Correct Answer & Explanation
Option C
• 'Honesty is the best policy' is a universal truth/proverb.
• When the reported speech states a universal truth or a habitual fact, the tense of the reported speech does not change, even if the reporting verb is in the past tense.
• The reporting verb 'said' remains 'said' as there is no object.
• The connector 'that' is used for assertive sentences.