The Financial Services Authority (FSA) has ended its controversial investigation over the leak of documents at Belgian brewer Interbrew after concluding that it cannot take the probe any further, Andrew Cave, Associate City Editor reported in a statement. The regulator confirmed the move, signaling an end to the investigation in Britain. Regulatory authorities in Belgium are continuing with their own probe. The FSA is understood to be willing to assist but has not yet been asked.

The affair dates back to December 2001, when Interbrew began criminal proceedings against "persons unknown" for the theft and falsification of documents after leaked materials suggested the Stella Artois, Bass and Boddingtons brewer was set to bid for South African Breweries.

Interbrew pursued five British news organisations demanding the return of leaked documents and took the matter to the House of Lords, before handing over the investigation to the FSA last year. The FSA had already begun an investigation into the leak and allegations that it may have been linked to market abuse. However, the regulator's involvement caused uproar with the Financial Times, The Guardian, The Times, the Independent and Reuters, who claimed that an English court judgment requiring them to hand over the documents breached their freedom of expression.

In July 2002, FSA chairman Sir Howard Davies abandoned plans to send officials into newspaper offices to seize leaked documents. The newspapers took their fight to the European Court of Human Rights.

The FSA's decision not to pursue the case comes as Sir Howard prepares to leave the regulator on Friday to be director of the London School of Economics. He said: "We have concluded that the appropriate authorities to pursue this are in another country. At this point, we have concluded that we are not the appropriate authority. If an offence has been committed, it has been committed elsewhere." FSA spokesman John Fryer said: "The FSA started this investigation with no suspects because we had an anonymous offender. The case has therefore been a difficult one to investigate. The FSA still believes it was right to start the investigation, because of the possibility that a criminal offence had been committed.

The cases will include the FSA's first criminal prosecution but Sir Howard said most of the legal actions involve "people at the margin of the market".

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