THE acquittals of Mr Kevin Maxwell, the man accused of masterminding the defrauding of the Maxwell pension funds, and his co defendants, Mr Ian Maxwell and Mr Larry Trachtenberg, yesterday confounded those who had, thought the men's convictions web a foregone conclusion.

The death of Robert Maxwell and the collapse of his business empire in late 1991 precipitated arguably the most emotive and far reaching City scandal in decades. Thousands of pensioners faced the winter stripped of their financial security. Traumatised banks and City advisers were locked into mutual recriminations. Parliament was outraged. The hostile media turned their spotlight against "the Maxwell boys".

In this atmosphere, it seemed to some that the conviction of those supposedly responsible for this extraordinary scandal should be a formality. More than four years on, they have been proved wrong.

The acquittals will provoke further criticism of the Serious Fraud Office which brought the prosecution. However, the government has already endorsed its long term future as the best means in an imperfect world of tackling City fraud.

Mr Kevin Maxwell and his father were accused of misusing £100 million worth of shares in Scitex, an Israeli company.

He, his brother Mr Ian Maxwell and Mr Trachtenberg were accused of misusing £22 million of shares in Teva, another Israeli company in the days after Robert Maxwell's death at sea.

However, Mr Kevin Maxwell mounted a robust and up front defence from the outset.

His defence to the charges had two main strands. First, he placed crucial responsibility on his father. Second, he tried to widen the responsibility for the entire fiasco, insisting that bankers, accountants and lawyers should bear their share of the blame.

Giving evidence for almost four weeks, he admitted having been a "bloody arrogant" businessman and owned up to lying to one bank. He voluntarily mentioned aspects of the case the jury would not otherwise have heard of. However, he denied any criminal responsibility.

To support its case against him, the prosecution called a long series of bankers and others who complained that Mr Kevin Maxwell had either lied or misled them.

Mr Kevin Maxwell's central defence to both charges was that at two late night meetings his father had told him that the legal ownership of both the Scitex and Teva shares had been transferred from the pension funds to the Robert Maxwell Group. At both meetings, The two men had been alone.

The prosecution poured scorn on the suggestion that these meetings, had ever taken place. However, Mr Kevin Maxwell insisted that they had - and that they showed he had acted perfectly honestly when pledging the shares as security for the loans.

In trying to spread the blame for the pensions fiasco throughout the City, Mr Kevin Maxwell said banks, accountants and lawyers had for years accepted the way the Maxwell empire finances were conducted.

To observers of the trial, Mr Kevin Maxwell was helped by many of those who gave evidence. Witness after witness told how Robert Maxwell ran his business - the bullying of staff, the chaotic paperwork, the deliberate and secretive "compartmentalisation" of activities and the virtual total control he demanded.

The attempt to spread the blame more widely included the jury being told of the "global settlement" when Coopers, along with US investment banks Lehman Brothers and Goldman Sachs, contributed millions of pounds to help repay the pension funds.

The ghost of Robert Maxwell and the parts played by others plainly posed considerable problems for the prosecution.

Even before the trial started, the scale of Mr Kevin Maxwell's task in convincing the jury of his innocence had already been considerably lessened.

During pre trial hearings, it was agreed that, to keep the trial manageable, the jury would consider only the two charges involving the alleged fraud on the main Maxwell pension funds.

With yesterday's verdicts in mind, the SFO must now decide whether to continue its prosecution of Mr Kevin Maxwell and others on the outstanding charges against them. The total cost to the public purse so far is estimated to be close to £25 million sterling.

With such sums at stake and the reputation of the SFO having taken another knock, the decision on whether to press ahead will be a complicated one with significant, political overtones.