It was disclosed that the Attorney General's rules about disclosure of evidence to the defence were ignored; changes were made in a prosecution witness statement; and there were efforts to prevent lawyers for the defence in the Matrix Churchill trial interviewing William Waldegrave, a government minister, about his role.
It was also revealed that 'gagging orders' - Public Interest Immunity certificates (PIIs) - which several ministers signed in an attempt to stop sensitive government documents being disclosed in open court - were issued for 'administrative convenience', and no test of public interest was applied.
PIIs have been used to stop crucial evidence in several cases, and several convicted people claim the documents withheld could have proved their innocence.
Andrew Leithead, Assistant Treasury Solicitor, told the inquiry he tried to prevent government documents being released to Matrix Churchill defendants.
Documents from the Department of Trade and Industry (DTI) were obtained by Customs investigators looking into allegations that the machine tool company had breached regulations on exports to Iraq. The DTI had shown Customs documents outlining officials' knowledge but stopped them keeping the documents to avoid them being legitimately disclosed to the defence. Customs obtained copies from the intelligence services and Mr Leithead said he tried to get them back. That 'seemed the right line to take'.
He was sharply criticised by Lord Justice Scott, who questioned the justification for a government department 'setting out to make it more difficult for a defendant to get documents which under the Attorney General's guidelines he would be expected to get.'
The judge criticised Mr Leithead for making changes and deletions in a prosecution witness statement. He and several officials discussed changes in the statement of Anthony Steadman, a DTI official. 'It was about the state of his personal knowledge,' the judge said. 'What business have officials got drafting something like this?' Mr Leithead said the initial statement was 'inadequate' and 'speculative'. It would be 'obviously wrong to put words' into the witness's mouth but 'ultimately, he takes responsibility for his own statement'.
Lord Justice Scott accused the Government of abusing PIIs, after Mr Leithead revealed that any documents about discussions between ministers or advice they received from officials was automatically covered by PII and the test of whether disclosure would be damaging to the public interest was not applied. 'It is damaging to the public interest to have any decision-making process exposed,' Mr Leithead said.
Lord Justice Scott said: 'What started as ad hoc protection given to particular documents has become by-rote protection of a very wide class of documents.' He said it was for ministers to determine what was in the public interest and for judges to weigh the balance between competing public interests, such as non- disclosure and justice. Judges believed certificates were signed by ministers who genuinely believed disclosure would be 'injurious' to the public good.
When the judge complained that signing PII certificates had become a 'mechanical' response, Mr Leithead conceded that there was little room for ministerial discretion. If ministers disagreed, then they were 'persuaded'.
When ministers were asked to sign Matrix Churchill PIIs, Michael Heseltine, President of the Board of Trade, refused because he believed the defendants were entitled to the papers. He agreed to sign only after being told he had a duty to do so by Sir Nicholas Lyell, the Attorney General.
Mr Leithead argued civil servants might be less candid in their advice to ministers if they feared disclosure. The business of government was difficult enough without being exposed to captious criticism.
When Mr Leithead suggested civil servants would become more reluctant to write things down, the judge suggested he underestimated the integrity of officials.
Mr Leithead: 'The Americans are surprised by the numbers of things we write down.'
The judge: 'They are also surprised by the number of things we keep secret.'
Mr Leithead: 'One is the consequence of the other. We write things down because they are kept secret.'
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