Germany's intelligence service has been rocked by revelations that its staff mysteriously destroyed a 500-page file on Alois Brunner, one of the world's most wanted Nazi war criminals, amid suspicions that he worked for them as an agent after fleeing to Syria in the early 1950s.

Brunner, who if he is still alive is 99, collaborated closely with Adolf Eichmann, the Nazi officer who masterminded the Holocaust. He is said to have sent more than 128,000 Jews from throughout Nazi-occupied Europe to the death camps during the Second World War. An Austrian citizen, Brunner fled to Syria in the early 1950s from where he gave interviews to German and American newspapers. In one, given in 1987, he stated: "The Jews deserved to die. They were garbage. If I had the chance I would do it again."

All attempts to have Brunner extradited failed. Until this day, Syria flatly refuses to acknowledge that he is or may have been living in the country. Although he is widely thought to be dead, Austria announced as recently as 2007 that it would pay €50,000 for information leading to his arrest.

Now disclosures about 518 pages that mysteriously disappeared from a secret file on Brunner have shaken the Federal Intelligence Service (BND) – the German equivalent of Britain's MI6.

The agency's in-house historians have revealed that staff ordered the Brunner file to be wiped off its computers at some stage between 1994 and 1997, when it was under the control of the former conservative chancellor Helmut Kohl's government.

Suspicions of a deliberate cover up have been raised, not least because Brunner is thought to have worked for the BND as its Damascus agent after he fled to Syria. Bodo Hechelhammer, the BND's chief historian, told Der Spiegel magazine: "I would like to have seen the whole Brunner file. It would have helped clear up all the speculation."

The claim that Brunner worked for German intelligence is borne out by a handwritten BND document from 1997 which records a conversation with the service's head of security, Volker Foertsch, in which he states that he "knew personally" that Brunner was a BND informant in Syria.

Evidence surrounding the missing Brunner pages is contained in reports submitted to the BND's then head, which state that they contained material on the Nazi war criminal dating from 1957 to 1964, dealing exclusively with the "life, connections and business of Alois Brunner". However, the reports insist that the pages contained "no indication" that Brunner worked for the BND "at any time".

The revelations could hardly have come at a more awkward time for the BND. They follows disclosures that the agency knew of Adolf Eichmann's whereabouts prior to his capture in Argentina by Israeli agents in the early 1960s, and other allegations that the agency regularly used Nazi war criminals as agents in the aftermath of the Second World War.