THE OLD Portuguese tourism posters hanging on the dirty white tiled walls of Caxias maximum security prison's visiting room in Lisbon portray a bitter irony. Any prisoner unfortunate enough to be locked in the hilltop prison, previously populated by the political opponents of Portuguese dictator Antonio Salazar, will not be able to go sight-seeing for some time.

If the irony has ever struck incarcerated British law professor David Lowry, it has long since worn off.

Lowry enters the room grinning and, without a glance at the mocking pictures, proceeds to give a detailed account of his experiences over the past four years.

He was arrested in April 1997 and not charged until a year later. His trial, which ran for 15 weeks, only took place in the last four months.

On Friday, Judge Feria delivered her verdict in a case that Lowry's supporters claim expose the inherent abuse of human rights in this EU-member country.

Lowry stood accused of aggravated fraud, criminal association, forgery and unauthorised creation of a database, in what the local press have described as Portugal's biggest fraud.

The former civil rights lawyer, Warwick University law professor and tax consultant claims the authorities simply over-reacted to business methods that they didn't understand. He says they have since been wallpapering over that error with what he calls corruption and incompetence.

English lawyers, MPs, Canadian investigators and many others all support his claim that there is no evidence against him. Yet, under the Portuguese law of preventive detention – designed by autocratic rulers in the 1920s, allowing suspects to be imprisoned for a year without charge and four years without trial – Lowry says he has spent two years starved of information and crammed in over-crowded cells, where 70 per cent of the inmates have HIV, aids or hepatitis.

His lawyers are taking his case to the European Court of Human Rights, hoping to force widespread changes to the Portuguese legal system.

Last week, his story took a further extraordinary twist. Despite press reports last year in Private Eye and other titles ridiculing the claims, Lowry maintains that he was a “pocket operative”, and has been helping US and British law enforcement agencies break a US$100m dollar international banking fraud while in prison. He also says he is currently helping the FBI with one last case – a similar banking fraud, but this time estimated to be worth US$1bn.

When Lowry first flew into Portugal in the summer of 1995, he knew nothing of Portugal's justice system. He was scouting out several European countries on behalf of five Swiss-based American millionaires, one of whom was a long-standing client who wanted to set up their own investment bank.

They called their new business Paramount Portugal, and it now needed a “back office” where its administration and telemarketing hub could be housed. After a legal opinion said their business plans “will not breach any Portuguese law or regulation”, Lisbon was chosen.

Then his client developed skin cancer and asked Lowry to act as his nominee in Portugal. With his marriage breaking up, Lowry agreed to what seemed like a profitable escape to a new life in the sun.

Paramount sold shares in three young US companies – Global Connect Direct, Premier Petroleum and DW Filters. It sold small lots of shares over the phone to targeted “intelligent investors”, usually “managers or above” in similar industries.

Two of the three companies did well, and with growing confidence investors started to use Paramount as their broker in other deals – to the point where it had 278 portfolio clients. But when DW Filters struck research problems, its shares had crashed.

Most of the investors cut their losses and moved to other investments. But Lowry claims a disgruntled shareholder, chose to stay in. When his stock continued its slide, he demanded his money back. Lowry says the shareholder made threatening phone calls, saying “I know how to make trouble for you”.

The shareholder's complaint to Portuguese authorities prompted Lowry's arrest. His office was raided and he was taken into police custody where he has remained ever since.

At Lowry's first hearing two days later, he asked his lawyer what charges he faced. “He replied 'we'll find out in a year'. It was just like Kafka.”

Professor William Twining, an expert in the evidence of law at University College, London, has damned the

Portuguese investigation as “amateurish, radically incomplete, secret and unfair”.

Pacing around his office in old Lisbon, one of Lowry's Portuguese lawyers, who fears for his career if he is named, says the prosecutors insisted the investigation continue in order to cover up their own incompetence.

“They arrested first and started the investigation after that. After two or three weeks, when they realised how serious the mistake was, they just started to cover it up. They covered it up with another mistake then it was two mistakes to cover up, then three and it went on. One thing I can tell you is that he is not guilty of what they say he is.”

The CMVM (Portugal's share and securities regulator) acted extemporaneously, he says, because a US company called Robinson Schwab was “doing fraudulent things with shares in this country” a few months earlier and had fled the country before being apprehended.

“The CMVM made a fool out of itself with the previous action and didn't want to be caught out again.”

There are other concerns about this case according to Lowry's supporters. Lowry waived his right to silence, but was not approached for a statement by the police for over three months. Apparently, when he finally spoke to the fraud squad, they actually apologised to him, but said they could do nothing to help.

Lowry says that eight people swore affidavits on his behalf, but were all then charged with criminal association, meaning they could not come to Portugal to testify at his trial.

Lowry's Portuguese barrister claims the Portuguese police advertised on the internet for anyone who had a complaint against Lowry or Paramount, and that when, after 11 months, they sought search warrants in the US, they were told “there is not enough information to provide probable cause”.

How does that system supposedly fail? For a start defence lawyers do not have access to prosecution evidence and cannot speak at the initial hearing; the investigation is private under the “secrecy of justice” system; and prosecutors sit on the bench beside the judge, suggesting questions, while the lawyer is on the courtroom floor.

Lowry's barrister says the judiciary, claiming independence, has avoided political reform and is a law unto itself. Yet looking at the statutes, Portugal has a good system.

“But what the law says is one thing. What happens in reality is another,” says the barrister.

Lowry was first placed in a 16 by 10 foot cell with 26 bunks. Twenty-eight people were already in there and he was beaten by other inmates more than once. The shower and toilet were over the same ceramic bowl. Drug addicts are abandoned to the agony of withdrawal, teenage first offenders are locked in with hardened criminals.

“They break every known rule of penology,” says Lowry. “The food is indescribably awful.”

And the British government has not been much better, he adds. Embassy staff trot out the old line about not being able to intervene in another country's law.

Lowry fears that another foreign lawyer could just as easily find themselves in a similar predicament. “The only thing that will change anything is if their European money is placed in jeopardy.” Portugal's reliance on EU funds is heavy and pressure from Europe could not be easily shrugged off.

The last sight of Lowry is him standing at the top of the stairs leading to the cell block, while guards search the food a visitor has brought him.

“I hope that will be the last fruit salad we will have to take him,” says the visitor.