The British government has consistently maintained since 1945 that there were no Channel Islands witnesses to atrocities committed in slave camps on Alderney, where up to 1,000 Russians, Germans, French Jews and Poles are believed to have died through systematic brutality. Virtually all German files were destroyed at the end of the war.
Once the Germans have considered the previously unreleased documents they will be made public in Britain.
The former SS officer being investigated by the Germans is Kurt Klebeck, 86, second in command at one of the Alderney camps in 1943-44, and now living in Hamburg.
He was prosecuted by the Allies after the war for killing Allied soldiers in another camp, but the fact that he was never tried for his Channel Islands activities has fuelled the suspicions of a whitewash over the extent of islanders' collaboration and of the post-war Government's knowledge of activities on Alderney.
Home Office documents on the occupation, previously classified for 75 or 100 years, were released (with censorship) after pressure from MPs late last year, but the MoD files were among those held back without release date.
The German ambassador, Baron Hermann von Richtofen, has told the Labour MP David Winnick, the leading campaigner for greater disclosure on the British knowledge of Channel Islands atrocities, that his country's Ministry of Justice has requested to be allowed to see any documents relating to Klebeck.
In his letter the ambassador said: 'The question of further prosecution (against Klebeck) has been given serious consideration . . . The Minister of Justice, as well as the Hamburg public prosecutor, have expressed interest in getting access to the British documents concerning Klebeck and others on the Channel Islands.'
He said a decision on whether to prosecute would be taken after all the documents, including the Home Office papers released in November, had been studied.
The British government's decision to release the MoD files first to the Germans then to scrutiny at the Public Record Office in London, was revealed by Viscount Cranborne, Under-Secretary of State for Defence, in a letter to the Labour MP Greville Janner, chairman of the all-party Parliamentary War Crimes group.
The Channel Islands were impossible to defend after the fall of France, but islanders who wanted to flee to Britain were evacuated when occupation became inevitable. The Germans took over in June 1940.
Under the occupation, the civilian administrations on Guernsey, Jersey and Sark remained in place, reporting to the Germans. The islands were liberated in 1945, and for more than a year were administered under the Army before being returned to their former state of semi-independence.
Files from that period, including an investigation into alleged war crimes on the Channel Islands, came under the War Office at the time, and were exempt from the normal rules in which documents are disclosed after 30 years or re-classified for longer on grounds of national security or personal confidentiality.
No Channel Islanders were prosecuted for war crimes or collaboration with the occupation force, despite extensive evidence of their help in deporting English and Jewish residents, fraternising with the Germans, and operating a black market.Reuse content