Scott Report: the essential guide

It's very long, very dense, probably very dull and it took three years to produce but could it blow the lid so far off the British state that it will never be put back on? If you are confused or just bored with the arms-to-Iraq report, Paul Vallely is here to help

THE STORY SO FAR

What to watch out for when the report is published today

Government ministers gave themselves eight days to study the Scott report into the arms-to-Iraq affair: they received advance copies to prepare their response. The rest of us may never have time to trawl through the thousands of pages. This is a simple guide to help you to pick your way through the welter of news and commentary that will be unleashed

HOW DID IT ALL BEGIN?

Iran and Iraq fought a bloody war from 1980 to 1988. In 1985, the House of Commons decided to comply with the United Nations arms embargo against both sides in the conflict.

SO WHY THE ROW?

When the war was over, ministers decided to modify the guidelines on exports to Iraq, enabling arms to be sent there - because Iran was perceived as the bigger threat to British interests in the Gulf. But there was no formal announcement of this change in Parliament. So most people assumed the embargo still operated. Later, ministers insisted that the guidelines had been "reinterpreted" rather than changed.

HOW DID IT ALL BECOME PUBLIC?

After the Iraqi invasion of Kuwait, officials in UK Customs and Excise became aware of breaches of the embargo. They decided to charge the directors of one company - the Coventry-based, machine-tool firm Matrix Churchill - with illegal exports.

WHAT HAPPENED AT THE TRIAL?

Just before it began in November 1992, ministers signed Public Interest Immunity certificates declaring that certain government documents could not be passed over without imperilling national security. These documents were considered vital to the defence case that the company was acting in the knowledge and support of the security services which wanted information about Iraq's plans. But the judge refused to accept the certificates - and the trial collapsed.

WHY WAS THE SCOTT INQUIRY SET UP?

The collapse of the trial led to allegations that some ministers had been prepared to allow innocent men to go to prison rather than allow their change in policy to become public. The Prime Minister appointed Sir Richard Scott to investigate the affair.

WHY HAS SIR RICHARD SCOTT COME UNDER FIRE HIMSELF?

Senior Tories, including former foreign secretaries Lord Howe and Douglas Hurd (see his article on the comment page overleaf), have criticised Scott for employing a technique that was unfair to witnesses who were not given the opportunity to cross-examine other witnesses. Scott was accused of being prosecutor, judge and jury in an inquiry that eventually involved 200 witnesses, 430 hours of evidence and 200,000 pages of documentation.

SO WHAT MIGHT BE THE FALL-OUT?

The Big Questions

If Scott answers yes to any of these, the fall-out goes stratospheric and the affair will become a major national political storm.

If Scott answers yes to any of these questions, there will be agitation within Westminster and Whitehall

Did the Government have one policy for public consumption on the sale of British arms to Iraq, and an entirely different policy for arms companies to operate by?

Did any minister tell lies in Parliament or elsewhere about the policy or arms sales?

Did the Government fail to act promptly on information it received about the Iraqi "Super-gun" project?

Did the Government allow businessmen to be prosecuted (over Supergun, Ordtech and Matrix Churchill) for activities that had been privately condoned by officials or ministers?

Was it right for ministers to issue Public Interest Immunity Certificates - so-called gagging orders - to try to withhold documents that could be useful to the defence in the Matrix Churchill trial?

Did ministers conspire to mislead the British public?

WINNERS OR LOSERS?

JOHN MAJOR

WHAT HE DID

Mr Major told the Scott inquiry (which he set up) that he was not formally briefed on the guidelines for arms sales to Iraq when he was Foreign Secretary, Chancellor of the Exchequer or Prime Minister. He only learnt that they had been changed after the three Matrix Churchill employees went on trial accused of breaking the arms embargo.

SCOTT-FREE SCENARIO

Personally: The best verdict for Mr Major would be that he was not personally involved in the decision and was not briefed on it. He may be applauded for setting up a no-holds-barred inquiry immediately the problem came to the public attention.

Politically: Scott could couch his report in moderate tones which will require only a reform of communications systems between Whitehall departments and changes to the system for issuing Public Interest Immunity Certificates (which prevent the defence in a court case from demanding access to confidential government documents).

NIGHTMARE SCENARIO

Personally: Scott may decide it was inconceivable that Major did not know earlier and was not straightforward in the answers he gave in the Commons to John Smith, the Labour leader, when the Matrix Churchill trial collapsed. The cabinet secretary Robin Butler's chronology claims he told Mr Major the day before the Commons' question.

Politically: The worst-case outcome for Mr Major would be if he was unable to resist calls for more than one cabinet minister to resign. He might then face a backlash for being, as right-wing Tory backbenchers might see it, stupid enough to set up the inquiry. He could then lose the Commons vote on Scott in the teeth of an alliance between Labour, the Lib Dems, the Ulster Unionists and a handful of Tory backbenchers who see issues of principle at stake. That would only hasten his defeat in a general election.

WILLIAM WALDEGRAVE

WHAT HE DID

One of three ministers involved in the decision to relax the guidelines without telling MPs. Mr Waldegrave admitted "with hindsight" that the decision was wrong, but said Parliament was not misled. According to a leaked draft of the Scott report, he wrote 38 letters to MPs and others insisting guidelines had not changed when they had.

SCOTT-FREE SCENARIO

Perhaps he was not fully frank with MPs at key moments, but he was under no obligation to reveal every detail of government policy on a sensitive issue. Tory backbenchers would probably accept that.

NIGHTMARE SCENARIO

He knowingly misled the House of Commons. His defence - that there are circumstances in which it is in the public interest for a minister to mislead the House - wouldprobably not wash. If Scott's language is as strong as a recent leak suggested, Waldegrave may well have to resign.

KENNETH CLARKE, MALCOLM RIFKIND

and PETER LILLEY

WHAT THEY DID

All signed Public Interest Immunity Certificates asking the judge in the Matrix Churchill case not to release government papers to the defence. Mr Lilley also claimed PII for government documents in the Ordtec arms- to-Iraq case.

SCOTT-FREE SCENARIO

Ministers had no option but to comply with the advice given them by the Attorney General.

NIGHTMARE SCENARIO

It was open to ministers to add a rider, as Michael Heseltine did, expressing reservations. If Scott expresses this view strongly, then Kenneth Clarke would have to resign as Chancellor having promised on BBC TV's Question Time that he would resign if Scott decided he was "at fault, and wrong" in signing the certificate.

MICHAEL HESELTINE

WHAT HE DID

Signed a heavily watered-down Public Interest Immunity Certificate in the Matrix Churchill trial after originally refusing because he said it would look like a government "cover-up". The defendants were entitled to the papers, he told Scott, and said it would have been "terrible" if innocent men had gone to jail because they were not disclosed.

SCOTT-FREE SCENARIO

Heseltine's example might be praised by Scott for helping to restore a reputation that has recently been battered by repeated errors of political judgement and less-than-sparkling performances in the House of Commons.

NIGHTMARE SCENARIO

None, Hezza will come out of this smelling of roses.

SIR NICHOLAS LYELL

WHAT HE DID

As Attorney General he advised ministers that they had a duty in law to claim public interest immunity for the government documents in the Matrix Churchill case. They duly signed, though Michael Heseltine added a rider voicing reservations. Lyell failed to alert the judge at the Matrix Churchill trial to Mr Heseltine's reservations.

SCOTT-FREE SCENARIO

Ministers had no choice but to sign. Lyell didn't act alone; he took advice from counsel and felt bound to act on that. He did not act out of a wish to prejudice the case for political reasons.

NIGHTMARE SCENARIO

The Attorney General was prepared to allow three innocent men to go to prison to save the political skin of his fellow cabinet members. He cannot hide behind counsel to disguise this. Scott may use language that makes Lyell's position untenable.

ALAN CLARK

WHAT HE DID

The former Trade Minister was one of the three ministers involved in relaxing guidelines. Matrix Churchill defendants claimed he gave them a "nod and a wink" to carry on selling equipment to Iraqi munitions factories, advising them to cover up by downgrading specs on official documents. The trial collapsed after his witness-box admission that the official account of his meeting with the defendants had been "economical with the actualite".

SCOTT-FREE SCENARIO

Clark gets a plaudit for being honest in court, and a slap on the wrist for turning a Nelsonian eye to the illegal exports.

NIGHTMARE SCENARIO

He becomes No 1 Scapegoat. He is blamed by Scott for his gung-ho attitude that it was OK to sell arms to anyone and for his duplicity. He is blamed by Tories for his insistence on telling the truth under oath. Clark will never find his name on a candidate's shortlist again.

BARONESS THATCHER

WHAT SHE DID

She was prime minister during the period that the guidelines on defence sales to Iran and Iraq were in operation. She told the inquiry she had no knowledge of the way the guidelines were operated but should have been told of the decision by junior ministers to relax them following the 1988 ceasefire in the Iran-Iraq war.

SCOTT-FREE SCENARIO

She really was concerned with policy rather than detail, as she told Scott (in contrast to her usual practice on many subjects). She was not a party to the meeting that decided to change the rules and did not know about the arms sales until it was too late.

NIGHTMARE SCENARIO

Scott decides she did know about the clandestine policy. Her reputation is tarnished and she goes to her grave with a question mark over what else she may have lied about. Heavy criticism of her could be helpful to John Major.

PAUL HENDERSON

WHAT HE DID

As managing director of Matrix Churchill, the Coventry company that was supplying arms to Baghdad, Henderson found himself in the dock charged with breaching the UN embargo. Despite the fact that he was working with the full knowledge of MI6, he found that government ministers seemed intent on withholding vital documents from his defence. Smear stories in the press this week have implied that he was not the entirely innocent man some have claimed him to be.

SCOTT-FREE SCENARIO

Scott vindicates him entirely, enabling Henderson to sue for damages for wrongful prosecution.

NIGHTMARE SCENARIO

He is branded as a less-than-innocent party in the arms deals and as a man who told the truth only when it was convenient.

THE LABOUR PARTY

WHAT IT DID

In 1990, when Peter Lilley rushed through an Act to extend the provisions of the 1939 Emergency Powers Act (which blocked the sale of arms to Germany), Gordon Brown, then shadow trade spokesman, did not oppose it or suggest that it be debated and re-approved every year.

SCOTT-FREE SCENARIO

Brown's omission is not mentioned by Scott. Labour can then fearlessly use Scott as part of its election strategy to put the Tory style of government in the dock and claim to be the party of open government with a commitment to fully implement all Scott's recommendations.

NIGHTMARE SCENARIO

Scott's contents will get on the air before Labour puts its spin on them. Tories then clamp down on potential backbench revolt. The report may suggest Labour should have done a more effective job in scrutinising government policy.

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