British intelligence officers welcomed the collapse of one of the most notorious IRA “supergrass” trials of the Troubles, according to a former MI5 agent who suggests the government may have encouraged a senior judge to dismiss the prosecutions.

Thatcher’s Spy, the memoirs of Willie Carlin, who spent 11 years as an informant in the republican movement, contains claims about how the security service tried to redirect the Provisional IRA away from violence and down the road towards political engagement in the mid-1980s.

Carlin’s reminiscences provide an extraordinary insight into the life of an agent in Derry, constantly fearing exposure and death at the hands of the IRA’s “Nutting Squad”.

The trial that was supposedly sabotaged was heard by Northern Ireland’s then lord chief justice, Lord Lowry. It began with around 100 alleged IRA and Irish National Liberation Army (INLA) members being arrested on the evidence of another informer, Raymond Gilmour.

The rounding up of activists had begun in 1982 and many of the 35 suspects who were eventually charged spent two years on remand in prison awaiting trial. The prosecution evidence depended almost exclusively on the word of Gilmour, who had been a volunteer in both the INLA and IRA.

The case, one of the largest supergrass trials of the Troubles, coincided with an internal debate in the republican movement following the Maze prison hunger strikes about whether the IRA’s armed struggle should be pursued exclusively or whether it could be combined with an electoral strategy. Martin McGuinness, the IRA leader in Derry, supported the path of greater political engagement.

In 1984, the expectation was that the trial – presided over by Lowry who was sitting in a Diplock court without a jury – would result in mass convictions.

Carlin recounts meeting his army and MI5 handlers in Derry and paints a picture of the intelligence service’s exploitation, if not manipulation, of events. Having been called to a debriefing in Ebrington barracks, Carlin said one of his handlers “Stephen”, an MI5 officer, asked to meet at a nearby bar.

Carlin recalled: “We went over the revelation that IRA ‘volunteers’ all over the north would be standing for the city council elections in May … It would be mostly IRA men because that was the only way Martin McGuinness could placate the IRA leadership, and at the same time it demonstrated they weren’t going soft.

“Then we talked about Raymond Gilmour, the trial’s effect on us in Derry, and the obvious impact it would have when the boys were sentenced … [ ‘Stephen’ remarked that] ‘The judge might not see it the way you all think …’

“‘In his case, with a delicate matter like Gilmour’s, he’ll seek guidance from the judiciary and in some cases it’ll go right up through the Northern Ireland Office and even on up to the Home Office. The questions he asks are considered and legal guidance is passed back down.’”

The MI5 officer, according to Carlin, said Northern Ireland’s most senior judge had been given “guidance” and “some private political guidance too”. “Stephen” added: “‘Apparently, there are or have been a few flaws in the prosecution’s case. It’s not a game-changer but Lord Lowry will now have to reflect on that guidance before he comes to a decision.’

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“‘It might not be in the public interest, long-term, to convict. If … IRA volunteers are being prepared all over the north for the May council elections, then that’s a huge step towards some semblance of peace further down the road. Because it’s our guess that those volunteers will effectively and eventually be decommissioned.’”

In the end, Lowry acquitted all the defendants, telling Gilmour: “You are a selfish and self-regarding man to whose lips a lie invariably comes more naturally than the truth.” Most of the suspects were immediately released.

Lowry, who survived an IRA assassination attempt at Queen’s University Belfast in 1982, became a law lord and died in 1999. Gilmour died in England in 2016.