The war I'm still fighting

Paul Grecian lost his home, his family and his career after being wrongfully convicted of selling arms to Iraq. Why, eight years after his release from jail, is he still waiting for compensation? Jon Robins reports

You might think that government ministers owed a considerable debt of gratitude to Paul Grecian, a former arms-dealer who was once credited with being the source of about half of our intelligence on Saddam's arms build-up immediately before the 1991 Gulf War. If so, it has been a long time coming.

More than a decade has passed since Grecian's business collapsed after an ill-fated prosecution by Customs and Excise for selling military equipment to Iraq. "I lost absolutely everything," the 47-year-old businessman recalls. "A fantastic home in the Scottish Borders, my wife and kids, my career... everything." Grecian has long since been revealed as an MI6 informant, codenamed Raven, his role in British intelligence recognised by Sir Richard Scott in his Arms to Iraq report, and his conviction quashed.

But still the Scotsman waits for compensation. His case is being considered under a Home Office scheme to recompense victims of miscarriages of justice. "The great irony has been that the closer one appears to get to 'justice', the more difficult the legal process seems to make it to enable me to have even a fair hearing," he reflects. Grecian and his lawyers are exploring an unprecedented judicial review to open up the notoriously secretive scheme to outside scrutiny. His concern, shared by many applicants on the scheme, is that the process offers no hearing and that there is no clear basis on which his compensation might be assessed.

Grecian's circumstances do not fit the profile for the average miscarriage of justice. He is the managing director of a successful events-staging company formed six years ago, after he left prison with only £80 in his pocket. But in a former life he was the managing director of Ordnance Technologies (OrdTec), working on defence contracts for governments all over the world. In the mid-1980s he began providing information about Iraq to the British authorities. "I wouldn't have been there if it were not for the intelligence dimension," he says. "I had regular discussions with my controller."

It was revealed at his trial that Grecian was the leading source of intelligence as Iraq metamorphosed into a pariah state at the beginning of the 1990s, and that he was the first to inform the government of Saddam's supergun project. "We knew Saddam was becoming a serious destabilising influence." He says there are few opportunities in life to stand up and be counted, and that was his.

Soon after Iraq invaded Kuwait in August 1990, Customs arrested the directors of Matrix Churchill (the collapse of whose trial prompted the Scott inquiry) and then executives at OrdTec for exporting an assembly line for military fuses to Iraq via Jordan. "Customs was desperate to have someone to hang out to dry," he reckons. "But I didn't believe that someone in Whitehall wouldn't step in and say this prosecution wasn't in anybody's interests."

As the trial approached, Grecian kept shtoom about his intelligence connections. "It was out of loyalty. I hadn't even told my wife." His legal team did not know until an unorthodox meeting in which the prosecution pointed out that revealing his role as a spy would expose him to the unwelcome attentions of terrorist groups – an observation hetook to be "a veiled threat".

The Government was taking no chances and Peter Lilley, the Secretary of State for Trade and Industry, and Kenneth Baker, the Home Secretary, signed Public Interest Immunity certificates. By this stage, Grecian no longer wanted to go quietly. "My life was grim and the prospect of going to prison didn't make it any more grim," he recalls. It was not just his own position at stake, but also that of co-directors including his father. "They were in the dock because of my lack of judgement, but I believe that if I had carried on, the prosecution would have thrown the towel in," he says. None the less, the defendants agreed to a deal whereby if they admitted guilt, they would receive suspended jail sentences.

The Customs victory was short-lived, and the following year the Scott inquiry revealed, in the famous words of Alan Clark, how "economical with the actualité" ministers had been. The Court of Appeal quashed the OrdTec convictions in 1995. But Grecian still ended up in jail when he went to South Africa a couple of months later. He was arrested under an Interpol extradition order requested by the US. According to an old intelligence contact, there were celebrations at MI6 when Sky News broadcast an image of Grecian in chains.

He was released six months later after the personal intervention of Nelson Mandela. Since 1996, Grecian has been embroiled in the Home Office scheme after Jack Straw, as Home Secretary, decided to make a statutory payment under the Criminal Justice Act, s 133. Given Grecian's business success, it looks as though it could be a record payment by the Home Office. Some payments have been made to people wrongfully convicted for arms-to-Iraq exports, including Reginald Dunk, who was awarded £2.1m, the highest award so far.

Grecian believes that his claim is far greater, and cites one OrdTec contract worth £22m concerning the Pakistani government that would have netted a £7m profit. His legal team has so far submitted 1,700 pages of argument to the Home Office. But his solicitor, Lawrence Kormornick of the law firm Dechert, who has also lodged substantial claims on behalf of two Matrix Churchill directors, says Grecian is entitled to an oral hearing under Article 6 of the European Convention on Human Rights. "If there is no hearing, how can there possibly be any adequate challenge to any decision by judicial review? If the assessor decides his case without an oral hearing, the Administrative Court cannot possibly convene itself as a court of merits... [especially] if it's ignorant as to how previous assessments have been determined."

"It is a system that operates within a cloak of secrecy," says Matthew Gold, chairman of the Miscarriage of Justice Lawyers group, who has nine clients on the scheme. There is mounting exasperation as to how the Home Secretary's independent assessor, Lord Brennan, QC, arrives at figures. Last year, he refused to enter into a public debate on how compensation is awarded, which, he said, would "turn a humanitarian exercise into a mathematical process". His predecessor, Sir David Calcutt, QC, did explain assessments.

There are also concerns about a new "penny-pinching" approach to compensation. A judicial review was heard last month on two notorious cases – Michael and Vincent Hickey, cleared of the Carl Bridgewater murder, and Michael O'Brien, cleared of killing a newsagent. The O'Brien case alarms critics because his award was docked £37,000 to account for "bed and board" while behind bars for 11 years. "It does not seem right, legally or morally, to make such a deduction when a person should not have been imprisoned in the first place," says Kormornick. "It would be grotesque if such a deduction were to be made in the Sally Clark case." Clark's conviction for the murder of her baby sons was quashed earlier this year. She was convicted in November 1999.

Paul Grecian has been watching the English legal system for long enough to know he is in for another long wait. "I am not gagging for payment, and the case has always been a matter of principle," he says. "If it means having to fight for another couple of years, I will."