The verdict was finally announced at the High Court in Edinburgh after a trial lasting almost nine weeks.
Mr Sarwar's acquittal creates an embarrassing dilemma for the Labour leadership, which suspended him from the parliamentary party while police investigated allegations of fraud and bribery, over late entries on the Govan electoral roll, surrounding his election as MP for Glasgow Govan in 1997.
The jury of nine women and six men deliberated for more than four hours before reaching a majority verdict clearing the 46-year-old MP of two charges of attempting to pervert the course of justice. His co-accused on one charge, Mumtaz Hussain, 41, was also acquitted by the jury.
The key question in the case was whether a sum of pounds 5,000, which changed hands in Mr Sarwar's white Mercedes shortly after the election, was a bribe to cover up fraudulent entries on the electoral roll, or a loan to a fellow Pakistani down on his luck.
The main witness for the prosecution, Badar Islam, a fringe election candidate, former bankrupt and self-confessed gambler, who was handed the notes, was at the time working with the News of the World, which paid him pounds 45,000 for the Sarwar story.
Summing up before the jury retired to consider its verdict, Judge Lady Cosgrove drew jurors' attention to the role of the newspaper in instigating Mr Islam's journey in the Mercedes with a concealed tape recorder. But much of the conversation, spoken in Punjabi, was unintelligible.
Mr Sarwar will now decide whether to resume his legal action against the Sunday tabloid newspaper, claiming pounds 750,000 for defamation.
Emerging from the High Court yesterday holding hands with his wife, Perveen, Mr Sarwar said: "I have always maintained that the allegations against me were false."
Mr Sarwar, 46, made history when he was elected. Though admired and respected in Glasgow's Pakistani community, he had made enemies in building up his cash-and-carry trading business, and over his politics.
Born in 1952 in Salleempur in the Punjab, he was the son of a farmer. The family was comfortably off and he says he did not feel real poverty until he went to Scotland.
He arrived at Glasgow airport on a wet day in 1976 to wed his cousin, Perveen, whose parents had settled in Lossiemouth. The couple lived in his parents' council flat in the Maryhill area of the city and worked all hours in the family corner shop.
With a growing family to support - the couple have four children - Mr Sarwar sold clothes on market stalls and tried shopkeeping on his own account, veering from modest success to near-bankruptcy. His big break came when he and his brother Ramzan started selling eggs and cheese to other shops, employing price-cutting tactics that would make them rich through their cash-and-carry firms, United Wholesale and United Homestores.
The Sarwars lived in the area until their wealth propelled them to a pounds 250,000 detached villa in nearby Maxwell Park, and helped to send their children to private school.
Mr Sarwar raised funds for a Glasgow mosque and increasingly got involved in politics. He joined the Labour Party in 1984.
In 1993 he was accused of "Militant-like" vote-rigging in the first of a series of controversial party selection battles. His local branch had become one of the largest in Scotland, with 370 members, of whom half were Asians. It was this power base that enabled him to take the council ward of Pollokshields from the Tories.
Pollokshields' streets are home to most of Govan's 5,000 Asians. And it was from here that the rash of late applications to vote came, which led to the High Court trial.Reuse content