The authorities investigating allegations that six directors of PowerGen exercised share options while in possession of internal information have indicated that they are unlikely to take any action.
The Metropolitan Police conducted a preliminary investigation into allegations that directors took advantage of their knowledge of what is alleged to have been price-sensitive information when they exercised options that netted them a total of pounds 3.5m.
The police inquiries followed an article published in the Observer newspaper last month and concluded that the allegations were "serious and complex".
The matter was referred to the Serious Fraud Office. The SFO, while not taking a formal decision to drop the case, has since indicated to witnesses that it is unlikely to take the matter further.
PowerGen has firmly denied the allegations and has said that the directors were not in possession of price-sensitive information when they exercised their share options. The directors are suing the Observer for defamation.
The police investigation, which appears to have been triggered by the newspaper's interest in the affair, included an interview with Dr Glyn Charlesworth, the former head of corporate planning and strategy at PowerGen.
He was responsible for supervising a planning report on the company's medium-term strategy and prospects which is at the centre of the controversy.
After several draft versions of the report had been prepared, a final version was presented to Ed Wallis, PowerGen's chief executive, and the company's advisers at a meeting. Soon after that meeting Dr Charlesworth left the company.
The Stock Exchange Surveillance Unit, which was also informed of the allegations, is believed to have concluded that there was insufficient evidence that the report was deliberately delayed or that its content contained "price-sensitive" information.
The sale of share options soon after privatisation drew much criticicism.
Gordon Brown, the shadow Chancellor, has described the move by the six directors to cash in on the options as "one of the worst examples of share option practice".
For its part, PowerGen has argued that the forecast being prepared under the supervision of Dr Charlesworth was one of numerous scenarios prepared by its planning department and was not the one that was settled on.
Dr Charlesworth, contacted at home, said he did not wish to comment.
He said the job he ended up with at PowerGen was not the one he had been appointed to and that he had a difficult relationship with Mr Wallis.
His employment at PowerGen lasted less than six months. He has since worked as a personal adviser to the electricity regulator, Professor Stephen Littlechild.Reuse content