Hunt for truth on Iraqi arms scandal ends: Scott inquiry hears evidence from its 86th and last witness. David Connett reports

LORD JUSTICE Scott yesterday ended the closing day of one of the most remarkable public inquiries ever held in Britain as he started it - trying to discover what was 'lurking' in the Matrix Churchill arms-to-Iraq scandal.

The judge closely questioned the Customs solicitor, Andrew Biker, about notes he made at a legal conference with the barrister Alan Moses QC, more than a year before three executives from the Matrix Churchill case were brought to trial at the Old Bailey.

Among the notes was a reference saying: 'Things are lurking. ie they knew it was for military use.'

His notes included further hints that civil servants from the Department of Trade and Industry who policed exports to Iraq were fully aware that United Kingdom machine tools were destined for munition factories in breach of the Government's own guidelines.

Mr Biker said he could not recollect why he wrote the remark, prompting the judge to ask whether: 'The reference to lurking is used to indicate something in the wings that was disagreeable - fairy godmothers don't lurk, for instance.'

Mr Biker was the 86th and last witness scheduled to appear before the Scott inquiry, which has been holding public hearings for more than a year. Whitehall will now have to wait until the judge produces the first draft of his report.

There are no further hearings scheduled, although inquiry officials do not rule out the possibility that additional witnesses could be asked to appear or previous witnesses recalled.

The judge remarked yesterday about the 'speculative' way Customs had prosecuted Matrix Churchill and other machine-tool manufacturers charged with selling equipment to Iraqi weapons factories.

Mr Biker admitted the concept used of accusing defendants of exporting machine tools which together formed a 'package' specially designed to produce munitions had never been tested in court.

The inquiry has previously heard that Customs developed the 'specially designed package' theory to get round the uncertainty over the attitude of ministers and officials to exports to Baghdad.

Lord Justice Scott said: 'You were embarking on a prosecution which was speculative. It depends on a legal proposition that has not been tested in the courts that may or may not be right.' Mr Biker said if the package concept failed they would bring charges relating to individual machine tools identified by their technical expert as being specially designed.

He admitted that Customs did not ask the DTI whether they would have granted export licences for the individual machines knowing they were capable of military as well as civil purposes.

Mr Biker, who was involved in the preparation of the Matrix Churchill and related prosecutions, said he was asked to leave the room when intelligence matters were discussed at a case conference as he had not been positively vetted.

He said he was asked: 'Would you mind going for a cup of tea?' If he had known the full intelligence background it could have affected his handling of the cases.

Ministers and civil servants were asked not to leak details of Lord Justice Scott's findings before they are published.

Lord Justice Scott has pledged to send extracts of his draft report to individuals he criticises, in order to give them the opportunity to respond before he makes his final report.

The draft report, which is expected to be finished by the end of July, will not be made public.