Hotel receptionist Baha Mousa, 26, died in UK military custody in Basra, southern Iraq, in September 2003 after being subjected to humiliating abuse.
British troops in Iraq routinely used interrogation methods banned by the Government in 1972 and did not think they were illegal, the inquiry into his death was told.
Rabinder Singh QC, counsel for Mr Mousa's family and other Iraqis detained with him, said: "This case is not just about beatings or a few bad apples.
"There is something rotten in the whole barrel."
The inquiry has already heard how UK troops subjected Mr Mousa and his fellow detainees to abuse, including making them scream in an "orchestrated choir" and forcing one to dance like Michael Jackson.
It was also played a short video showing Corporal Donald Payne screaming obscenities at the hooded Iraqi prisoners, including Mr Mousa, calling them "apes".
Mr Singh said: "The official version of events was that nothing on that video was in fact illegal.
"What we saw on that video was a soldier trying to implement official policy, forcing detainees to get back into stress positions when they were clearly moaning and unable to maintain those positions.
"They are all shown hooded, again in accordance with orders, and again illegally."
Soldiers from the former Queen's Lancashire Regiment arrested Mr Mousa and the other detainees at Basra's Ibn Al Haitham hotel in the early hours of 14 September, 2003 and took them to Battle Group Main camp, known as BG Main.
There they were subjected to "conditioning techniques", including being forced to maintain painful "stress positions", hooding and deprivation of sleep and food, the inquiry has heard.
These methods had been banned 30 years earlier following their use in Northern Ireland.
One of the detainees recalled hearing Mr Mousa scream: "Oh my God, I'm going to die, I'm going to die. Leave me alone, please leave me alone for five minutes."
Mr Mousa died at about 10pm on 15 September, having sustained 93 separate injuries, including fractured ribs and a broken nose.
Mr Singh said: "One of the striking features of the terrible events of BG Main in September 2003 is that the abuse did not take place in a secret location behind closed doors.
"The temporary detention facility (TDF) was open to the outside. Many people must have seen or heard what was going on. Many seem to have visited the TDF."
He went on: "This gives rise to serious questions about the professionalism of the outfit and whether the culture was one of impunity.
"It also gives rise to serious questions about the capacity of the regiment's members to question and challenge abuse."
Mr Mousa's 22-year-old wife had died of cancer shortly before his death, meaning his two young sons, Hussein and Hassan, were orphaned.
Cpl Payne became the first member of the British Armed Forces to be convicted of a war crime when he pleaded guilty to inhumanely treating civilians at a court martial in September 2006.
He was dismissed from the Army and sentenced to one year in a civilian jail.
Six other soldiers who faced the court martial were all cleared on all counts in March 2007.
The Ministry of Defence agreed in July last year to pay £2.83m in compensation to the families of Mr Mousa and nine other Iraqi men mistreated by British troops.
David Barr, counsel for the Ministry of Defence, said the "appalling" behaviour of British soldiers in the case "disgusted" the Army.
He told the inquiry: "It is with huge regret that the Ministry of Defence acknowledges the way in which some of those techniques were used on Baha Mousa and those detained with him.
"The mistreatment of the detainees went further than the application of these prohibited conditioning techniques.
"They were clearly subjected to brutal violence as well. Conditioning techniques alone do not cause such injuries.
"The brutality was completely unacceptable. It has stained the reputation of the British Army."
Cpl Payne's barrister, Michael Topolski QC, said the former soldier hoped that the inquiry would provide a "clearer and fuller picture" of what happened.
Mr Topolski said: "Donald Payne has accepted and he does accept that he violated his duty to those detainees.
"For that, through us, now without hesitation he wishes to publicly apologise to each of them and in particular to the family of Baha Mousa."
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