Shirley Temple scandal was real reason Graham Greene fled to Mexico

Graham Greene's travels to Mexico in the late 1930s are part of literary folklore, spawning his masterpiece, The Power and the Glory, about a "whiskey priest" and the policeman sent to hunt him down. Widely regarded as one of the finest British writers of the last century and a committed Roman Catholic, Greene was sent to Mexico by the Vatican to document government-led persecution – or so it was thought up to now.

Now, a sensational new theory has emerged – that Greene in fact fled to Mexico to avoid being sent to prison after the Lord Chief Justice who presided over his infamous civil libel trial with the child star Shirley Temple decided he should be prosecuted for criminal libel. Papers were sent to the Director of Public Prosecutions, but Greene was never arrested.

The amazing claim is made in the lost autobiography of Greene's close friend, the cinema pioneer Alberto Cavalcanti, who died in 1982 aged 85. The discovery of the biography, along with letters and other papers belonging to the film director, has sent a frisson of excitement throughout the film world.

Cavalcanti had an enormous influence on both British and French cinema. In France he worked closely with Jean Renoir; in the 1930s and 1940s he worked in London and directed several Ealing films, including Greene's Went the Day Well? and was involved in many others, including Kind Hearts and Coronets. He is recognised as the creative force behind the studio's unique style.

His papers are currently with the special collections at the British Film Institute (BFI) archive in Berkhamsted, where they are being catalogued with the help of film academic Charles Drazin.

Cavalcanti's biography, to which The Independent on Sunday has had exclusive access, contains numerous anecdotes about the artistic community in Paris and London. But it is the few lines about Greene that will cause the history books to be rewritten.

In 1937 Greene was a film reviewer for Night and Day magazine. In a review of the Shirley Temple vehicle Wee Willie Winkie, he wrote: "Her admirers – middle-aged men and clergymen – respond to her dubious coquetry, to the sight of her well-shaped and desirable little body, packed with enormous vitality, only because the safety curtain of story and dialogue drops between their intelligence and their desire."

Twentieth Century Fox sued on behalf of Temple, then aged eight, on the grounds that Greene had implied she played deliberately to "a public of licentious old men, ready to enjoy the fine flavour of such an unripe, charming little creature", Cavalcanti wrote. He added: "Thanks to vigilant, quick-witted friends, Graham was warned that the Americans producing the film had introduced a writ of libel against him, meaning that not only would the backers of Night and Day pay a large fine, but he, Graham himself, faced a prison sentence. The only solution was to find a country without extradition. They chose Mexico and our poor Graham went away very quickly indeed. Very likely Shirley Temple never learned that it was partly thanks to her that, during his exile, Graham Greene wrote one of his best books."

The trial was held on 22 March 1938. Greene had left for Mexico on 29 January and did not return to Britain until May. The judge, who fined the magazine a crippling £3,500, lamented it was a shame Greene was out of the court's reach, said Cavalcanti.

The BFI, which has recently been awarded £25m from the Government to help preserve some of its priceless stock of original film negatives, says the Cavalcanti papers will help to fill in the gaps in film history.

Janet Moat, head of special collections at the BFI, which also has controversial plans to build a new film centre on the South Bank in London to display treasures including the Cavalcanti papers, said: "It was very exciting to get the papers. For us Cavalcanti has always been a bit of a Holy Grail. The papers fill a gap in 20th-century film history. That's what we're trying to do at the BFI – fill the gaps because nobody thought at the time that what they were doing was important."