He was shot
because the men in front of him had been *told* that he
was a probable suicide bomber; they were jumpy, expecting him to try
and do something. Then he, tragically, didn't know what was going on
and acted in a way that caused them to jump too far.
Specifically, he was accosted by armed, plainclothes policemen and
panicked. (When I see people wearing civilian clothes coming at me
with guns, my first reaction wouldn't be "oh, they must be police!"
either.) As I recall, he was tackled to the ground and shot in the
head execution style. Any eyewitness would have no reason to believe
that police were involved, and would conclude that some sort of awful
US-style gang-related murder had taken place.
Just an FYI, we have a fantastic article on this at [[Jean Charles de Menezes]].