Looking at Dr Isikveren's LinkedIn profile he shows:
- education at Swedish Royal Insitute of Technology 1998-2002
- Bristol University, 2005-2010
- Bauhaus Luftfart 2010-present
Whatever he was doing 2003/4 it seems unlikely that he was particularly senior - I'd guess he was a fixed term postdoc somewhere, which would be a fairly standard bit of career progression for a university academic. Whatever the project is, it may well have failed -I have no idea, but I doubt very much that he was senior enough to have been responsible given it was probably his first job after finishing his PhD.
Looking at his publications about the start of his period at Bristol, they seem to have been on adaptive wings on UAVS - so the odds are he was working in the missing two years on some form of military UAV project, which would probably explain why he's not being very open about it.
Frankly, I think that you students are conjecting too wildly and almost certainly seeing something that's not there. Hard luck on losing him if he was a good lecturer - but I somehow doubt there's a big skeleton in his closet.
G