Appearing before the Scott inquiry, Mr Clarke said two Public Interest Immunity (PII) certificates that he signed when he was Home Secretary, in an attempt to withhold documents from three defendants in the Matrix Churchill case, were in the interests of national security and did nothing to stop them defending themselves.
It was not in the interests of anyone in the 'employment of the state' to seek to get convictions of innocent men, he said. 'In fact, they bend over backwards to achieve the opposite.
'I was satisfied then and I remain satisfied that nothing that was relevant to the case was cut out by the certificate. None of my certificates had a bearing on the trial at all. No one has ever claimed Mr Henderson was remotely prejudiced by this certificate.'
But Paul Henderson, one of the defendants, disputed the claim after listening to the evidence. 'If the judge had upheld those certificates we would not have had the documents and it would have prejudiced the outcome of the trial.'
The Matrix Churchill prosecution collapsed amid controversy in November 1992 after the trial judge, Mr Justice Smedley, threw out ministerial certificates and ordered the release of Whitehall documents.
They revealed that Mr Henderson and another Matrix Churchill employee passed on information about their Iraqi dealings to the intelligence services who then passed them on to other government departments.
Mr Clarke denied 'mechanically' signing the certificates, but admitted he had no idea the defence would be arguing that the Government knew and permitted defence- related equipment to be supplied to Iraqi munitions factories in breach of UK export guidelines.
He said that the certificates were signed to protect the lives and work of MI6 officers. Mr Clarke's duty was to protect the security services, the intelligence services, people working within them and the continuation of those services. The trial judge would decide whether or not there was a competing public interest. He said that he was surprised to discover two intelligence officers gave evidence at the Matrix Churchill trial because he had only been asked to sign a certificate in respect of one. This an 'administrative oversight' rather than anything sinister, the Secretary of State said.
Mr Clarke added that he double- checked the certificate after hearing that Michael Heseltine, President of the Board of Trade, was 'uneasy' about signing one.
His evidence that ministers had discretion whether disclosure of documents would damage the public interest contradicted statements by Sir Nicholas Lyell, the Attorney- General, who has said that ministers have an absolute duty to sign PII certificates to protect government documents if disclosure harms the 'operation of the public service'.
Questioned why he tried to prevent heavily edited versions of intelligence reports being given to the defence, Mr Clarke said that the reports included times and dates that could help Britain's enemies.
The hearing was adjourned until today, when Malcolm Rifkind, the Secretary of State for Defence, gives evidence.