Staff warned Lyell over arms trial: Attorney General tells inquiry of Matrix Churchill fears. David Connett reports

THE ATTORNEY General was warned by his staff that the Matrix Churchill arms-to-Iraq trial might come to a 'sticky end', the Scott inquiry was told yesterday.

The case was brought to Sir Nicholas Lyell's attention when Michael Heseltine refused to sign a Public Interest Immunity (PII) certificate or 'gagging order' to stop Whitehall documents being disclosed in the trial.

His staff described the prosecution as a 'very difficult' one, and said another minister - Alan Clark - was to be reinterviewed after appearing to change his evidence in a newspaper article.

Concerned, he called a meeting with Alan Moses QC, the prosecuting counsel, and Michael Saunders, Customs chief solicitor, who reassured him there was nothing in the Government papers which 'called into question the fairness of the prosecution'.

He did not read the documents which Mr Heseltine feared would appear as if the Government were involved in a cover-up, he said.

The issue was not whether the documents should get PII protection, he said, but whether Mr Heseltine should balance the interests of justice with the public interest of non-disclosure of them.

Sir Nicholas said a carefully drafted PII was drawn up to reassure Mr Heseltine, who was also told his concerns would be passed on to the trial judge. He agreed with Lord Justice Scott who remarked that the PII 'left ambiguous that which should have been unambiguous', and suggested a better way would have been to say Mr Heseltine 'did not wish to offer any argument against disclosure of the documents to the defendants'.

Sir Nicholas said he did not think he could have done more to make the judge aware of Mr Heseltine's fears. His office copied a letter assuring Mr Heseltine to solicitors briefing Mr Moses. It was never shown to him. Asked by the judge: 'Do you think you should have taken some other step to see the concerns of Mr Heseltine were adequately reflected?'

Sir Nicholas: 'No.'

LJ Scott: 'Did you give any instructions to the Treasury Solicitors Department as to how they were to approach the briefing to counsel?'

Sir Nicholas: 'No.'

LJ Scott: 'Do you think you should have done more?'

Sir Nicholas: 'No.'

LJ Scott: 'Is there any more to be said than no?'

Sir Nicholas said it would have been impossible for him or his team to 'second-guess' the Treasury Solicitors Department, and added: 'If we attempted to substitute our role for theirs, the system would just break down.' The inquiry was told that Sir Nicholas had never raised Mr Heseltine's concerns when he met Mr Moses.

Presiley Baxendale QC, the inquiry counsel, asked incredulously: 'Why not?'

Sir Nicholas replied: 'I regarded as inconceivable that any injustice could have resulted by non-disclosure of the documents. The judge could never have allowed that to happen.'

The trial collapsed after the judge overruled the ministerial PII certificates and ordered the documents being revealed.

The inquiry continues.