Major's 'frenetic' days after arms trial: Prime Minister denies misleading opposition and involvement in 'formation or amendment of guidelines'. David Connett and Colin Brown report

AN EXTRAORDINARY picture of panic and confusion gripping Downing Street in the days after the collapse of the Matrix Churchill arms-to-Iraq trial emerged at the Scott inquiry yesterday as John Major sought to minimise his responsibility in the controversy.

Cabinet Office documents not previously disclosed at the Scott inquiry revealed how the Prime Minister struggled with conflicting accounts of how Britain's policy of arms exports to Iraq operated while under attack from MPs demanding to know why innocent men had been prosecuted and Parliament misled.

But he insisted to the inquiry that he was not aware of any change to the guidelines, he was not 'involved in the formulation of the guidelines, consideration of the guidelines, amendment of the guidelines or interpretation of the guidelines'.

Last night, critics accused him of misleading the Scott inquiry or Parliament. Robin Cook, Labour's trade and industry spokesman, said: 'John Major's defence is clear but discreditable. The danger for John Major is that in trying to escape the charge that he knowingly misled Parliament, he is confirming he is a Prime Minister not in control of his government.'

Mr Major described the atmosphere in Whitehall as 'frenetic' after the Matrix Churchill trial collapsed and allegations flowed of government connivance over breaches of export guidelines.

He ordered a search of the files to establish what had happened as accusations poured in. 'One of the charges at the time was that in some way, because I had been Foreign Secretary, Chancellor of the Exchequer, Prime Minister, I must have known what was going on,' he said.

He denied misleading opposition leaders John Smith and Paddy Ashdown, claiming that he only learned changes to guidelines limiting exports to Iraq had been considered in 1988 one day after rebutting claims of ministerial misconduct in Parliament.

After checks, officials told him he could not have been aware that the guidelines might have been breached. He was advised that it was 'absolutely true' to say the guidelines had not been changed and Parliament had not been misled.

He was told that 'flexibility of interpretation' in the guidelines had allowed some relaxation to take place although the guidelines had not formally been altered.

The documents revealed that Mr Major believed this was a 'pretty dreadful' phrase. 'Conspiracy theories may assume that 'inflexibility of interpretation'

means 'never mind about the guidelines, we can get round them any way we want',' he said.

Mr Major denied involvement in decisions to approve the sale of British machine tools to Iraqi weapons factories in breach of the Government's own guidelines designed to limit defence-related exports. He said he was not briefed about them on becoming Foreign Secretary in July 1989 and only read a passing reference to them in a Cabinet Office paper.

He was not told of a secret ministerial decision to relax the guidelines in December 1988, he maintained, insisting that the first time he discovered that changes were considered was in November 1992, after the collapse of the Matrix Churchill trial.

Mr Major insisted that the question of whether the guidelines were changed was a matter for Lord Justice Scott's inquiry. 'My opinion, post hoc, is of no more value than anyone else's opinion,' he said. The underlying policy always remained clear - Britain would not supply lethal equipment to Iran or Iraq.

Questioned by Presiley Baxendale QC, the inquiry counsel, Mr Major agreed that answers to MPs' queries could be an 'art form', but stressed that there should never be any intention to mislead. Difficult questions were not avoided simply to escape political embarrassment, he said.

As Chancellor of the Exchequer, he said, he had not seen documents about defence- related sales to Baghdad that were discussed by a Cabinet committee just days before Iraqi troops invaded Kuwait. The papers were copied to his office and contained references to the Customs investigation into the Coventry-based engineering firm Matrix Churchill.

He did not attend the meeting and the papers were passed to his deputy, Richard Ryder, instead. He said it was 'normal' for ministers not to see everything that came into their offices.

Michael Meacher, Labour spokesman on the Citizen's Charter, described Mr Major as 'the most hands-off Prime Minister in modern history' after witnessing his performance. 'He showed an extraordinary unawareness and extremely convenient amnesia,' he said.

Letters, page 15

(Photograph omitted)