The tale of Lulu, Haile Selassie's lap dog that was allowed to piss on the shoes of dignitaries, and the courtier whose job for 10 years was to wipe those shoes clean with a satin cloth, is among the more compelling images produced by modern journalism. It sums up neatly the arrogance and absurdities of autocracy, along with the humdrum obsequiousness of life in the emperor's court.

This glimpse into an ancient monarchy comes at the start of Ryszard Kapuscinski's masterpiece The Emperor, a taut parable of power that deservedly elevated its author to global fame. The book is filled with similar vivid descriptions garnered from interviews with melancholic courtiers after the downfall of the emperor, painting an elegiac picture of a lost world of ritual and intrigue.

Kapuscinski told an interviewer you could only write one book like that in a lifetime. But he went on to write another about the Shah of Iran, a treatise on tyranny and revolt that remains as pertinent today as when it was written. And then there are the astonishing accounts of chaos and revolution in Africa and Latin America, packed with evocative observations that inspired generations of writers and reporters.

But as Artur Domoslawski points out in this masterful biography, many of the anecdotes  including, probably, the incontinent dog  are phoney. With the Mengistu regime on the rampage, no official from the deposed ruler's circle would have dared be seen with a white man, says one person. Another suggests Kapuscinski interviewed alcoholics. A third that he regurgitated stories from expat dinner parties.

It is the same with Shah of Shahs. An academic challenges Domoslawski to open the book at any page and he will point out the falsehoods  and then does just that. There are tall tales of fish feasting on the bodies of Idi Amin's victims, of gangs of dogs on the run in Luanda, of Belgian soldiers threatening to shoot the globetrotting reporter. Even stories of the author's own father escaping death at Katyn, when Stalin killed more than 20,000 Polish officers, were made up.

Kapuscinski would not have lasted in today's digital world; he would have been just another journalist felled as a fantasist by snapping packs of online critics. As a reporter, his actions were indefensible. The biographer talks to a Bolivian whose father is portrayed as a hard-drinking conman, an editor who charges priests for disclaimers about stories that they are rapists. The son's reaction is shock. "It's pure fantasy," he says. "What a bastard." His father was a serious publisher, politician and patriot forced to flee repression.

Yet Kapuscinski's reputation remains high for the brilliance with which he turned frontline journalism into a form of literature. When a friend pointed out that a report of a riot in Tanzania took place on a different street in different circumstances, he retorted: "You don't understand a thing. I'm not writing so the details add up  the point is the essence of the matter." Near the end of this inquisitive biography, Domoslawski finally understands his friend and mentor: "Ryszard Kapuscinski  the hero of Ryszard Kapuscinski books  is also a fictional character."

This book caused a furore when published in Poland two years ago; Kapuscinski's wife tried to stop release because of revelations of extramarital affairs, while the rest of the country was gripped by confirmation of collusion with the communist authorities. But what makes it so interesting is that the author does not shred Kapuscinki's reputation, not does he ignore the mounds of uncomfortable evidence. Instead, he peels away and probes with understanding, producing not just a fascinating biography of an important writer but also a subtle study of life under authoritarianism, with all the compromises and complexities that entails.

This was a life formed in the dark dislocation of war, growing up amid horrors unleashed by the Nazis and Stalin. He joined the communist party in his youth, had friends in the highest places and only left after Solidarity shook the system. To go abroad, he had to be loyal. But unlike western journalists, the impecunious Kapuscinski travelled and lived like the people he was writing about to gain real understanding, so he accepted deprivations such as maggots nesting under his skin and poor food.

These experiences gave him his profound understanding of power, poverty and revolution, together with passionate sympathy for the underdog. While he wrote private reports for his party bosses, his books about Ethiopia and Iran were allusive works, reflecting his own rulers and their decaying systems as much as the courts in Addis Ababa and Tehran.

He sought ideals  and perhaps his own youth  in the uprisings of the developing world, but he knew that power defeats hope, distorting idealists into soulless bureaucrats and cruel monsters. These are lessons that remain pertinent today  as does his understanding that wounded dignity, not the fight for bread, drives most uprisings, something we saw demonstrated again last year in north Africa.

At times Domoslawski's style, possibly due to its translation from Polish, seems almost selfconsciously to echo its subject's writing. The author is weakest in unlocking the character of this detached man: a dreadful father, disloyal husband and disarming user of friends. He was imbued with anti-Americanism, yet made cuts to his work to appease the CIA. And for all his passionate anti-colonialism, he viewed Africa as a place of extremes  what one critic calls "gonzo orientalism".

On one level this is a devastating indictment of a fraudulent journalist and flawed human being, one who made possibly too many compromises with a tawdry system. But it is also a portrait of a courageous and sympathetic writer, whose hard-grafted prose was unusually poetic and who possessed rare insight into the swirling forces that shape society. Ultimately, Kapuscinski created a new language for telling the stories of oppressed peoples on the cusp of change  even if we now know they should be filed under fiction.

"Kapuciski" has long been one of Poland's few internationally recognised names, comparable to "Miosz" or "Polanski". His vivid literary reporting of the uses and misuses of power, in the books The Emperor, The Soccer War and Shah of Shahs, was widely read in the 1980s and beyond, partly because of the author's unique position (a star reporter emerging from the darkness of communist Poland, then in the midst of martial law after a failed workers revolt) but mainly for its unusual style  personal, meticulous, literary, digressive. His wasn't the typical way of writing journalism and, similarly, Artur Domosawski's book is not a conventional biography. Both the author and his "hero", friend and mentor stand out from what was acceptable during the cold war, and today.

The book caused much controversy when it was published in Poland two years ago (with the title Kapuciski  Non-Fiction). For foreign commentators, the main interest was in discovering how its subject had embroidered the truth in service to style or politics  the fabulations involved his meetings with Che Guevara, Patrice Lumumba, Idi Amin and Salvador Allende. (The Guardian ran numerous pieces in his defence, including by Neal Ascherson and Timothy Garton Ash.) In Poland, the issues were different. Kapuciski's widow tried to stop the book's publication because of its unembellished descriptions of the writer's private life (in particular, his extramarital affairs). But more important than these revelations was Domosawskii's confirmation of the reporter's close connection with various aspects of the communist order, including the intelligence services; his belief in socialist ideology; and his uneasy adaptation to post-1989 realities. In engaging with all this, Domosawski has produced a rare and subtle portrait of the People's Republic of Poland.

Politics in Poland is still largely determined by the past, and after 1989 there have been only two acceptable ways of looking at the postwar era. One is to regard the communist regime as illegitimate, but something after which we can draw a "thick line" between the past and the present. The other considers the system simply as criminal and those who worked within it as traitors  traitors who should be tried. Kapuciski was himself accused of being an agent shortly before his death in 2007; Domosawski gives details of his espionage, in particular the notorious case of him spying on the academic and reporter Maria Sten in Mexico. But the biographer also goes beyond this binary approach to the past, dwelling on and paying tribute to his subject as a lifelong opponent of imperialism. Crucially, while the Polish ex-oppositionist media fervently supported the Iraq war, Kapuciski was a rare figure of the post-communist intelligentsia publicly to oppose the war on terror.

At the time Kapuciski started to gain fame abroad for his reportage, the cold war had entered a new, dangerous stage. He dropped his party card, supported the Solidarity movement, and, pre-empting his American editors, removed potentially inflammatory passages in Shah of Shahs about the role of the CIA in overthrowing the Mossadegh regime. Yet there were proper limits to his flexibility, and Domosawski includes much evidence of his hero's dedication and sacrifice. Plenty of questions have been asked about the "real cost" of his free travel around the world, but Kapuciski didn't gain much when compared with his journalistic colleagues. Friends recall him wearing rags and sleeping in his car. Without doubt, it was political passion and humanism that made him such a profound critic of colonialism in Africa and an enthusiast for the Cuban revolution. And this gave him an insight, unusual in Poland, into the negative role of the US in supporting dictatorships. His reportage from Latin America could have been written yesterday. Yet nothing is simple: did Kapuciski realise his friends in the Polish politburo were involved in beating students and in antisemitic witch-hunts in 1968? After all, his net of connections allowed him to write, and aroused suspicion from persecuted friends.

The constant speculation about the level of Kapuciski's engagement with the regime means that this biography reads at times like a John le Carré novel. The question of identity, of image, of truth, of confabulation, shifts constantly and gains new meanings, turning the book into a quest for Kapuciski's personality. Who was he? Not even his family or close friends are really able to answer.

He was born in the 1930s in Pinsk, a Jewish town that suffered all possible atrocities during the second world war. Although his own life was not in danger, he witnessed the murder of the town's Jews, invasion by the Russians, then the Nazis, then the Russians again  it becomes plausible that everything he did subsequently was inspired by these events. He was from a poor family, and for people like him communist Poland created chances, which he took. Domosawski quotes a friend: "Rysiek produced great work. However, in order to do it, he had to create himself, his own image  He put a great deal of work into it  it was hard for him, but he passed that exam with flying colours. The image of a fearless war reporter. He reckoned without this legend no one would listen to a writer from faraway Poland." That would explain also why he repeatedly claimed his father was nearly killed with 20,000 Polish officers in Katyn in 1940.

When the moment came for coming to terms with the crumbling Soviet empire, he missed his chance. For Domosawski, Imperium (1993), about Kapuscinski's travels to the USSR, is a book written in denial, in which the author  who could have told us the most gripping story of his own engagement and disappointment  disappears. Kapuciski reacts with his most significant act of self-censorship, afraid to present himself in the new Poland as an ex-communist, and choosing instead to present himself as a victim. In a way, the system left no option other than to be both victim and beneficiary  in post-communist Poland there was little space for nuance. The earlier reporter wrote a complex version of history; the feted Kapuscinski of the new Poland was unable to do so. But Domosawski's book brings back the authentic voice of the reporter and hero, and if only for that, it is a truly great achievement.