman, but a prosecutor dropped the charges, citing lack of evidence.

Khoja asserted that the four were killed because they had acquired sensitive information about the stolen jewelry.