Hatton is cleared after 8-week trial: The investigation into alleged corruption continues, despite the verdict at Mold Crown Court. Jonathan Foster reports

POLICE refused last night to call off one of their most expensive investigations despite the acquittal of Derek Hatton and three co- defendants charged with conspiring to defraud Liverpool City Council.

Merseyside Police said Operation Cheetah, begun in 1990, was still considering 'a number of associated issues'. Detective Chief Superintendent Ray Walker refused to comment on the verdict of a jury at Mold Crown Court which, after 7 hours 30 minutes of deliberation, brought criticism of police conduct in an inquiry which Mr Hatton, former deputy leader of Liverpool council, claimed may have cost pounds 10m.

The two charges he faced with John Monk, his tailor, and former Labour councillors John Nelson and Hannah Folan, rested on ambiguous entries found in Mr Hatton's diaries after a police raid in October 1990.

The prosecution had claimed the council could have been defrauded by the way licences were issued to Mr Monk for use of two small bombsites owned by the council as temporary car parks. No estimate of the value of the alleged conspiracies was ever given to the jury.

Alan Rawley QC, for the prosecution, said after the verdicts that two other charges faced by Mr Hatton, and charges jointly against him and two others, would not be brought to trial.

Earlier in the eight-week hearing, Mr Justice Waterhouse instructed the jury to find Mr Hatton and Ms Folan not guilty of conspiring with Roy Stewart, a builder, to defraud the council. There had been insufficient evidence, the judge said.

Peter Quinn, Mr Hatton's solicitor, said the verdicts should lead to the immediate abandonment of Operation Cheetah.

Defence laywers will next week consider litigation and other measures devised to reveal whether the investigation was properly conducted from the outset by the police and Crown Prosecution Service.

Mr Hatton said he had been ruined by the shadow cast over his reputation by Operation Cheetah. 'Whether it was a political vendetta is for other people to answer in the future,' he said.

He had gasped when acquitted, before embracing his lawyers. At a press conference he criticised the cost of the investigation.

It was ironic, he said, that the acquittal coincided with Comic Relief day. 'What could pounds 10m have done to relieve hardship in Britain and beyond?' he said.

Mr Quinn said the outcome of the trial 'proved justice does prevail in fraud cases'.

'This case has shown that a jury can understand a complex fraud prosecution. All the talk that it is beyond a jury is a nonsense.

'They know exactly what it is all about. Within a court you get to the nub of the argument. The evidence is subject to a funnel effect.'

Police, who are believed to have considered the evidence of alleged conspiracy over the two bombsites, represented the best case that could be brought from an inquiry which they compared at its outset to the Poulson local government corruption scandal of the 1970s.

Mr Stewart last night claimed he had offered to co-operate with Operation Cheetah. 'When I first heard in 1990 of the police investigation into the so-called Liverpool land deals I voluntarily approached the head of the Fraud Squad and offered to meet him at my solicitor's office to answer any questions he might have and to enable him to look at any documents he might wish to,' he said. 'As a proud Liverpudlian, I made it clear that I had nothing to hide and, in fact, welcomed the police investigation in the hope that if any impropriety had taken place, it would be uncovered and dealt with.

'The head of the Fraud Squad said he had no questions for me at that time and did not wish to look at any of the documents.

'I was somewhat surprised, therefore, when I was one of those arrested in October 1990 - woken in the early morning, hustled into a police vehicle, driven away at high speed and left alone in a holding cell.'

Mr Monk said outside the court: 'It is very difficult to smile after what we have been through. It has been a tremendous ordeal for two and a half years.

'It has been a very harrowing nine weeks and before that there was a lot of innuendo in various Sunday papers.

'They have spent three years and about pounds 20m in a vendetta against Derek Hatton. It was absolutely politically inspired.'

(Photograph omitted)