He told the Scott inquiry he was 'baffled' why ministers were criticised for signing 'gagging orders' to prevent vital evidence being heard in the Matrix Churchill trial.
Several ministers signed Public Interest Immunity certificates in an effort to stop government documents being released.
Three businessmen from the Coventry-based Matrix Churchill machine tool company charged with illegally exporting goods to Iraq said the documents would prove their innocence.
The trial judge, Mr Justice Smedley, rejected government arguments that disclosure was not in the 'national interest' and ordered them be released to defence lawyers. All three were acquitted when the case against them collapsed.
Mr Hurd defended Tristan Garel-Jones, a former Foreign Office minister, who signed a PII certificate in the case.
'What he was widely represented as doing was trying to protect the Government from embarrassment, taking an action deliberately designed to result in the conviction of people known to be innocent.' Both suggestions are 'deeply damaging and deeply wrong' as well as distressing to ministers, he added.
'What he was actually doing was making a plea, following lines set out by the law officers about the protection of certain documents.'
Ministers had a duty to sign the certificates. The system had worked properly and allegations that ministers had tried to protect themselves from embarrassment at the end of the trial were unsubstantiated.
Mr Hurd said there was a need for the PII system but if the present system was to continue it had to be 'better understood'.
It was correct that confidential advice between officials and ministers should be subject to PII certificates, he believed.
Douglas Hogg, the Foreign Office Minister, warned him before the trial started that the judge might not accept the certificates. Mr Hogg predicted the documents would be leaked and embarrass the Government by showing some ministers and officials knew of Matrix Churchill's long-term links with an Iraqi military procurement network. But Mr Hogg did not think political embarrassment was a proper reason for asking Customs and Excise to abandon the prosecution. He warned Parliament would 'really smell a rat' if the case was dropped.
After the case collapsed, Mr Hogg's private secretary wrote in a memo that his minister was concerned the Foreign Office 'wrongly acquiesced' to the prosecution. Mr Hogg was particularly alarmed that one of the defendants, the Matrix Churchill managing director, Paul Henderson, had supplied information about the firm's activities to MI6. Mr Hogg was concerned that MI6 failed to inform ministers of Mr Henderson's role, knowing a prosecution was imminent. Mr Hurd said he shared the concern.
Irrespective of whether guidelines limiting defence exports to Iraq were revised or 'flexibly interpreted' Mr Hurd said, 'this is light years away from any evidence or suggestion of the kind one reads about the whole time in the media of some conspiracy by British ministers at that time to arm Iraq or to indulge in some secret and wrong and wicked conspiracy.'Reuse content