Waldegrave owns up to Iraq sales error

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WILLIAM WALDEGRAVE admitted yesterday he was wrong to have sanctioned exports of machine tools that helped to develop Iraq's military machine.

Mr Waldegrave, Chancellor of the Duchy of Lancaster, with responsibility for open government, told the Scott inquiry he was not aware of vital intelligence warnings that the exports were being used to build up its nuclear, chemical and ballistic missile power.

The former Foreign Office minister said he made the decision on the 'best arguments' in front of him. 'Clearly with hindsight that was a wrong judgement,' he told the inquiry.

He also revealed that important information about possible breaches of government export regulations by Matrix Churchill, the Coventry-based machine tool company, was available to the Government almost a year before three executives from that company were arrested and put on trial.

All three were acquitted after claiming the Government was fully aware of the company's activities. Ministers signed Public Immunity Interest certificates to prevent evidence supporting those claims being presented in court. The trial's collapse led to the setting up of Lord Justice Scott's investigation.

In his third appearance before the inquiry, Mr Waldegrave admitted there had been a breakdown in the Whitehall system of passing vital intelligence about the destination and purpose of British machine tool exports to Iraq.

He said he would have halted exports of machine tools by Matrix Churchill if he had been told they were being used to make missiles.

After hearing there had been successive intelligence warnings about the involvement of British firms in the Iraqi military build-up in 1989, Mr Waldegrave conceded he should have been made aware of the information. 'I think that we should have seen more of this stuff. I think there are questions that arise out of this about the distribution and use of intelligence material.'

An application by Matrix Churchill for four export licences for machine tools worth pounds 12m was opposed initially by the Foreign Office, which eventually succumbed in the face of pressure from the Defence and Trade departments and permitted the export to go ahead.

Mr Waldegrave said he approved the applications because he had been advised that the tools were to be used to rebuild Iraq's shattered industrial base after the ceasefire with Iran.

Despite evidence that earlier Matrix Churchill exports breached government guidelines limiting the export of defence-related equipment, he believed on the 'balance of probability' the new applications were not for military use.

Information from military intelligence and GCHQ, the signals intelligence organisation, that the exports were destined for more sinister purposes was not passed to him, he said.

GCHQ warned in November 1989 that Matrix Churchill lathes and other machines were destined for a factory in Iraq making shell and bomb fuses which had been built by a Chilean company, Cardoen Industries.

Despite the intelligence warnings, senior ministers did agree to permit the export of machine tools in July 1990 after an attempt by Lord Ridley of Liddesdale, the former Secretary of State for Trade and Industry who died in March, to abolish government guidelines. Only Iraq's invasion of Kuwait prevented Matrix Churchill supplying further machine tools. 'One week later and they could have gone,' he said.

(Photograph omitted)