Katrena Allan was accused of stealing the money from East Lothian-based Bindery Machinery Services, where she worked as finance director.

Her former boss Jim Brown claimed Allan had fraudulently written dozens of cheques for thousands of pounds to herself and her company Glowworm Books, which published Maisie.

A jury at Edinburgh Sheriff Court today returned a unanimous "not guilty" verdict on all charges after a three-week trial.

Speaking outside court, Allan, 51, who burst into tears at the verdict, said: "It's a great relief and the truth is out now. I can get on with my life now."

She was hired as finance director at the firm in Macmerry Industrial Estate in 1999 but was arrested in 2005 after more than half a million pounds was discovered missing from the accounts.

Allan stood trial in November 2007, but proceedings were abandoned because the defence team were unable to get hold of vital cheques, invoices and receipts.

A new trial began in March this year but was again deserted after a few days when more documents emerged.

Allan, of Ecclesmachan, Broxburn, West Lothian, stood trial for the third time this month, denying she had fraudulently taken the money from Bindery.

It was alleged she wrote unauthorised cheques and made electronic payments worth £656,325 between May 1999 and January 2005, and tried to take a further £35,108 in January 2005.

The finance director claimed any cheques or electronic bank transfers were repayments for money she had loaned to Bindery.

She said Mr Brown regularly asked her to pay thousands of pounds for his expenses – including diamond rings and holidays – to avoid tax.
She had paid machinery, suppliers, travel and personal expenses using her own and Glowworm's credit cards.

In return, she used Bindery money to pay Glowworm salaries when she was short, and paid it back when she could.

Allan admitted falling behind with the salary repayments, but said it was a "commercial matter" and she never intended to cheat her employer.
Her lawyers claimed she had been forced to defend herself "with hands tied behind her back" because many of the documents she needed were lost or destroyed during the liquidation of Glowworm.

The trial heard the defence repeatedly asked for documents kept in a "Katrena Allan" cupboard at Bindery but the company had ignored requests.

One large box of documents was only handed over on October 10 this year.
Glowworm Books, of Broxburn, went into liquidation after Bindery began proceedings against it in April 2006.

Maisie author Aileen Paterson has claimed she lost £40,000 when Glowworm hit financial problems.

She created Maisie after her 11-year-old son, Max, died of leukaemia in 1980.

The former art teacher at Craigroyston High School said she had tackled her grief through drawing.

She moved from Borders-based publishers, Three Hills Books, to the newly-formed Amaising Publishing House, which was run by Scotprint boss Charlie Watt and Mrs Allan.

The firm later became Glowworm Books, run by Allan, and the contract between the pair ran out in 2005.

Maisie is one of Scotland's most popular fictional characters, and in 2000 her adventures were adapted for children's television by ITV, voiced by veteran comedian Stanley Baxter.