The usual suspects?

The previously fanciful prospect of an al-Qaeda attack seemed all-too-real when police arrested nine men in a series of raids in Edinburgh and London. It was said the "gang" was using the Scottish capital as a base for terrorist activities across Europe, with even the Hogmanay celebrations in Princes Street touted as a possible target.

Yet last week, after 12 months of intense investigations by MI5, Special Branch and police, the Crown Office announced that it had decided not to prosecute the nine Algerians who had been charged under the Terrorism Act of 2000.

The decision was a huge relief to the men, though they complained bitterly about the case against them and the treatment they received while they here held in prison. They also claimed it left them fearful for their future safety, whether in Britain or, if they are now extradited, in their homeland.

The decision was also a devastating blow to the team of officers set up to investigate the men, and senior police are understood to be furious at the collapse of the case. As Scotland on Sunday reveals today, evidence is still being gathered against the Algerians, who it is understood are still under surveillance by the security services.

It is thought the nine were originally arrested after their names and addresses cropped up during raids south of the Border which, in turn, are believed to have been sparked by anti-terror raids in France. The suspects’ legal team insist this was a "dragnet approach" which brought in for questioning virtually anyone the police came across.

But until the Crown Office decision to drop the case "at this time", officers believed they had built up a coherent case against the suspects, having concentrated their efforts on proving a "close association" between the men and incriminating items found in four or five flats in Edinburgh. These included a video collection which featured footage of Jenners department store among others showing Osama bin Laden and al-Qaeda fighters in training,

a terrorist ambush of military personnel and what was described as "massacre and mutilation of bodies".

More damning still were substantial amounts of false passports, driving licences and identity cards from several different countries, as well as many mobile phones and sim cards. A key factor in persuading officers they had found a plan to fund terrorism was the discovery of at least 80 different bank accounts, mostly in false names.

Other pieces of evidence proved to be red herrings - most notably a map marked with key locations in Edinburgh which was later found to be the property of an Australian backpacker who had doodled on the map. In addition, a framed photograph found in one flat of the World Trade Center towers on fire on September 11 turned out to be the property of the landlord, not his tenants.

Despite this, police sources insist the other material was compelling and that the investigation was thorough and professional. They also stress that it was directed by a senior procurator fiscal to make sure there was enough evidence to get the case in to court. Such was the confidence that an Edinburgh court was specially fitted out in preparation for a trial amid high security.

Yet when the papers arrived with senior counsel at the Crown Office, the carefully constructed case started to unravel.

The men offered a plausible explanation for a key part of the case for prosecution, the false ID cards and bank accounts, saying that as asylum seekers they had used them to get around a ban on them working. Other documents were being "kept for friends" - fellow Algerians who were on the move.

In interviews with Scotland on Sunday, the men said they were bemused by the more mundane incidents that had been painstakingly recorded as part of MI5’s surveillance efforts.

On one evening one of the suspects, Karim Benamghar, was followed as he drove round Edinburgh and gave a lift to two friends to help them with their shopping.

He was spotted in Beanscene on Nicolson Street having a coffee with another two friends then, in the early hours of the morning, followed from the Nicolson Street kebab shop where he worked, home to his flat in Albion Street.

Hidden agents even reported Benamghar’s constant trouble with his maroon Vauxhall Cavalier, noting he had "trouble starting it" and detailing how it broke down on a trip to Carlisle.

Another operative noted Hakim Ziem, 32, "appeared relaxed" and unaware he was being watched. He was reported "using his mobile phone a lot" after he was spotted going into a mosque in west London, where he was visiting his brother.

The lawyer for four of the men, Aamer Anwar, of Glasgow law firm Beltrami Berlow, said: "The surveillance operation, like the rest of the evidence as far as we’re concerned, at the most pointed out that people were carrying shopping bags, wearing dark glasses and sheepskin jackets. The surveillance officers must have eaten a lot of takeout and coffee because they must have been bored out their heads. Some of it was hilarious in terms of ‘evidence’."

One police source close to the investigation stressed the key role played by fiscals in determining the course of the inquiry. "The whole thing was dictated by the fiscal, Jim Graham, who said, ‘I want you to do this, that and the next thing’. The fiscal had an office in Livingston as well," he added.

The source also emphasised the dedication of the team which carried out the investigation. "The officers involved were very committed to the inquiry. You can see when people feel they are on to something. Sometimes you are so close to it you live and breathe it," he said. "You can read into it what you want to. Would the force embark on a very high profile operation like this without some justification?"

Publicly, Lothian and Borders Police praised the Scottish justice system’s "checks and balances", insisting the inquiry had not been a failure. Deputy Chief Constable Tom Wood said: "The Crown has made the decision and as far as we’re concerned there’s nothing more to be said. I don’t want to get into the business of saying we did this and did that. We did what we think is a good, thorough inquiry. The prosecution of crime is their [the Crown Office’s] business. We investigate, they decide to prosecute or not."

When asked why the decision was taken not to prosecute, one Crown Office source said a "clue" was in the statement issued on the case this week. It said "based on the evidence presently available, no further proceedings will be taken at this time".

But in the eyes of the law, the nine men are officially innocent of any crime, so Anwar complains of an ongoing "whispering campaign" against them. "The wording the Crown has used is almost like an implication these men are guilty," he said.

Despite his views on the evidence gathered against the men, Anwar believes they would have stood little chance if the case had actually got to court, claiming the jury would have been swept away by the tight security and numerous warnings of an imminent terrorist attack.

"I think these guys would have been found guilty. I don’t think they would have stood a chance," he said. "The only war on terror we have seen is the war on the Muslim community. We have got a Muslim community too scared to go to the mosque and to talk to each other.

"I’ve had clients who had Special Branch visit them. First of all the nice visit, offering them money and mobile phones to inform on people. Then it’s been a case of threats: ‘We’ll get you kicked out the country’; or a visit to their employer to get them sacked."

Ziem, 32, a former journalism student, complained of sleep deprivation while being interrogated. "You get tired, you get so knackered. You just want to sleep but they make you talk and talk and talk," he said.

He admitted he had pretended to be Italian so he could work as a cleaner in hospitals in London and Edinburgh. "I had a false ID but it was to work. I used it to work in a hospital," he said.

Another of the men, Salah Moullef, 33, who came to Britain from Algeria in 1996, complained bitterly he was an innocent man who had been wrongly accused and deprived of his liberty without any cause. "We’re anti-violence. We need an official declaration that we are innocent. I’m not happy until I see justice," he said.

"We were taken to Govan [police station] where we passed about a week in very miserable conditions, deprived of sleep, which I can call torture. There was a very high light on 24/7 and it was a very cold room with two metal doors. It makes you feel like a real monster."

The men were later transferred to Barlinnie prison where Moullef went on hunger strike in protest at being held in a segregation unit. He said:

"Other prisoners would spit on our heads in front of the prison officers. I used to receive food with coloured spit on it. They used to ask me, ‘Do you have any problems?’ I said ‘No, it’s okay’ and throw the food away."

"Then one day the chief of the guards came and told us, ‘There is a serious and big plan [by other prisoners] to kill you.’ Then they put us in the protection unit with paedophile people."

Another of the arrested men was Ghalem Belhadj, a 37-year-old married father of four who worked as a delivery driver at Khushi’s restaurant on Drummond Street in Edinburgh. He told Scotland on Sunday he had lost his faith in British justice. "When I came here I thought of Britain and I thought of peace, freedom and human rights. Now I cannot believe that," he said. "I have a wife and children. I’m not safe now. All the people look at you and say, ‘You’re a terrorist.’"

• SINCE the September 11 attacks, more than 500 "suspected terrorists" have been arrested in Britain, but few have gone to court and fewer still have been convicted.

Only five people out of the 529 arrested - the large majority are British Muslims - have actually been found guilty of terrorist offences.

These include Baghdad Meziane and Brahim Benmerzouga, from Leicester, who were jailed for 11 years in April for raising funds for terrorists.

Most of those held were released without any charge.

The most high-profile case was that of Algerian pilot Lotfi Raissi, alleged by the US security forces to have trained the pilots involved in the September 11 attacks. Raissi spent five months in Belmarsh high-security prison in south London but never faced any charges under British law and was eventually released.

Karim Kadouri was allegedly plotting to release poison gas in the London Underground when he was arrested in November 2002. He was given a four-month prison sentence in February for having a fake passport.

The Home Office has defended the poor conviction rate and suggested the arrests have helped disrupt terrorist operations. "We believe the Act allows the police to carry out their vital role in targeting suspected terrorist activities and preventing an attack," a spokesman said.