Ex-minister 'deceived over exports to Iraq': Matrix Churchill chief denies peer's claim that he lied over military purpose of machine tools for Baghdad. David Connett reports

Lord Trefgarne yesterday accused Paul Henderson, managing director of Matrix Churchill, of lying about the military purpose of exports to Iraq.

The former trade minister told the Scott inquiry that he approved controversial export licences because Mr Henderson 'looked me in the eye and deceived me'.

Mr Henderson and two other directors of the Coventry company, were cleared of illegally breaching export regulations at their trial at the Old Bailey in 1992. Their acquittal led to the setting up of the Scott inquiry.

The former minister's accusation was denied by Kevin Robinson, Mr Henderson's lawyer, who was present at the inquiry.

'Lord Trefgarne's allegation is completely denied. Paul Henderson has already supplied the inquiry with a truthful account of the events surrounding his meeting with Lord Trefgarne,' he said. 'Mr Henderson is confident the inquiry's report will sustain his position.'

Lord Trefgarne said he met Mr Henderson in September 1989 to discuss several Matrix Churchill machine tool exports to Baghdad.

He admitted he was told of reports that the company had previously helped to equip Iraqi weapons factories, but said the evidence for this was 'not irrefutable'. He was also told Matrix Churchill was owned by a front company deeply involved in an Iraqi defence procurement network.

'I don't think I could have done more than looked him in the eye and asked him what the machines were intended for. He told me. I now believe that he deceived me.

'I attached great importance to Mr Henderson's assurances. I thought he was telling me these machines were intended for innocent purposes, purposes he knew we would be able to authorise,' he said.

The inquiry heard that Mr Henderson told a senior Foreign Office official the same week that he could not guarantee the machines would be used for peaceful purposes.

Lord Trefgarne expected Department of Trade and Industry officials would have checked out the true destination and purpose of the exports notwithstanding the assurances. 'I don't believe I needed to tell them to make checks because I believe as experienced officials they would do this anyway,' he said.

The inquiry has been told that no checks were carried out despite warnings from the intelligence services. The exports were later approved. Shortly before the approval Lord Trefgarne was advised that military use was not a reason to refuse the exports after a relaxation of official guidelines following the 1988 ceasefire in the Iran-Iraq war.

Asked whether this was correct, Lord Trefgarne replied: 'It depends whether or not the munitions they were going to make represented a significant enhancement. If they were going to make one round it was not, if it was going to make 100 rounds a minute it would be.'

He refused to comment on whether he thought his officials had been slow to react to an intelligence report which named Matrix Churchill as the company supplying equipment to an Iraqi ballistic missile project.

Lord Trefgarne said he was 'nervous' about the Customs prosecution of Matrix Churchill. He expressed his fears informally to Lord Caithness, the then Paymaster-General - the minister with nominal responsibility for Customs.

His nervousness stemmed from changes in international rules which proposed removing most machine tools from the export licensing system altogether.

'If Matrix Churchill were about to be prosecuted for something that was about to cease to be an offence then the prosecution would run into difficulties,' he said.

(Photograph omitted)