Letter that prompted Heseltine not to sign

Arms-to-Iraq: 'Whistle-blower' led to caution on PII certificate

NICHOLAS TIMMINS

Public Policy Editor

A "whistle-blower" from Matrix Churchill - the firm at the centre of the arms-to-Iraq controversy - was directly responsible for Michael Heseltine's decision not to sign the Public Interest Immunity certificate put before him, it was said yesterday.

The claim was made by a group backing a private member's bill aimed at protecting people who choose to go public with their concerns.

The Public Interest Disclosure Bill is due for its second reading on Friday. But Mr Heseltine, the Deputy Prime Minister, has declined to see its cross-party supporters or declare whether the Government will give it a fair wind.

Its backers now fear ministers want to see the Bill killed off. Yet if the Government had acted on the letter expressing fears over Matrix Churchill - which warned in January 1988 that the firm's lathes were to be used to produce shell cases - further export licences would not have been granted, Public Concern at Work said yesterday.

Matrix Churchill might not have been prosecuted, the factory might not have closed and the Scott inquiry might not have been needed, the pressure group argued.

The letter - written to Lord Howe and circulated around Whitehall - is described as "highly significant" in Sir Richard Scott's report. Its contents were disclosed to Mr Heseltine, then President of the Board of Trade, when he was asked to sign a PII certificate in 1991. He was told by officials that no action had apparently been taken on the letter by the Ministry of Defence, to whom it was sent, by the Export Licensing Branch or by the security services.

He was warned that if the writer "retains his public spirited interest" he could write to newspapers.

The letter and its distribution showed that "everybody knew" what was going on at Matrix Churchill, Mr Heseltine told the Scott inquiry. His officials warned him that the contents of the letter could "appear across the front of the tabloid press during the court proceedings".

Don Touhig, the Labour MP for Islwyn, who is the main sponsor of the Public Interest Disclosure Bill, said it was the action of a whistle-blower that led to Mr Heseltine emerging as a hero of the Scott report. Yet the Deputy Prime Minister will not say whether ministers will back Mr Touhig's bill, which has both Liberal Democrat and Conservative support.

John Taylor, the junior DTI minister, has expressed worries that the Bill will involve compliance costs for industry - a point its backers reject.

The Bill would protect employees in both the public and private sectors from financial and other reprisals if they disclose crime or other serious wrongdoing to the authorities, or, in some cases, to the media.

Concerns would have to be raised internally first, however, and the whistle- blowers would have to convince a court that their actions had been in the public interest.