Martha finds it hot in the kitchen

FOR two decades, no household project has been too big for Martha Stewart. But the American doyenne of home economics is facing her biggest challenge yet - redecorating her own reputation while Federal prosecutors probe allegations of insider trading and obstruction of justice. If proven, Stewart faces a possible prison term.

Stewart's expertise ranges from cooking and decorating to gardening and childcare. And perhaps even a bit of financial wizardry. A former stockbroker, Stewart floated her homemaking business in 1999, giving her a paper fortune approaching £1bn. The investigation has hit the share price badly but she remains an extraordinary wealthy woman.

Her company, Martha Stewart Omnimedia, publishes and distributes Stewart's wisdom via magazines, a website, syndicated newspaper column, 24 books and television programmes.

At the centre of the inquiry is former biotech wonder stock, ImClone, which claimed to be closing in on a cure for cancer. Stewart sold nearly 4,000 shares on December 27, 2001, at £38.67 a share, making nearly £152,000. But the next day, drugs regulators prohibited ImClone from marketing its star cancer drug, Erbitux. The shares immediately collapsed.

What investigators want to find out is how Stewart timed her sale so perfectly. Her defence is clouded by her close links to ImClone's former chief executive, Sam Waksal. The two met more than 15 years ago when Waksal dated Stewart's daughter Alexis.

Waksal has pleaded not guilty to charges of tipping off friends about Erbitux. A Congressional committee found 'inconsistencies' provided by Stewart's legal team and passed her case to the Justice Department. The penalties for making false statements include fines and five years in prison.

Stewart denies any wrongdoing, saying she ordered her broker, Merrill Lynch, to sell ImClone at any price below £40. The Congressional committee expressed 'serious doubts' about the explanation.