Neil Haywood was found dead by poisoning in a southwest China hotel room. In August 2012, Gu Kailai, the wife of Bo Xilai, a senior Communist Party leader, was given a suspended sentence for his killing.
The details of Heywood's death eventually were leaked, topping Bo and triggering a political crisis in China, the British newspaper The Daily Telegraph reported.
Speaking in London, Heywood's mother Ann Heywood said she had grown frustrated "repeated discreet approaches to Chinese authorities" for compensation in the matter received "no substantive or practical response."
Li Xiaolin, a lawyer close to Gu's family, said Monday negotiations had "broken down" after the Heywood family's demand of 50 million yuan ($8.16 million) was reduced to 20 million yuan ($3.26 million).
Li said Gu's lawyer claimed she did not have any money.
Last week it emerged a key piece of evidence in Bo's upcoming corruption trial will be a French Riviera villa, valued at 2.25 million pounds (nearly $3.5 million) Heywood is thought to have managed for the Bo family. It was also disclosed the son of Bo and Gu, Bo Guagua, recently enrolled in Columbia University Law School in the United States, where tuition and expenses average $61,000 per year, the newspaper said.