PAUL Henderson, the former managing director of Matrix Churchill, seems an unlikely spy.

Of the three former Matrix Churchill executives who stood trial on charges of illegally exporting machine tools to Iraq, he is the one who has become the media celebrity - a choice he claims to have made as part of a personal crusade to bring to light the injustice and double-dealing of a government system to which he had always felt loyal.

Of his co-defendants, Mr Trevor Abraham, the former commercial director, is now managing director of Machine Tool Agencies, a Warwick-based company which was hived off from Matrix Churchill when it was sold to an Iraqi firm, and Mr Peter Allen, former sales director, is overseas.

Mr Mark Gutteridge was Matrix Churchill's former export sales manager, although he had left the firm before the court case and appeared only as a witness. Although Mr Henderson had been working for MI6 on and off since 1973, it was Mr Gutteridge who apparently suggested he be reactivated to provide much-needed information to the Government about Iraq's military build-up.

Indeed it was Mr Gutteridge who, working for MI5, first provided the Government with evidence that Iraqi factories were manufacturing weapons and who first passed on information about the building of the supergun.

When the Matrix Churchill trial loomed, he was told by HM Customs that his links with MI5 would never be exposed in open court. However, when the prosecution dropped him as their witness he agreed to help Mr Henderson. It was to prove a fateful decision, for his evidence helped the defence convince the judge that he should overrule the Ministerial public interest immunity certificates.

When he joined Matrix Churchill as a boy apprentice almost 40 years ago, Mr Henderson could not have envisaged how his career would develop. His first encounter with British Intelligence was in 1973 when he became managing director. Four officers of MI6 - two men and two women - visited the Coventry factory to brief sales staff working behind the Iron Curtain. A few days later, one of the women came back. She became his controller and they met in pubs and cafes whenever he returned from visits to eastern bloc countries.

In 1987, at the end of the Iran-Iraq war, Matrix Churchill won a #19m order for CNC lathes, their use for Iraq's munitions industry being accepted by the then Trade Minister Alan Clark. Later that year, the British TI Group sold Matrix Churchill to the Iraqi-owned Technology Development Group, a subsidiary of al-Arabi Trading which was at the heart of Iraq's intricate arms procurement network. The question remains: was the sale permitted to make it easier for British Intelligence to monitor the Iraqis?

In the event, Iraqi ownership allowed Mr Henderson to make business deals for his company and to glean information from Iraqi officials, with whom he would drink late into the night.

Then, in September 1990, Mr Henderson and his fellow directors mounted a bid to buy the company. Twenty-four hours before the deal was due to go through, they were arrested and charged. The company, which at its height had employed 900 workers, later went into receivership.

After the trial collapsed in 1992, Mr Henderson worked in export consultancy, travelling in the eastern European countries he used to spy on. He said his unmasking as a spy did not cause him any problems - rather, the people he did business with found it rather amusing. They were doing the same thing for their countries as he had done for his.

Just short of two years ago, he joined up with the former Conservative Industry Minister John Butcher and a merchant banker to buy the machine tool group Production Systems International.