Sussex Police were guilty of "systematic failure" over the investigation of the unsolved murder of businessman Richard Watson, a report says today.

The inquiry team failed to adequately pursue all lines of inquiry and officers failed to keep an open mind.

The Police Complaints Authority (PCA) investigated the handling of the case after complaints from the victim's widow, now Linda Henderson, and stepdaughter Amanda, who were acquitted of the killing.

Mr Watson, 55, was shot dead outside his home in East Grinstead in 1996. The case is the subject of a new investigation by the force, led by Detective Chief Inspector Alex Wood.

The PCA report said too much significance was placed on the theory that Mr Watson was shot from the balcony of the house, occupied at the time by his wife and stepdaughter. It says the evidence did not justify the scenario.

The PCA said there were a number of possible motives for his murder, but other lines of inquiry were not adequately pursued.

The PCA report names Detective Superintendent Paul Westwood, senior officer in the case, and his successor, Detective Inspector Nick Siggs, but said no disciplinary proceedings would be instigated because both were now retired.

Sussex Police today admitted some of the failings but suggested the PCA inquiry, carried out by Metropolitan Police, was not necessary complete.

Spokesman Chris Oswick said: "We regret Mr Westwood and Mr Siggs exercised their right not to assist with the inquiry.

"Had they done so, the Metropolitan Police investigators would have been more fully informed."