Profile: Whistler against the wind: Gerald James

THE American commentator and wit H L Mencken once wrote of government officials that "there is actually no more public spirit among them than among so many burglars or street-walkers". It is a view to which Gerald James, the ruined arms dealer who has caused Jonathan Aitken such troubles, subscribes wholeheartedly. He believes British officialdom to be capable of everything from criminal conspiracy to treachery, and says they have burgled his home, stolen his papers and worse.

All these things have occurred, he is convinced, because of his knowledge that in the late 1980s the Government acquiesced in the sale of British weaponry to Iran and Iraq, nodding through such embargo-busting deals as the sale of naval guns to Iran ("Project Lisi") via Singapore.

Until last week we were being told to ignore him, and there seemed to be some good reasons. Undeniably, he sees conspiracies and "spooks" everywhere, and some have dismissed him as a paranoid fantasist. He is being investigated by the Department of Trade and Industry for alleged financial incompetence. Jonathan Aitken has emphatically and publicly denied Mr James's allegation against him - that, as a director of the arms firm BMARC after 1988 he knew about the Lisi project - and other former board members have endorsed that denial. Mr James has been variously described in Parliament over the past few years as a "failed director", "bitter" and "isolated". So why should we believe anything he says?

Because last week Michael Heseltine, President of the Board of Trade, suddenly admitted to the Commons that the naval guns "could well" have been sold to Iran in breach of Britain's embargo, and that the whole apparatus for preventing weapons from reaching Iran and Iraq had been riddled with holes. As a result, fresh investigations into the BMARC affair are under way and Mr Aitken's role is once more under scrutiny.

People may continue to resent and fear Gerald James, but he can no longer be written off as a mere crank.

I FOUND him in hospital, sitting up in a chair. The room was small, spartan and faintly claustrophobic, and the bed-cover had a hole in it. Despite a recent hernia operation, he eased his large frame out of the chair to shake my hand, swaying slightly as he did so. He was not, I thought, in great shape.

Four hours later, I had formed a different opinion. During that time he drank copious quantities of tea, ate a hearty lunch, answered numerous telephone calls and talked to me with relentless animation about government, its agents and their many wrongdoings. Mr James, his friends say, is not a man to take things lying down.

He was born the younger of two brothers in 1937 in Cockermouth, Cumbria. His father was a solicitor; his mother a housewife. His schooling began in Cockermouth and ended - after spells in Manchester and St Helens - at Sedbergh (Will Carling's Alma Mater). He did his National Service as a paratrooper and then joined a City firm of chartered accountants, where he audited outfits ranging from Gil-lette to the Greyhound Racing Association.

He qualified in 1964, but he was restless, finding accountancy and the legal profession "very boring - people who think the sun shines out of their backsides; that they are the hub, rather than an adjunct of society". He moved on, through a variety of City and other firms including Hill Samuel and Barings, but by the 1970s "I wanted to try something quite different".

Brock's Fireworks provided it. A spell with the company's military pyrotechnics section (which made smoke grenades and flares) ignited interest in weaponry, and in 1981 he joined a group of businessmen in buying a small company called Astra. It thrived. "By 1984, Astra was growing so fast that we had to look to the North American market for expansion."

The arms trade is a world in which brushes with the security services are only to be expected, and Mr James had no problem with this. In the City he had played cricket for a team which included former wartime agents, one of whom got him his job with Hill Samuel. Another job had come courtesy of George K Young, a former deputy head of MI6 whom he encountered through the Monday Club, on the right-wing edge of the Conservative Party.

Britain's security services took a keen interest in Astra, Mr James says, and it was with their encouragement that in 1989 the firm bought a Belgian fireworks company, Poudrieres Reunies de Belgique (PRB). Soon after the purchase went through, a government contact approached Astra and said, according to Mr James: "In your own interests and for your own safety, if you find any contracts in PRB which are funny, report them." Sure enough, they did find something funny - "That's how we came to report the Supergun contract" - under which an international network of arms firms was supplying Iraq with parts to be used in a huge artillery piece.

By now James was becoming concerned that the "spooks" were taking rather too close an interest in his firm. He "started to get reports that Astra was being used by the intelligence services. We had been pointed in the direction of acquisitions. All the companies we had were involved in covert operations. That applied to our American companies, to BMARC and PRB." The company, he says, seemed to have a mind of its own. He was sometimes unable to obtain documents which, as chairman, he was entitled to see. He learnt of secret meetings at the White Hart hotel in Lincoln, which were attended by Astra colleagues, Ministry of Defence officials and security personnel. He found he could not confide in colleagues.

The business, moreover, was turning sour. The purchase of BMARC in 1988 had proved a bad mistake and PRB a worse one. The City lost confidence in Astra and, financially overstretched, it was placed in the hands of receivers. Mr James resigned in 1990, blaming the Government for wrecking his firm. His troubles were just beginning.

AFTER the Gulf war, as the furore began about arms sales to Iraq, he was called to give evidence to a Commons select committee, and he alleged that large-scale secret sales had taken place. The Matrix Churchill case was already shaking the Government and ministers were fiercely denying complicity and deception, so his claims were highly controversial. Some Conservative members of the committee sought to discredit his evidence - it was here that the word "fantasist" was first used. His change in attitude to the Tory party, once fiercely loyal, was now sealed. Once he had been a member of the Monday Club and of the Anglo-Rhodesian Society, which supported white rule in what is now Zimbabwe. Now he says it is unlikely that he will vote Conservative again, "until the traditional, high-principled stand of the old High Toryism returns".

There is no doubt that he is a very bitter man, and it is hard to escape the feeling that this has made him paranoid.

Because he claims he knows so much about the "double game" played by ministers and acolytes, he insists that he is vulnerable, exposed and the target of official harassment and worse. How, he asks, can you explain some of the strange things that happen to him?

There have been burglaries at his home in Barnes in which papers containing evidence of the "double game" were removed. So thorough were the burglars that they even cut the backing from framed pictures in their search for documentary booty.

In one burglary last year, the police said a towel found outside had been used to deaden the sound of breaking glass. Yet the towel belonged to the Jameses and must have come from inside the house. Less strangely, perhaps, the Inland Revenue is also gnawing at him.

However implausible such worries may seem, they can no longer be used as grounds to dismiss altogether what Mr James says about the arms trade in the late 1980s. If the proceedings of the Scott inquiry had not already seen to that, Mr Heseltine certainly did so last week.

And there are many who speak up for Mr James: Kenneth de Courcy, founder of Intelligence Digest, says: "James has taken an enormous risk, you know. If the Government does decide to prosecute him over these shipments to Iran and Iraq, and he can't prove that his part was carried out with a nod and wink from the government, then he will have no defence at all. He is really a rather brave man - absolutely, patently honest."

Mark Phythian, a university lecturer and author of a forthcoming book, The Arming of Iraq, says: "He is the most important and high-level whistle- blower in the defence industry - a man of total consistency." According to Dr Phythian, the account Mr James has given "has been consistent over a long period of time. He has never sought to embellish, even when it was in his interests to do so. It is inevitable now that the truth will come out and he will be vindicated."