Mr Haig said he was "celled up" with Mr Bain in Dunedin prison for a month while Mr Bain was awaiting his original depositions hearing in 1994.
He said "he knew" the cell they shared was "bugged" by police.
"We really ran the police down because we knew they were listening the whole time."
He considered Mr Bain "a regular young bloke" and they shared a common dislike of the New Zealand Police, justice system and prison system.
"He was just really floored by it all. It was a bit of a godsend really when Joe Karam arrived."
Mr Haig speaks from experience on the compensation matter.
After spending 10 and a-half years in prison for the 1995 murder of fishing boat crewman Mark Roderique, his conviction was quashed by the Court of Appeal.
But the Government in February denied him any compensation for his time behind bars.
Justice Minister Simon Power turned down his application on the grounds that it was "more probable than not" that Mr Haig participated in Mr Roderique's murder.
Speaking to the Otago Daily Times from Christchurch last night, Mr Haig was scathing of the system he believed was stacked against people like himself and Mr Bain.
"What they are saying, when you go for compensation, is that you have to prove, with some evidence, you are innocent," he said.
"And that's a bit bizarre. It's impossible, because the only way is if you scientifically prove you didn't do it, like DNA."
Mr Haig (62) said he considered he should have been awarded "millions of dollars", but after his case had been reviewed by Robert Fisher QC, he was found not to be eligible.
He was unable to get legal aid and his failed claim cost him $20,000.
He believed Cabinet guidelines let the Government "wriggle out of paying compensation" and it would be "just a piece of cake" for them to deny Mr Bain any money.
Christchurch barrister Nigel Hampton said Mr Bain would have a tough task to win compensation.
"He has got to prove, on the balance of probabilities, more likely than not, that he is completely innocent. It is a high hurdle, I think," he told TV One.
Michael Reed QC said yesterday he hoped Mr Bain's relatives would be "generous" and give him back the inheritance that was legally his.
Mr Bain received nothing from the sale of his family's properties, as it would have been regarded as benefiting from the proceeds of crime.
The family owned a house in Every St, Dunedin, which was burnt down.
They also owned a section in Whangarei and another in Bundaberg, near Brisbane.
They had about $60,000 invested with some friends, and a substantial amount in an overseas bank account, The Press reported.
Mr Bain's previous lawyer, Colin Withnall QC, said there was a provision under the Judicature Act for payments made under a mistake of fact or law, which could apply to the family members, but it would be difficult to pursue.
Mr Bain's relatives told media they would not comment on the inheritance.
"We need time," Valerie Boyd, one of Margaret Bain's sisters, told The Herald on Sunday.
