This article is more than 9 years old

This article is more than 9 years old

A major Scotland Yard investigation has ended in failure after three men were acquitted of charges over the 1987 murder of a private investigator who was found with an axe embedded in his head in a pub car park.

The family of Daniel Morgan immediately called for a judicial inquiry, saying: "The criminal justice system is not fit for purpose."

They are bewildered by the fact that the case never reached a jury and that it collapsed after 18 months of legal argument during which the police were in effect on trial, accused by defence lawyers of failing to disclose potentially relevant material.

No one has been brought to justice despite five police inquiries and three years of legal hearings, unofficially estimated to have cost around £30m.

The first investigation into Morgan's murder, immediately after his killing, is feared to have seen the real killers shielded from justice by police corruption.

The Met has privately admitted that corruption in the late 1980s aided the killers in avoiding justice.

Senior officers vowed to right the wrongs of the past, but it is unlikely that Morgan's family will see the police, courts or judges deliver justice.

At the Old Bailey on Friday – a day after the 24th anniversary of his killing – the Crown Prosecution Service formally dropped the case against Morgan's former business partner Jonathan Rees and brothers Garry and Glenn Vian, who had all been charged with murder. A fourth man, Jimmy Cook, was cleared of murder at an earlier hearing. Sid Fillery, a former police detective from Catford, was cleared of attempting to pervert the course of justice at an earlier hearing. Fillery had moonlighted at Southern Investigations, the private detective firm in which Morgan was a partner.

The CPS is believed to have concluded that it could not provide sufficient guarantees to the court that every document held by police over the course of 24 years of investigations which the defence might want to study had been handed over. The manner in which the case collapsed is an embarrassment for Scotland Yard.

Morgan was killed outside the Golden Lion pub in Sydenham, south London, on 10 March 1987.

Police involved in five investigations believed that the motivation for his murder lay in his business dealings.

Morgan's name became a byword to symbolise how corrupt parts of the Metropolitan police had become in the late 1980s. After a campaign led by his family, Scotland Yard tried to bring the killers to justice.

In April 2008, police arrested and charged Rees, Garry and Glenn Vian, and Jimmy Cook with murder, while Fillery was charged with attempting to pervert the course of justice. The five were charged after a criminal investigation which, at the start, was kept secret by Scotland Yard.

The suspects were subjected to covert audio recording devices, or bugs, but the mainstay of the case was a series of supergrasses.

The supergrasses claimed to have knowledge of the accused's guilt, from seeing money handed over to pay for the killing, to hearing admissions from defendants. But their reliability as witnesses was questioned because they were themselves involved in crime.

The trial began in January 2009 with legal argument. Legal observers cannot recall legal argument raging for so long.

Detectives on the Morgan murder team admitted during the legal argument that they were drowned by the weight of documents they were dealing with – 750,000 of them, mostly uncomputerised, going back to 1987.

In the end, the court was told that police had found documents that had not been disclosed to the defence, undermining the credibility of the prosecution.

The death knell came on Friday last week when police again admitted that they had found four more crates of material defence lawyers had not been told about. Detectives involved in the case say they made a genuine mistake which, once realised, they informed the court about.

After intense discussions all week with senior officers, the CPS decided it would have to end the case.

Those close to the investigation, and the family, are angered by the lengthy legal argument. Defence lawyers had argued the prosecution was an abuse of process meaning the accused could not receive a fair trial.An inquest in 1988 found Morgan was unlawfully killed. An employee of Morgan's firm, Southern Investigations, said in evidence to a hearing 23 years ago that a business contact had talked of wanting Morgan killed and that his police contacts at Catford police station would help him.

The Guardian understands police believe that witness was prepared to testify again if the case had reached a jury.

Morgan's mother, Isobel Hulsmann, 83, who had travelled from her home in Hay-on-Wye, Powys, to lay flowers at her son's grave in London, was being comforted by her family.

Morgan's brother, Alastair, 62, said: "My family is devastated by this news. We put some flowers on the grave. It's just horrible."

Alastair Morgan said he believed there had been a number of police cover-ups over the years and alleged that his brother was murdered because he was about to expose police corruption.

"It was obvious my brother was going to blow the lid off the links between the police and criminals," he said.