Evidence was misleading or was not investigated properly, leaving prosecution to offer no case against seven defendants

The National Crime Agency has been labelled “incompetent” by an Old Bailey judge after a series of blunders led to the collapse of a £5m trial.

The judge Wendy Joseph QC discharged the jury from finding verdicts against the seven defendants, saying the prosecution case demonstrated mistakes that were “beyond negligence”.

Evidence had gone missing, was misleading or had not been investigated properly in the complex fraud inquiry, she said. The court heard how detectives did not have the software to grab pictures from CCTV and were reduced to taking photos on their phones.

The criticism comes as the government considers stripping the Metropolitan police of its national lead in counter-terrorism and handing it to the agency, which was set up last year.

Shane Collery, prosecuting, was forced to offer no evidence against the accused men, who grinned broadly as the decision was announced.

Joseph told jurors: “It must be very apparent to you that things have gone terribly wrong in this case. The prosecutor accepts he cannot continue with the case in front of you. Everyone accepts that with the state of the evidence as it is – half investigated, material missing, material misleading – it is simply impossible to go on with you.

“Please don’t leave the building thinking this is how cases are normally conducted,” she said.

The investigation by the agency centred on a multimillion-pound fraud against a series of companies and institutions including Chester zoo, Care UK, AB InBev and South Essex College. At the opening of the trial it was claimed that the extent of the fraud totalled £37m.

Between April 2013 and March 2014, payments to building contractors were intercepted and quickly dispersed through hundreds of bank accounts, the court heard. But after five days of evidence it emerged that there were problems with the timeline prepared by the agency, which was the basis of the crown’s case.

Joseph said: “On the face of it they were just little things, mistakes in mathematics, typographical errors that should have been very easily sorted out. But as each problem has been sorted out another has emerged and each time problems have been worse and worse. The picture that emerged was the documentation that we call the timeline is in many ways wholly misleading.”

Further investigation over the past three weeks while the jury did not sit revealed that the total laundered was closer to £40m. It emerged that more than 200 bank accounts involved in the transfer of payments had not been investigated.

“The likelihood is that either it will strengthen the crown’s case or it will go to support the defendants’ explanation. None of this has even been looked at. It has all just been missed,” Joseph said.

Several exhibits had not been examined by detectives, and a mistaken identification of a suspect during agency surveillance had not been disclosed to the defence, the court heard.

The judge made a series of criticisms of the NCA in her ruling dismissing the prosecution application for an adjournment. “They had no software for the capture of CCTV photographs and tried to do it by taking stills on their mobile phones. They had no software allowing them to cut and past pdfs into the document and again tried to take photos. They could not access their own electronically served case papers and they had no paginated statements or exhibits. The case team struggled on, producing useless material,” she said.

Less than a month before the start of the trial the agency decided to pay for an outside contractor to do the work, the court heard, but the analyst was “not competent for the task”, the judge said.

The NCA team was also accused of failures to obtain evidence and to disclose evidence to the defence. Joseph said: “Either because of the size of the case or because of financial constraints the NCA’s case team chose to ignore various routes of investigation including bank accounts. They applied a forensic strategy outside that applied by the Crown Prosecution Service without telling the CPS or counsel. The NCA case team failed to apply the disclosure protocol which they were required to follow.”

The judge criticised the CPS team for “multiple and profound’ failures and added: “The crown has been the author of the misfortune which has overtaken it. A number of failures go beyond misfortune and even beyond negligence.”

Joseph concluded: “I have no doubt that the NCA has failed the public interest in this case. There can be no excuse or justification for the combination of multiple failures that have occurred or the very late stage they have occurred. There can be no justification for what these defendants and the jury has had to endure over the past month nor the public expense that has been incurred as one wheel after another has fallen off the prosecution’s train before it has finally rolled to a standstill.”

The NCA, often described as Britain’s FBI, is believed to be undertaking an internal inquiry as to how the case fell apart. A spokesperson said: “The NCA and CPS will reflect on the implications of the judge’s ruling and consider what could have been done differently.”

Six men and one woman from Enfield, north London, Norbury, south-west London and Clapton, east London, all denied a single charge of becoming concerned in a money laundering arrangement between 29 April 2013 and 11 March 2014.

Jurors heard that victims of the scam included Chester zoo, which lost £1.26m. South Essex College lost £1.4m, North Herts College lost £424,000, the Budweiser brewer AB InBev lost £511,000, and the healthcare provider Care UK lost £1.43m.