greatest sympathy and hugs, Selmecat. You won't like what I'm about to say right now - but when you are feeling better you might thank me.
Let's start by saying wholeheartedly, 100%, you are an excellent worker and have given loyal service for 35 years. Hey- even if you gave so-so service, you've turned up every day for 35 years and they've had the benefit of your labour. you should be very proud of that.
Your firm has handled this business worse than ineptly - probably illegally. But they have done this because they know they can. It is hugely stressful on a person to take legal action against this kind of injustice, as well as expensive, and as others have posted, it puts your financial settlement at risk. They have behaved in a disgraceful, unethical way, and you have suffered as a result.
I'm guessing that the person who was arrested was linked socially to others in the firm - all buddies together - and they have sought revenge, pure and simple. You got it properly sorted - so they tell you everyone is against you and humiliate you.
They have stopped short though of trying to rob you, as then you would have excellent tangible grounds for taking them to court.
Dear old selmecat, you need to be helped and supported to get your head round this very difficult time. I'd advise you to look at the money - you can sit on your duff, go to Spain, volunteer, go on a course, do whatever you want now because you are a free person and you are in that respect very lucky. Retirement is always hard for people with a work ethic, but to start this new phase in such a rotten way is most hurtful.
Can I suggest you see your GP and outline this terrific stress you've been under? You need a contact to talk to over the next few months so you can get better, leave the bitterness behind and embrace your new life positively.
You might also take the time to visit your MPs surgery and talk to them about this gross injustice, but don't paint mental pictures of ever getting even.
Living well is the best revenge - move on, keep well, and keep your dignity.
Sending blessings.