The source story does not have to be a work of fiction. You can use a true story, the benefit of this being that there are no plot holes. Scandals are a good place to start, particularly if the true story involving real, living people is too libel-likely to be given an 'honest' treatment. Scandals mired in waves of disinformation are pretty good too.
By taking the story out of the true context and setting it in another time and place you can possibly do a better job of telling the truth than you would be able to do otherwise.
For instance, you could take the Iran-Contra affair and set it in colonial times, as if it happened during the Opium Wars (for example). To get started you could start with the standard 'Wikipedia' telling of events, search and replace your characters so 'President Reagan' becomes '[King Whomever]', same with dates, same with locations. This could then serve as your rough draft. You could then quickly establish if the story actually worked. Then you could tighten up the story a bit, get someone else to read it and see if they thought it 'was true'. If so then you have got to a reasonable start point. Your full research could then begin, proper history stuff, filling in gaps and embroiderising as required. It is important that you learn more and more about your target time and place, you don't want those who know better to see your work as horribly naive.
Some of your embroiderisation can be stuff that you cannot say in your 'target' story, for instance I am sure there is an Israeli angle to the Iran-Contra story that, if told truthfully, would brand you anti-semitic, worse than Hitler etc. However, set in a different time and place you could write whatever was 'true' as 'fiction'.
There are other emergent properties of taking one story and time-warping it to somewhere else. The protagonists could get dehumanized, corrupted, revealed to be ruled by superstition and so on. Within the context of the true story and the morals of our times this might not be so evident. However, after the transposition, whatever it is that makes your characters (good and bad) may be a lot clearer to see. On the Iran-Contra example, you could take today's arms-trade and how that corrupts power and put it in context of the slave-trade of yesteryear. In the 'Opium Wars' example you could probably find a fit with indentured labour in India.
In summary, take a story you like, some history you know, mash it together and there you go, novel written.