Exporters 'deceived DTI on sales of parts to Iraq'

Department of Trade and Industry officials relied on the honesty of exporters to give proper descriptions of goods destined for Iraq before deciding to grant an export licence, an Old Bailey court was told yesterday.

Alan Moses QC, for the prosecution, alleged that three senior executives with the Coventry- based engineering company Matrix Churchill deliberately deceived DTI officials by pretending there was a civilian use for machinery, parts and software specifically designed to produce fuses for explosives.

The result of 'that deception and that pretence' was that the DTI considered the export licence applications on a 'wholly false basis', Mr Moses said. 'The system depends on truthful information being given by the exporter. If the exporter wants to get round a ban on equipment designed for military use, there is a powerful incentive to say it's for civilian use.'

Matrix Churchill's former managing director Paul Henderson, 52, of Coventry; former sales director, Peter Allen, 46, of Leicester; and Trevor Abraham, 45, of Balsall Common, Coventry, all deny knowingly being concerned in the export or attempted export of prohibited goods between 1988 and 1990.

Mr Moses alleged said the three told DTI officials that the machinery they wanted to export was for 'general metalworking'.

'The truth is they knew the machinery and associated equipment was going to be used for military purposes. The DTI took the information provided by Matrix Churchill on trust.'

The court heard that Matrix Churchill was a member of the Machine Tools Trade Association. Mr Henderson attended an association meeting in January 1988, at which Alan Clark, then Minister for Trade was present. He told the exporters 'they should arrange in advance the non-military use of the machines with the ultimate consumer'.

By the end of 1988, the company was involved in multi-million pound contracts with a Chilean company to supply the fuse- making machinery to Iraq and provide training in Britain for more than 30 Iraqi engineers. If it failed to export the machinery it would be in breach of contract and lose money. So 'it was deeply important to Matrix Churchill that it obtain export licences'.

The trial continues today.