Iraq arms rules 'not changed by Cabinet': Scott inquiry to hear conflicting evidence

LORD Justice Scott's inquiry into the supply of arms-related equipment to Iraq will be told that a critical relaxation in Whitehall's export guidelines, agreed in December 1988, was never approved by the Cabinet.

According to a well-placed government source, the inquiry will be told that the original guidelines, published by Sir Geoffrey Howe when he was Foreign Secretary in 1985, were maintained right through to the Iraqi invasion of Kuwait in 1990 - when a total embargo was imposed.

But at least one other key government witness is prepared to tell Lord Justice Scott that the guidelines were in fact changed by ministers, and the change was then put into practice by officials. That flat contradiction has emerged as the central issue for the Scott inquiry.

Lord Justice Scott said this week that he wanted to establish whether the Government had known of exports to Iraq breaching its guidelines.

The question posed by the Independent's sources is whether there was an unofficial set of guidelines, for which ministers could deny responsibility.

John Major has already said that the original Howe guidelines were enforced by Whitehall 'with scrupulous care'. But there is no record of any minister denying that the guidelines were changed in 1988.

The Independent was told by another source last night that the guidelines were changed at a December 1988 meeting held at the Foreign Office attended by three ministers of state - William Waldegrave, Foreign Office; Alan Clark, Defence; and Lord Trefgarne, Trade and Industry. That allegation conformed with a document presented in evidence at last year's Old Bailey trial of the three Matrix Churchill executives who were acquitted on charges of evading export controls - showing that the wording of a 'proposed revision' in the guidelines, dated 20 December 1988, had been 'accepted'.

Last year's Commons select committee inquiry into the Iraqi supergun affair was also told by John Goulden, a senior Foreign Office official who has since been made ambassador to Turkey: 'The guidelines set out by Sir Geoffrey Howe in '85 applied until December '88, when the third guideline was amended.'

One of those involved in the December 1988 change told the Independent last night: 'Yes, the guidelines were changed, and it was agreed there should be no announcement.' A 'slightly looser framework' had been agreed because officials had been getting their 'wires crossed'.

Menzies Campbell, the Liberal Democrat spokesman, said that when Mr Major had been challenged about 1988 decisions on the guidelines, he had said: 'I was not a party to those decisions . . . .'

Mr Campbell added: 'What decisions? If they are now saying that no such decisions were made, who is telling the truth?'