Customs did not interview officials over Iraq case: Scott inquiry told of failures in Matrix Churchill affair

SERIOUS FLAWS were revealed in the Customs investigation of the Matrix Churchill machine tool company at the Scott inquiry yesterday.

Customs investigators did not interview important Whitehall officials involved in the case, only saw important documents weeks before the trial started, and were slow to or failed completely to disclose key documents vital to the defendants in the case.

Peter Wiltshire, the senior Customs investigating officer, said evidence which showed the Government permitted exports despite being aware that machine tools were destined for Iraqi munition factories was not followed up. He said Customs lawyers did not make it a priority for his officers.

Mr Wiltshire said no witness statements were taken from civil servants in the Ministry of Defence or Foreign Office, although they had been closely involved in Whitehall's decision to allow the firm to export.

Important Whitehall papers were received late by Customs investigators and only two Department of Trade and Industry officials were asked to give witness statements. Documents were not obtained from the MoD until August 1992, two months before the case was scheduled to start at the Old Bailey.

He admitted knowing early on that the likely defence would be the Government had turned a blind eye to the fact the machines were being used to make weapons.

There was no follow-up on some intelligence reports because the Customs case hinged on the fact the company had deceived the DTI about the fact the machines were specially designed for munitions. Lawyers advising him never asked for any follow-up and were confident their evidence was correct, he said.

Documents the defendants said were essential to prove their innocence were slow being disclosed or were not disclosed at all. Mr Wiltshire said this was an 'oversight' on his part and could not explain how it happened. 'There were a lot of fingers in the pie.'

When Lord Justice Scott asked why more was not done to check the defendants' claims, Mr Wiltshire said he believed the firm had deliberately deceived officials over what was happening.

Customs decided 'government knowledge' only extended to what 'the licensing authorities knew'.

He said they did not look at the broader view of government. The licensing authorities 'guessed what might have been going on, had suspicions, but they didn't know what exactly was going on', he said.

Asked why no statements were taken from MoD or Foreign Office officials, he replied: 'I think the investigation was difficult enough without trying to interview half of Whitehall.'

He told the inquiry he lost control of the investigation to more senior Customs officials when it became apparent the case was a 'high profile' one with a serious 'political dimension' after Customs went to interview a DTI official. Immediately after they left, a report went to Nicholas Ridley, then Secretary of State for Trade and Industry, who wrote to Sir Brian Unwin, chairman of the Customs Commissioners.

'I knew that everything we did was going to be under the eye and looked at extremely carefully,' he said.

The inquiry continues today.