Iraq case 'tailor-made to cope with policy shifts'

CUSTOMS officials tailor- made the Matrix Churchill prosecution to cope with Whitehall's shifting policy on exports to Iraq, the Scott inquiry was told yesterday.

Faced with uncertain government policy, Customs believed that a prosecution would fail unless definite proof existed that machine tool exports to Baghdad were 'specially designed' to make munitions, Cedric Andrew, the officer commanding the Customs investigation, said.

In a 'brainwave' solution, they conceived a 'special design package' - a standard, general purpose machine tool, with tooling and computer software - which would prove to a trial jury the exports were meant for military use.

It enabled the investigation to proceed despite clear early signs that government policy to prevent the export of defence-related equipment was 'not black or white'.

He said there was 'quite evident will, in some Whitehall circles, to modify that policy' after the Iran-Iraq war ceasefire in 1988.

He said the balance tipped in favour of officials keen to promote exports even if there was a likelihood of them being used to make weapons. Goods with both military and civilian uses would be allowed if there was any evidence of a peaceful purpose.

The new, untried concept 'removed any reasonable doubt which those sympathetic to allowing more exports could have used to support their arguments for granting licences'. No one in government would have permitted defence-related exports to go. Exporters needed to deceive civil servants to get licences, he said.

Suspicions - 'perhaps bordering on knowledge' - that Matrix Churchill was equipping Saddam Hussein's arms industry existed within Whitehall. But 'some knowledge' held by officials not involved in licensing exports was not a defence against the charges, Mr Andrew said.

He admitted drafting a statement for Alan Clark, the former trade minister, who was a key prosecution witness, including information which was 'inconsistent' with the true facts.

The hearing continues.