Officially, the details are sketchy, but according to the German media, the tale began when former soldier Anton Robert K., now 42, was posted to Kosovo in 2005, supposedly to work for the German Foreign Ministry.
In reality, however, the real job of K., whose full name has not been released, was to set up a network of informants on behalf of the German BND intelligence service, reports say.
In doing so, he recruited a Macedonian man who said he grew up in Germany, Murat A., now 29, to be an interpreter and translator, an appointment approved by BND headquarters after background security checks.
The working relationship continued for two years, and in 2007 K.'s job was extended for two years, but he failed to mention to his superiors the nature of their personal relationship: they had became lovers and had moved in together.
The first that the BND heard of this was when K.'s wife, whom he had left behind in Germany with their children, revealed he had changed his life insurance policy, replacing her name with his interpreter's as the beneficiary.
The BND then alerted prosecutors, and the two were arrested after being summoned back to Germany on false pretences in March 2008.
K. was handcuffed and bundled into an unmarked car by plain-clothes police at a suburban train station, while his alleged accomplice was arrested at his hotel. Both men were released the next day because of a lack of evidence to hold them for longer, press reports said. They then both spent 40 days in custody in March and April this year. The couple now live near Stuttgart.
According to a statement from federal prosecutors in August, K. divulged classified information to his interpreter.
Der Spiegel magazine reported that this included information obtained by British agents, and that K. revealed it "in the bedroom" or by allowing his lover access to his laptop computer.
The latter "then intended to pass this information on either to people in the area of organised crime in Macedonia or to foreign intelligence agencies," federal prosecutors said.
For the defence, however, the two men are victims of a homophobic witch-hunt within the BND, which has been deeply embarrassed by the affair, not least because it gave the interpreter clearance.
It now claims that he has links to organised crime, and since the affair broke, the BND has reportedly been forced to sever contacts with at least 19 information sources in the Balkans.
"There is no evidence to suggest that my client passed on information," the interpreter's lawyer Christian Stuenkel told the Süddeutsche Zeitung daily.
In the end prosecutors may only be able to convict them on charges of fiddling their expenses to the tune of €15,000 ($22,500), according to media reports.