The home secretary, David Blunkett, has agreed to pay compensation to the wife and stepdaughter of businessman Richard Watson after they were wrongly charged with his murder.

Sussex police have also made an unreserved apology to the women and acknowledged their complete innocence of all charges.

Mr Watson was murdered by a gunman in the drive of his home in East Grinstead, Sussex, as he returned home from work on December 10, 1996. Linda Watson, 48, and Amanda Williams-Gater, 27, were in the house at the time. The police immediately regarded them as prime suspects.

They were prosecuted for murder on the basis that they had hired the unidentified gunman. Both women spent time in Holloway prison awaiting trial, and were vilified by the media.

The case collapsed in June 1998, on the morning the Old Bailey trial was due to start, when the Crown offered no evidence. The judge said the pair left court without a stain on their character.

Mrs Watson and her stepdaughter then asked the Police Complaints Authority to investigate and the resulting report is perhaps the most strongly worded ever. The independent investigation, supervised by the Metropolitan police, considered the prosecution "ill-founded" and said the police had "failed to keep an open mind". Its conclusion was that officers "failed to properly investigate the murder of Richard Watson and this arose from a systemic failure by Sussex police".

"I'm relieved that at least now we have been given official recognition that we are innocent," said Linda Watson. "But at the same time I'm deeply saddened that it's taken six years, because truths that were so obvious were so deliberately misconstrued."

The women have each been awarded £25,000 as interim compensation. The payments are made under the home secretary's scheme for miscarriage of justice. Their solicitor, Lawrence Kormornick said: "Ex gratia payments are rare and my clients welcome the decision. The amount of the interim discretionary payments indicates the seriousness of the matter. We look forward to a final decision on the level of compensation that will reflect the distress my clients have suffered over the last six years."

The ultimate level of compensation will be determined by an independent assessor, currently Lord Brennan QC. A decision is not expected until December next year.

Although the central recommendation of the PCA report was that the Watson murder should be reinvestigated, no one has yet been charged.

See also:
Shots in the dark, April 1999

A police force criticised for an investigation that led to a woman and her daughter being wrongly charged with the murder of her millionaire husband, yesterday made new moves to find his killer.

Linda Watson, 46, faced trial at the Old Bailey after Richard Watson, 55, who ran a computer company, was shot dead as he arrived at their farmhouse in East Grinstead, West Sussex, in December 1996. Her daughter Amanda London-Williams, 25, was also accused of his murder.

The charges were dropped on the eve of the trial and a Police Complaints Authority investigation concluded that "systemic failures" by senior officers meant that the case was never properly investigated. Both women say they intend to sue Sussex Police.

The force is reinvestigating the crime. Yesterday 50 officers raided a number of addresses across southern England in a search for the murder weapon. Officers from the Sussex, Surrey and Thames Valley forces were involved in searching farmland at Blindley Heath, Surrey, five miles from the murder scene, and other undisclosed locations.

Mr Watson, a father of four, was shot twice in the chest as he stepped from his TVR Chimera at his five-bedroom house. His Glasgow-born third wife, a former runner-up for Miss Scotland, was inside with her daughter and raised the alarm but the gunman escaped.

Six months later both women were charged with murdering Mr Watson aided by an unknown third person. Det Insp Malcolm Bacon, of Sussex Police, said: "I can't say what information has led us here but we haven't found anything yet. We are using a Thames Valley Police underwater search unit."

Police are also expected to question Paul Garfield-Jones, 39, an antiques dealer, over the murder.

See also:
Shots in the dark, April 1999

Relevant reports in the Daily Telegraph:
16 January 2001 - 'Systemic' failings in murder inquiry
9 June 1998 - Row as women are cleared of murder
18 July 1997 - Wife and stepdaughter charged with murder
6 March 1997 - Wife and stepdaughter arrested over murder of computer firm boss
13 December 1996 - Witness saw killer in black
12 December 1996 - Computer firm boss murdered days after beating by muggers