Maxwell stole an estimated £400m from the Mirror Group pension fund

Malcolm Rifkind, then transport secretary, ordered that no investigation be held in Britain.

Mr Maxwell had looted an estimated £400m from the Mirror Group pension fund and was crippled by debt.

The political manoeuvring was revealed in records released to the National Archives at Kew, London.

Files show that there were fears among officials that an inquiry in Britain would spark a media frenzy.

International relations

There were also concerns that any investigation in Spain - the tycoon's body was found off the Canary Islands - would damage international relations.

Mr Maxwell, 68, went missing from his luxury yacht, MV Lady Ghislaine, during a cruise off the Canaries in November 1991.

His luxury yacht

His body was found floating in the sea.

The documents show that the Foreign Office did not want British officials on Gran Canaria to conduct an investigation for fear of upsetting the Spanish.

Officials in the Department of Transport also warned that an inquiry in Britain would attract massive media attention and become "a drawn out affair".

The British Consul on Gran Canaria, GK Hazell, was "somewhat reluctant" to get involved, having conducted only one low-level inquiry 10 years earlier and fearing the intense media scrutiny he would be subjected to.

I see no point in foisting an inquiry on a country whose authorities will at best be uncooperative and, quite possibly, hostile Patrick Fearn

Patrick Fearn, the British ambassador in Madrid, also wanted to prevent a British inquiry taking place on Gran Canaria, as the Spanish authorities were still holding their own investigations.

'Hostile'

In a cable to London, he warned: "It would have been an extraordinary vote of no confidence in their ability to hold such an inquiry.

"I see no point in foisting an inquiry on a country whose authorities will at best be uncooperative and, quite possibly, hostile: and which could react adversely on UK-Spanish relations."

Malcolm Rifkind pictured, left, with John Major

An official in the Department of Transport, P Kitchen, found a loophole in the Merchant Shipping Act which would avoid the need for an inquiry.

The act stated that an investigation had to be held into any death on a British-registered vessel.

But an amendment said that when someone died after being "lost" from a boat, it was up to the secretary of state to decide whether an inquiry should be held.