The managing director of Matrix Churchill, a Coventry man named Paul Henderson, had left school at fifteen and worked his way up from apprentice to the top of one of Britain’s largest machine tool makers. For roughly seventeen years, on trips behind the Iron Curtain and then into Iraq, he had been an informer for British intelligence, passing what he gathered to a succession of MI6 handlers. In September 1989, he sat down with Ministry of Defence officials and, on a wall map, showed them where Saddam Hussein’s weapons factories were. The man the state would one day put in the dock had been, for the better part of two decades, one of its own quiet sources.

The government knew what its machine tools were doing in Iraq. It knew because the managing director was telling it. And it kept signing the export licenses anyway. Part of the reason was that policy itself had quietly shifted.

Guidelines set out by the Foreign Secretary in 1985 barred exports that would significantly enhance either side’s ability to wage the Iran-Iraq War. After the ceasefire of August 1988, three junior ministers, William Waldegrave at the Foreign Office, Alan Clark at Trade, and Lord Trefgarne at Defence, met that December and agreed on a more liberal reading of the rules, deliberately, without any public announcement. The following November, Margaret Thatcher told the House of Commons that supplies to Iraq were still governed by the 1985 guidelines. As early as January 1988, the intelligence side had argued against pulling the company’s licenses, partly out of fear for the safety of their source, and partly because, through Matrix Churchill, far more important information might cease to flow.

The man on the inside was worth more than the machines were dangerous. For a while, that calculation held. The firm at the center of it all had deep roots. Walter Tatlow founded the Coventry Gauge and Tool Company in 1913 in a small workshop in Earlsdon, on the western edge of Coventry, with an ambition to measure things more accurately than anyone in Britain had thought to measure them before.

He worked to tolerances measured in tenths of a thousandth of an inch, roughly a thirtieth the thickness of a human hair, in a rented workshop with a handful of men. What Tatlow had in precision, he lacked in the business of turning precision into a going concern. His brother-in-law, Harry Harley, took over the management and could see the whole board where Tatlow saw only the next move. On 1 December 1916, with the country two years into the worst war it had ever fought, the business was formally reconstituted as the Coventry Gauge and Small Tool Company.

The war was the making of it. A shell made to a faulty gauge would jam in the breach and kill the men firing it, so accuracy became a matter of life. The firm began trading under a single word, Matrix, meaning the mold from which other things are cast, the master form from which every copy takes its shape. Harley built that trademark into something that meant, across the engineering world, that what came out of Coventry could be trusted down to the last ten-thousandth of an inch.

Matrix became famous for thread grinding. A screw thread is one of the most demanding things to make perfectly, cut and then ground to a profile so exact the eye cannot detect the error. Matrix learned to grind threads better than almost anyone alive, then built the machines that ground them, so good that other manufacturers in other countries bought Matrix machines to make their own. In 1936, the firm built a purpose-designed factory on Fletchamstead Highway in Coventry’s Canley district, a long, low, modern works with temperature-controlled rooms because a single degree of warmth could throw a measurement.

The men who worked there were the aristocracy of the engineering trade. A thread grinder served an apprenticeship that ran for years and at the end could feel an error of a few ten-thousandths of an inch through fingertips, hear it in the changing note of the wheel, see it in the way light caught a freshly ground surface. There was a second bloodline. Charles Churchill was an American, born in Connecticut in 1837, who came to London in 1861 to install machinery and set up as an importer in 1865, carrying American machine tools across the Atlantic.

He is said to have imported the first Morse twist drill ever seen in England, the first self-centering chuck, the first hand micrometer. Among his customers was an inventor friend named Hiram Maxim, who was perfecting the world’s first automatic machine gun. Churchill put down his own manufacturing roots, building precision grinding machines at Broadheath near Altrincham, until the works were bought by BSA in the early 1960s for eight and a half million pounds. In 1969, Coventry Gauge and Tool went into Tube Investments, the great holding company that gathered up so much of British engineering after the war.

In 1974, under a newly formed machine tool division, TI brigaded its precision firms together, Charles Churchill, the various Matrix companies, the foundries, the overseas arms, and out of that amalgamation came the name Matrix Churchill. By the 1960s, the firm stood as close to the summit of its craft as any British engineering firm of its kind. The decline of the wider trade began elsewhere. Charles Churchill’s old works at Broadheath closed its doors in 1972.

The following year, the wider company went into voluntary liquidation, swept up in the collapse of the Alfred Herbert Group, the giant of the entire British machine tool industry. Parliament heard the human arithmetic in the flattest possible terms: around a thousand people made redundant, five hundred skilled machine tool fitters now chasing ten jobs in Manchester. Across the North Sea, German makers were rebuilding with new capital and new methods. In Japan, an industry that had barely existed in 1950 was making machines as good as Coventry’s and selling them for less.

By the middle of the 1980s, Tube Investments was looking at its machine tool businesses and seeing a problem it could not solve. Matrix Churchill had lost money for ten years running. In Baghdad, a trading company called Al Arabi sat under the control of the Nasser State Establishment for Mechanical Industries, one of the great arms of Saddam Hussein’s machinery for arming Iraq. In the middle of the 1980s, with the war against Iran grinding through its bloodiest years, Iraq needed the capacity to make weapons itself, the machines that make machines.

In Britain in 1987, there was a world-class machine tool firm going cheap, owned by a conglomerate that wanted rid of it. A holding company was set up in London, Technology Development Group, the principal procurement front of the Iraqi network. TDG created another company beneath it, TMG Engineering, and on 23 October 1987, TMG bought TI Machine Tools of Coventry and renamed it Matrix Churchill. TMG was 89% owned by TDG.

Chairing the whole arrangement was Iraq’s procurement chief, Safa al-Habobi. In the 1988 to 1989 financial year, Matrix Churchill returned a profit of 2. 4 million pounds, its first in ten years. To the men on the floor, whose jobs had looked fragile for so long, this looked like a rescue.

But among the orders were lathes worth nineteen million pounds in total, including a single order for two hundred of the company’s computer-controlled lathes to be assembled in Iraq from kits made in Coventry, going to make parts, later inquiries would find, for multiple launch rocket systems. Most sensitive correspondence with al-Habobi was written in Arabic so the firm’s own American staff at the affiliate in Cleveland could not read what was being arranged. In August 1990, Saddam invaded Kuwait, and everything that had been quietly tolerable became politically radioactive. HM Customs and Excise raided Matrix Churchill in the autumn of 1990, seized its papers, and arrested its directors.

The company itself did not survive to see the verdict. Under the cloud of the prosecution, the Iraqi owners sold off what was left. In July 1992, the works on Fletchamstead Highway closed. Six hundred jobs went with it.

The trial opened at the Old Bailey in 1992 before a circuit judge named Brian Smedley. Three men sat in the dock: Paul Henderson, the managing director, Peter Allen, the sales director, and Trevor Abraham, the commercial director. The charge was that they had deceived the Department of Trade and Customs, claiming the machine tools exported between 1988 and 1990 were for civilian use when they knew otherwise. The defense was simple and devastating: the government had known, the government had encouraged it, and one of the three men in the dock had spent seventeen years telling that government in detail exactly what was going on.

To stop that defense from reaching the jury, four cabinet ministers signed public interest immunity certificates to keep the relevant documents secret: Michael Heseltine, Kenneth Clarke, Malcolm Rifkind, and Tristan Garel-Jones. Judge Smedley ruled the documents must be disclosed. The defense forced out Henderson’s links to MI6 and the documents proving the government had known all along. Then they called Alan Clark.

Under cross-examination, asked whether the official account had been the whole and honest truth, Clark conceded he had been, in his famous phrase, economical with the actuality. The case collapsed. In November 1992, Henderson, Allen, and Abraham walked free, acquitted. The firm they had run was already gone.

Within days, Prime Minister John Major announced an inquiry led by Sir Richard Scott. When the Scott report appeared in February 1996, it ran to thousands of pages. Its findings were damning: government policy on sales to Iraq had changed after the 1988 ceasefire in a way that should have been reported to Parliament and was not; statements made to the House of Commons had been untrue; innocent men had been put at risk of prison. The government survived the ensuing Commons vote by a single vote.

In Coventry, the story was six hundred families. The men who had lost their jobs fought a long campaign for recognition that they had been casualties of a national scandal, not of an ordinary business failure. Largely, they lost. Paul Henderson wrote a book about it all and called it The Unlikely Spy.

In 2001, he and Peter Allen received compensation from a Home Office fund for those wronged by the justice system, an acknowledgement that the men in the dock had been treated unjustly, nine years after the dock. Go to Fletchamstead Highway today, and you will find Earl Place Business Park. The long, low precision works is gone. The former workers put up a plaque recording simply that this was the site of Matrix Churchill, once Coventry Gauge and Tool, from 1913 to July 1992, renowned the world over for high-precision machine tools.

In Coventry, close to where it all began, a firm called Matrix Machine Tools still grinds threads, owned now by a company from Taiwan, carrying that old hard-won word forward. The thing Walter Tatlow set out to do in a borrowed shed in 1913 is still, in some quiet corner of Coventry, being done. The firm was not killed by war, by a rival, or by the slow decline that buried the rest of the trade. It was succeeding, profitable again, full of orders, when it was caught in the gap between what one part of the British state was doing and what another part was willing to admit.

The men on the floor measured everything to a fraction of a hair. The measurement that destroyed them was taken somewhere else entirely, in figures they were never shown, and the bill came to six hundred jobs and a century of skill.