Iraq arms case flaws 'were known'

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The Independent Online
THE GOVERNMENT was told a year before the Matrix Churchill trial began that the prosecution was flawed, the Scott inquiry heard yesterday. A senior official in the Cabinet Office was warned that wrong advice was given to John Major when he was told the Government knew nothing of the machine tool company's activities. Despite this, the official decided not to tell the Prime Minister or warn Customs and Excise, who were prosecuting the Coventry-based businessmen for illegal exports to Iraq.

Four ministers later signed Public Immunity Interest (PII) certificates seeking to withhold Whitehall documents which revealed the extent of the Government's knowledge about the exports.

The businessmen maintained they kept the Government fully informed about their exports to Baghdad. The case against them collapsed in November 1992 after the trial judge rejected the Government's argument and the documents were released to the defence.

According to documents disclosed at the Scott inquiry, the Cabinet Office was warned of impending problems in November 1991.

Martin Stanley, private secretary to Peter Lilley, then Secretary of State for Trade and Industry, told Sonia Phippard, private secretary to Sir Robin Butler, the Cabinet Secretary, that it was 'wrong' for the Government to deny it knew Matrix Churchill exports were destined for Iraqi military projects in breach of official guidelines.

Mr Stanley wrote that Ms Phippard acknowledged the denial, contained in a memo to the Prime Minister, was incorrect. He also said Ms Phippard decided not to inform Mr Major of the correct situation, nor Customs. She decided not to inform him of the fuller picture because circumstances which prompted the memo had changed.

Ms Phippard also expressed reservations about the Customs prosecution, Mr Stanley wrote. 'She clearly felt the jury was unlikely to convict and couldn't understand why Customs were pressing on with case. They had been quick enough to drop charges after Supergun.'

He added: 'She was reluctant to make the same point to Customs in case it was seen as the rest of Whitehall leaning on them.'

Michael Coolican, head of the DTI's export control unit, expressed concern to Mr Stanley that the memo gave a 'misleading steer'. While it was correct to say the DTI knew nothing of Matrix Churchill's activities Mr Coolican was aware that the company had passed information to the intelligence agencies. 'I didn't know if we could still say the Government didn't know, given that the agencies had been dealing with the manufacturers and therefore did know a certain amount of what had been going on.'