Eric Beston, former head of the Department of Trade and Industry's export controls and licensing branch, told the Scott inquiry that he had 'overlooked' and 'forgotten' evidence, had been 'mistaken' and had 'misled himself' when giving evidence at the Old Bailey last year. He denied he deliberately tried to avoid answering tricky questions which might embarrass the Government.
The misleading evidence was crucial to the defence of the three Coventry machine tool company executives who were accused of breaching export regulations.
All three, who denied the charges, claimed the Government knew they were exporting machine tools to Iraqi munition factories. They were acquitted after the collapse of the prosecution case. Lord Justice Scott's inquiry was set up following the collapse.
Mr Beston admitted telling the Old Bailey trial that the DTI did not know machines exported by Matrix Churchill were being used by the Iraqis to make weapons despite twice reading an intelligence report specifically warning that.
He admitted first reading an MI6 warning that the equipment was destined for Iraqi munition factories in January 1988 and had been deeply involved in advising ministers to permit the equipment to go, in breach of guidelines limiting defence exports to Iraq, in order to protect MI6's source.
Mr Beston reread the same report in January 1991 when preparing to make a witness statement to customs. He told the inquiry he had confused the question of the intended and actual use of the exports in court. 'I think I was quite mistaken in making that distinction there and as strongly as that. I fully accept I got myself into quite a tangle about it. I quite simply misled myself as to what the situation acutally was.'
Mr Beston also admitted failing to mention the fact that he knew of an intelligence report linking Matrix Churchill exports to Iraq's ballistic missile programme, codenamed Project 1728. He said he had 'overlooked' it, even though it had been raised at a meeting of the restricted enforcement unit - a secret Whitehall intelligence committee - which he had attended.
He admitted mentioning the report in a timetable of events prepared before the trial for senior DTI officials. Despite this, he said he had forgotten it by the time the trial began.
He also admitted telling the court, incorrectly, that Matrix Churchill had given assurances to a former DTI minister and officials that machine tool exports to Iraq would be used for civil purposes.
However, official DTI minutes of the meeting between Lord Trefgarne, the former trade minister, and Paul Henderson, the former managing director of Matrix Churchill, revealed the only assurance the company gave the DTI was that its Iraqi shareholders were not involved in day-to-day management of the firm.