After having served 15 months of a five-year jail sentence, Mr Daghir, a British citizen who was born in Iraq, found his once-thriving business and family life in tatters. Without compensation he has been forced to put his house in Esher, Surrey, up for sale. His wife, the mother of his four children, has left him.
He cannot get work because of what happened and, because the Americans refuse to lift their own indictment against him, he cannot travel overseas for fear of being arrested and extradited. At 55, he is a virtual prisoner in a country which he still adores but with a system of justice he now finds hard to stomach.
Like other businessmen whose lives have been shattered by the arms-to- Iraq saga and who found themselves the victims of the zeal of Customs and Excise to secure convictions, Mr Daghir is gearing up to claim damages from the Home Office. At the very least, he reckons, he is owed about pounds 40,000 for his time in prison and pounds 1m for the loss of business profits.
In theory, he should have a good case: Mr Daghir and his assistant, Jeanine Speckman, are the only British people to have been jailed in the whole arms-to-Iraq affair. But unlike some of the other defendants, notably Reginald Dunk, whose claim for compensation has been acknowledged by the Home Office following publication of the Scott report and whose case was highlighted in the Independent last week, Mr Daghir is on thin ground, through no fault of his own,
His difficulty is that after he was convicted in June 1991 of attempting to supply pounds 6,000 of ordinary electrical capacitors and won a right to appeal after fresh evidence came to light, his conviction was actually quashed on a technicality.
Instead of hearing the new evidence - a conclusive report from the United Nations nuclear inspection team that the capacitors from Mr Daghir's firm, Euromac, were not the same as those intended to detonate Iraq's atomic weapons and that he had been set up in a "sting" operation - the Court of Appeal quashed his conviction because the trial judge's summing-up was badly phrased.
The Home Secretary only has power to authorise compensation where new evidence is submitted showing a miscarriage of justice has occurred. In cases of judicial error, the Home Office recently wrote to Mr Daghir's MP, Ian Taylor, there are no grounds for payment.
Mr Daghir's tragedy is that he had many grounds of appeal, of which the first handful dealt with the judge's summing-up. The others related to new evidence proving he was not the heinous criminal Customs said he was. They showed his products were not destined for Iraq's nuclear bombs and that he had been the victim of a sting by US Customs.
"I wanted to clear my name," Mr Daghir said. "I did not know if I went on this one I would face a struggle for compensation, otherwise I would have gone on fresh evidence."
The plot thickens when Mr Daghir produces a letter from Customs and Excise's legal department, dated 27 May 1993. It was sent in the run-up to the appeal, following production of the UN report. It suggests hearing the technical grounds first, and saving the fresh, potentially embarrassing, evidence until later: "Mr Moses QC [Alan Moses, senior Customs counsel in the Matrix Churchill case] feels that all the grounds of appeal other than the question of the fresh evidence be dealt with first. If the court were to rule in the appellant's favour on any of the issues in a way that disposed of the appeal, it would be unnecessary to deal with the question of fresh evidence."
That is what happened. He was freed on a technicality, the new evidence was not heard, he has no automatic right to compensation. His solicitor, Lawrence Kormonick, is preparing a new case to persuade the Home Office to reconsider his application. "He has been in prison for 15 months, unemployed for several years, has lost his company, cannot travel abroad and has had this hanging over him for six years," Mr Kormonick said.
If his claim is contested, it could be years before he receives any money. "I think the time has now come for him to be properly compensated for his suffering and I hope that he will not have to wait too much longer," Mr Kormonick said.
Paul Grecian, 40, was head of Ordnance Technology (Ordtec). He sold an fuse production line to Iraq in the late 1980s. He was later acquitted on appeal when it emerged the prosecution had withheld files showing he provided British security officials with information about Iraqi war plans. Last year he was arrested by Interpol in South Africa and is fighting movesto extradite him to the US on charges of conspiracy, bank fraud and violating arms export controls. He was convicted on similar charges in Britain.
Reginald Dunk, 76, was wrongfully prosecuted 11 years ago for attempting to smuggle 200 Sterling sub-machine guns to Iraq via Jordan. The Home Office now accepts, in principle, it made a mistake. Diplomats may now face prosecution for denying him a fair trial.
Paul Henderson, the former managing director of Matrix Churchill. The criminal case against his firm, which collapsed in 1992, and the outcry over withheld prosecution evidence, resulted in the Scott Inquiry Henderson, it emerged, had been involved in helping M16 gather Iraqi intelligence. He is considering a claim for damages against a "malicious" prosecution attempt by Customs and Excise.