Stewart case takes more knocks

DOMESTIC style guru Martha Stewart seems more likely to walk free as the prosecution continues to take knocks in the trial over her role in an insider trading scandal. A judge in Manhattan has refused to allow prosecutors to talk about key phone calls between the defendants, throwing further doubt on the ability of government investigators to secure a conviction.

The failure would be a major embarrassment and add to question marks over the spate of financial trials due before US courts over the next few months.

US District Court Judge Miriam Goldman Cederbaum ruled that prosecutors could not speculate in court about the content of telephone conversations between Stewart and her stockbroker, Peter Bacanovic. The prosecution had hoped to show the conversations were part of a conspiracy between the two defendants to block an investigation into Stewart's alleged insider dealing in ImClone Systems shares.

Meanwhile, the case against Dennis Kozlowski, former chief executive of Tyco, is also a long way from being proved. Mark Swartz, former finance chief, testified in New York yesterday that a $20m (£10.5m) payment to Frank Walsh, a company director, was in accordance with company rules and was not kept secret.

The payment, which Walsh later returned, was a major factor in Kozlowski's downfall. Swartz's testimony could undermine prosecutors' attempts to prove that Kozlowski stole from Tyco.