Fall from Veuve Cliquot to catastrophe

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It is not suprising that Peter Clowes's early release provoked outrage yesterday. He had used the pensioners' life savings to finance a jet-set lifestyle.

Promising a safe bet in government securities for 11,000 small investors, he instead put their millions in off-shore investments and siphoned it off.

It was alleged he used his clients money to buy himself a yacht - once owned by Christina Onassis - four personal jets, a helicopter, and expensive cars.

He had a home in Adlington, near Wilmslow, Cheshire, a chateau in France and a farm in the Peak District.

He and his wife, Pamela, previously married to Hollies' bass guitarist Eric Haydock, drank Veuve Clicquot and holidayed in the Caribbean.

His had been the classic rags- to-riches story. He left school at 15 to serve in his parents hardware shop in Manchester, leaving for a career selling insurance.

There he met Elizabeth Barlow, the woman with whom, in 1973, he set up the fated Barlow Clowes investment company specialising in gilts. At first it went according to plan. When Mrs Barlow left in 1980, the company had a pounds 10m investment portfolio.

Seven years later, the amount totalled pounds 190m. But by this time, Clowes was no longer playing straight. He was creaming off money investors believed were safe in gilt-edged government stock and risking it a variety of business enterprises. His scam involved using new investment money to pay "returns" on existing customers' investments.

As long as new money poured in, Clowes was able to keep up the payments and continue trading through the then poorly regulated independent financial intermediaries. And no one was any the wiser.

Between 1983 and 1987, more than pounds 113m of the funds invested in off-shore companies and partnerships in his fund management empire was siphoned off.

Although the Department of Trade and Industry began investigating the company in 1987, it was not until May 1988, when it collapsed, that the true picture emerged.

Although more than pounds 225m had been invested by clients, just pounds 1.9m was in gilts. Liquidators recovered a further pounds 60m in other assets.

Fierce criticism of the Department of Trade and Industry for creating the lax regulatory environment which had allowed Clowes's operations to thrive, eventually prompted the Government to come up with a pounds 150m compensation package for the victims.

Regulations were subsequenty tightened by the 1996 Financial Services Act 1986. Last July, the long-awaited Government report into Barlow Clowes severely criticised the roles played by the DTI.

Mr Clowes yesterday promised on his release that he would do his utmost to make up his investor's losses.

He is barred from holding any company directorships until the year 2007. He is now subject to a programme of supervision run by the Probation Service, and could be recalled to prison if he breaks any conditions of his parole - a far cry from his French chateau.