Second Iraq export trial collapses

the charge against him.

Mr Alan Moses QC, who also prosecuted in the Matrix Churchill trial

that collapsed last week, said because of evidence that had emerged in

that case ''the proper and only course'' was to offer no evidence

against Mr Bailey, the chief executive of BSA Tools of Birmingham.

Mr Bailey, 57, of Streetley, Birmingham, denied exporting machine

tools and associated hardware to Iraq between l988 and March, l989. He

was awarded costs.

As he left court, Mr Bailey said: ''Obviously, I am delighted.''

The former chairman of the Machine Tools Trades Association was

present at the meeting with Mr Alan Clark, the then Trade Minister, in

1988 when he encouraged manufacturers to emphasise the peaceful use of

their equipment.

He would have called Mr Clark as a witness if the trial had gone ahead

and said Mr Clark was ''keen to do trade with Iraq''.

Asked if he believed the Government knew about the export of

arms-making machinery, he replied: ''I don't think they deliberately set

out to arm Saddam Hussein.

''I think they wanted to be in Iraq at the start of reconstruction

following the war with Iran and like every other country they had to be

there at the beginning if they were to be there at all.

''Iraq is the second largest oil-producing country in the world and

was obviously going to be a major trading partner.''

Mr Bailey, whose business and family had suffered because of the

prosecution hanging over him, said the Government must move to regulate

export guidelines so ''we in the machine tools industry can get on with

our business''.

Mr Bailey, who bought Matrix Churchill in 1991, said the prosecution,

along with the recession, had put the company into liquidation with the

loss of more than 600 jobs.

BSA bought the company back but it is no longer a major manufacturer.

But claiming compensation would be difficult because ''we have to work

with various Government departments on routine business''.

Had the trial gone ahead, Mr Bailey said he would have called for the

disclosure of documents and called Mr Clark as a witness.

Mr Moses told Mr Justice Garland that, after considering the material

which emerged during the Matrix Churchill trial, he had come to ''the

firm view'' the only proper course was to offer no evidence.

* A former export manager of Matrix Churchill described yesterday how

he gave information to MI5 about the type of machinery his firm was

supplying.

Mr Mark Gutteridge told BBC Radio 4's The World at One programme that

he now felt at risk.

He said he was told that the information he provided would end up on

the desk of the Prime Minister, then Mrs Margaret Thatcher.

Mr Gutteridge was asked what sort of material he passed to MI5. ''To

start with it was of a general nature. People I had met in the UK and on

occasional visits to Baghdad.

''As time went on that led to more detailed information regarding the

type of machines we were supplying.''

Mr Gutteridge said it was clear to him that the machinery could be

used to make munitions. He said he never learned the real name of his

MI5 contact.

He felt ''very exposed'' and agreed that he now felt he was at risk.