Minister 'misled' Iraq arms inquiry: Businessman gives special hearing his version of meeting, saying use of Matrix Churchill machines was not discussed. Chris Blackhurst reports

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LORD TREFGARNE, the former trade minister, was accused yesterday of giving misleading evidence to the Scott arms-to- Iraq inquiry.

Paul Henderson, former managing director of Matrix Churchill, the machine- tool company that supplied Iraq, said Lord Trefgarne was wrong when he told the inquiry he had only approved export licences after receiving from Mr Henderson 'the plainest assurances the exports were for innocent purposes'.

According to Lord Trefgarne, the assurances were made at a meeting with Mr Henderson in September 1989. But the latter told yesterday's specially convened hearing that the use of the machines was never discussed. Mr Henderson requested the hearing to clear his name.

Mr Henderson was chief defendant in the Matrix Churchill trial, accused of trying to break government arms export guidelines. When that trial collapsed and Mr Henderson and two colleagues were cleared, the Government moved to set up the Scott inquiry.

After giving evidence in public yesterday about the Trefgarne meeting, Mr Henderson then told the inquiry in a two- hour private session of his contacts with the intelligence services.

During his public examination, Mr Henderson was repeatedly pressed by Presiley Baxendale QC, counsel to the inquiry, as to why his account of the September meeting differed not only from that of Lord Trefgarne but also that of John Nosworthy, director general of the Machine Tool Traders Association.

The meeting with the minister had been requested by Mr Henderson to try to speed up the granting of export licences on nine orders to Iraq. He was accompanied by Mr Nosworthy, who later stated that Lord Trefgarne asked what the machines were intended to be used for. Mr Nosworthy said that Mr Henderson replied that they were to be installed at two factories which had been making equipment in the Iran-Iraq war but had now been converted to manufacturing cars.

Ms Baxendale said Mr Nosworthy's account also appeared to echo that of a Department of Trade and Industry official, Eric Beston, who was at the meeting on 26 September 1989.

But Mr Henderson said yesterday: 'I contend that Lord Trefgarne did not ask me at that meeting what the end use of these machines would be. We were talking about the use of machines for future contracts and what these machines were going to be used for in the industries they were going into.'

Asked if he thought that Mr Nosworthy and Mr Beston had been confused, as well as Lord Trefgarne, Mr Henderson replied: 'I think there was a misunderstanding by all parties at that meeting.'

Despite the reason for calling the meeting and his desire to speed up the licence application procedure, Mr Henderson maintained that no specific order was discussed. Instead, the discussion was more general, covering the way Iraq was developing its civilian industry following the war with Iran.