The move, which angered the victims of his fraud, followed a change of heart by the Parole Board - a change "reluctantly" sanctioned by Michael Howard, the Home Secretary.
Freedom came as Mr Clowes dropped a High Court attempt to jail Mr Howard for contempt for failing to keep to a pledge to reconsider his parole plea by 20 February. But yesterday officials denied the Home Secretary had been forced to act, because he had missed his deadline. A Home Office statement said Mr Howard had been advised he had no legal grounds for rejecting the Parole Board's recommendation - Mr Clowes had served a third of his sentence and was entitled to be considered for freedom.
Outside the High Court 52-year-old Mr Clowes made a pledge to the men and women he had cheated that he would do everything he could to repay their losses, now that he was free. "I am dreadfully sorry - I have always accepted responsibility," he said.
But former investors with his investment group, Barlow Clowes, which crashed with pounds 113m debts, said he should have served longer. "Serving just four years is no comeuppance for what he did," said Karen Reynolds who, with her husband Stuart, of Stockport, Cheshire, invested pounds 45,000 they received in a medical negligence case.
Mr Clowes, operating out of an office in the Cheshire town of Poynton, was convicted in 1992 of sample counts of stealing pounds 16.9m and of falsely promising to invest in Government securities.
A company set up in 1973 and promising investment in gilt-edged securities made him appear a safe bet for the small investors. But his scam involved using new investment money to pay "returns" on existing customers' investments, which had in fact gone off-shore. Some of it went to support Clowes' lavish lifestyle of expensive yachts, fast cars, private jets and substantial property holdings.
Criticism of the Department of Trade and Industry for creating the lax regulatory environment which had allowed Clowes' operations to thrive, eventually prompted the Government to come up with a pounds 150m compensation package for victims - but that still left them with losses.
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