Madeleine McCann detectives have interviewed a convicted paedophile who was reported to be in the Algarve when she vanished in 2007.
The Mirror says British police flew to Malta to question Roderick MacDonald, 77, about his alleged connection to a child sex gang operating in Portugal, linked to her disappearance.
The newspaper says he was asked what he knew about a spate of burglaries which occurred in the Praia da Luz resort where three-year-old Madeleine's family were staying when she went missing in 2007.
British detectives believe the burglaries could be the key to finally solving what happened to her.
MacDonald – who has previous convictions for indecently assaulting an eight-year-old boy and molesting two young girls - was due to be extradited to the UK after he was remanded in custody in Malta.
But when detectives searched his flat in the quiet village of Sannat, they uncovered a stash of child pornography and sentenced him to 16 months in prison.
Scotland Yard detectives then flew out to Malta to question him in prison.
A close friend of MacDonald's told the Mirror: "He was always talking about how he was in the Algarve when Madeleine went missing.
"He would brag about how he sailed a yacht into Praia da Luz but we never thought anything of it.
"We had no idea how evil this man was before he was arrested. Now it seems completely sinister. No wonder the police were so keen to quiz him."
MacDonald, from Aldershot, is the first person to be questioned in connection with Madeleine's disappearance since July, when four men were quizzed as arguidos – persons of interest. They all denied any involvement.
Scotland Yard has said it will not provide 'a running commentary' on its investigation.