Can we trust our rulers ever to tell the truth?

It was the great lie of the first Gulf war: that flight BA 149 to Kuwait City, from which civilians

On 6 September 1990, Margaret Thatcher rose to make a statement to a packed House of Commons. The previous month, Saddam Hussein had invaded Kuwait. George Bush Sr had drawn his line in the sand and was assembling his grand coalition. The countdown to the first Gulf war had begun.

But British concern was focused on the fate of the passengers and crew of a British Airways jet that had landed in Kuwait at the start of the invasion. These passengers were taken hostage by the Iraqis and were soon to join the group known as "human shields". This group included, most famously, the five-year-old Briton Stuart Lockwood, whom the world would see being patted on the head by Saddam when the hostages were paraded on television.

MPs wanted to know why a civilian flight, BA 149, had been allowed to land in a war zone. Thatcher was typically robust. "The British Airways flight landed, its passengers disembarked and the crew handed over to the successive crew, and the crew then went to their hotels. This all took place before the invasion," she said. Turning to her backbenchers, she emphasised the point: "The invasion was later.''

The statement seemed to put an end to questions about the fate of BA 149. But everything in it was misleading.

This month, a French court ordered British Airways to pay 1.67m euros (£1m) in compensation to seven passengers on that fateful flight. British Airways had argued that the carrier could not be held responsible for an act of war. But the court said the invasion was highly predictable, and that the airline had failed in its obligation to get the passengers safely to their destination.

It was the second time a French court had ruled against BA, but the verdict was barely noted in most British newspapers. Despite the row over whether the Blair and Bush Jr governments told the truth in the run-up to the second Gulf war, few made the connection with this further evidence that the country had been misled just as seriously 13 years earlier.

I began investigating the fate of BA 149 in the autumn of 1990, while working for the newly launched Independent on Sunday. Four questions drove my research, which over the past decade has taken me to Paris, Kuwait, Baghdad, Washington, Houston, Sydney and Auckland. Why was the plane allowed to fly into a war zone? Who was responsible for putting the lives of the 385 passengers and crew at risk? Why has compensation been given to some passengers but not to others? Why did Thatcher so comprehensively mislead the Commons over the sequence of events?

Iraqi tanks and troops had been massing on the Kuwaiti border on 1 August 1990 as BA 149's cabin crew headed for Heathrow. Clive Earthy, the purser, remembers hearing a radio report as he drove to the airport. "It said the Iraqis were actually massing on the border, and some reports were coming in that they were over the border.'' The flight was due to leave London for Kuwait at 4.15pm UK time, and then fly onward to Madras and Kuala Lumpur. American, British, New Zealand, French and Indian passengers had tickets for the flight.

Passengers and crew were nervous. Daphne Halkyard, a New Zealander travelling on a British passport with her husband, Henry, told me: "We had heard enough news about Kuwait to be very concerned. Waiting for two hours merely increased our fears. We expressed our concerns to everyone who would listen.''

The flight was delayed by a fault in an auxiliary power unit in the plane's tail. While it was being repaired, the BA crew discussed among themselves the advisability of flying to Kuwait. This was one hour before boarding. "The news media were saying one thing and the company was telling us something different,'' a crew member said. But it was decided that the flight would proceed as scheduled. As Clive Earthy later told me in an interview for New Zealand television: "You are there to work, and to take on a company like BA and refuse to fly an airplane and inconvenience 400 people is quite a big step.''

Just before the plane was due to take off, as the doors were about to close, a new group of passengers arrived - ten or 12 men travelling together, described by passengers as "clean-cut and muscular-looking''. They took seats at the back of the plane. Paul Merlet, a French anaesthetist, remembers thinking that they looked like oil workers or soldiers.

Another late arrival was a high-ranking member of the Kuwaiti royal family and his bodyguard. Information obtained later by lawyers for the human shields suggested that the man was a member of the ruling al-Sabah family who held the crucial post of director of state intelligence and security.

The Boeing 747 took off on the seven-hour flight just after 6pm UK time. During the first half of the flight, the pilot reported back constantly to the crew that things were looking all right in Kuwait and that it would remain their destination. Just after 10pm UK time, the pilot was in contact with BA 148, flying in the reverse direction. It said Kuwait airport, on the outskirts of Kuwait City, had been operating normally when the flight departed.

As this conversation was taking place, the invasion started. BA 149 was still three hours from Kuwait when the Iraqis poured over the border and headed down the main highway towards Kuwait City. Hundreds were killed in the first hours of the war, but apparently no word of this reached BA 149.

By the time the plane touched down, Iraqi troops and tanks were on the outskirts of the city. Yet air-traffic control gave the plane permission to land. One hour after it landed, the airport came under attack from Iraqi MiG fighter jets, as the refuelled plane sat on the runway ready to take off. The plane was abandoned and the passengers and crew evacuated. All of them would be taken hostage by the Iraqis - except for the men who had boarded the plane so late in London. They had vanished within minutes of the jet landing. None of the other passengers saw them again.

The hostages were held for up to three months. Under threat of being shot by the Iraqis or bombed by the Allies or lynched by a mob, they lived in constant fear. One day, a group of passengers found their guards had begun digging a trench, about three feet deep and eight feet square. After much prompting, they told the hostages that the trench was for them; their commander had given instructions that, at the first sign of invasion, everyone was to be shot and buried. Some hostages were taken to al-Tarmiya, a nuclear-enrichment plant near Baghdad, where they were held in a rat-infested tin shed. One man died of a heart attack while in captivity. Several others died within weeks of their release, apparently never recovering from the ordeal. One killed himself. Yet the Iraqis pretended they were honoured guests, showing a TV programme called Iraqi Guest News, which carried footage of a smiling Saddam mingling with the captive westerners.

Eventually, Edward Heath travelled to Baghdad to meet Saddam and secure the release of the hostages. The survivors of BA 149 celebrated with champagne on the way home. But when they got back and learnt of Thatcher's Commons statement, many of them were angry. It was the start of more than a decade of court proceedings.

Intelligence sources have confirmed to me that London and Washington were both informed of the attack by 11.50pm UK time. The plane did not land for another one hour and 23 minutes. So why did Thatcher - speaking more than a month after these events - get it so wrong?

John Prescott, then Labour's front-bench spokesman on transport, had no doubt that there had been a cover-up. In 1991, he said, there were rumours that SAS people had been put on the plane. "It could have been diverted . . . those people were held unnecessary [sic] . . . a wall of silence from British Airways - the Foreign Office and government are hiding what I believe was a major mistake made by them."

Speculation about the fate of the flight focused on the group of men who had disappeared when the plane landed. Paul Merlet said the French embassy told him after his release that BA 149 had landed in Kuwait because there were "special forces" on the plane. Members of the Kuwaiti resistance said later that "western commandos" had somehow arrived in Kuwait on the first day of the invasion. Clive Earthy, the BA 149 purser, later tried to find out who had checked in the last-minute group of passengers. A BA colleague told him their tickets had had a military coding. Another BA staff member recalled that the passengers had come from Hereford, the headquarters of the Special Air Service.

But Earthy's attempt to track down the woman who checked in the group came to nothing. She had left her job at BA soon after the flight, to take up a position with the Ministry of Defence.

The search for the truth became increasingly frustrating. Bill Neumann, the Texan lawyer who represented the American passengers, tried to obtain a list of those who had boarded. BA told him it no longer held a passenger list. In an interview for New Zealand TV, he summed up his conclusion in a dry Texas twang: "That probably gives some support to the notion that there was someone on board they didn't want people to know about."

In investigating this story, I have spoken to multiple military and intelligence sources who confirmed what happened. One source was directly involved in the operation. The team put on the ground was part of an MI6 operation, but one that used SAS-trained soldiers. Their job was to activate an underground intelligence network as the invasion got under way.

The SAS and MI6 quite often work closely together, with soldiers acting as spies. In the world of intelligence, best described by the former CIA counter-intelligence chief James Angleton as "a wilderness of mirrors", such blurring of roles can come in handy. In this case, because the soldiers were no longer formally designated military, Downing Street and Whitehall could repeatedly claim that "there were no military personnel on the flight".

One intelligence source told me this was not the first time that a BA flight had been used as a "Trojan horse". Before the fall of the Shah of Iran, he said, a flight was diverted to Tehran to pick up a team of agents whose lives were in danger.

BA has consistently claimed it knew nothing about any operation in Kuwait, or even that the invasion was under way. It insisted at one stage that "our passengers and senior cabin crew have stated that no passengers joined the flight during its delay at Heathrow". However, senior cabin crew confirmed to me that the group of ten or 12 men had boarded the flight during the delay.

It is clear that Kuwaiti air-traffic control gave the plane permission to land, even though the controllers must have known that the fighting had begun. One possible explanation: when in Kuwait earlier this year, en route to cover the second Gulf war, I was told by a contact that UK military personnel were in the control tower on 2 August 1990, insisting that BA 149 be allowed to land.

The plane was eventually blown up by the Iraqis. British passengers took their case to the House of Lords but got nowhere and have still not received any damages. The New Zealanders have received a few hundred pounds for lost baggage and from a UN Gulf war fund. They have never even received an apology from the airline or any government.

The French claimants, meanwhile, have all received payments running into hundreds of thousands of pounds. The American passengers, with a court system that usually favours the plaintiff, all received out-of-court settlements from British Airways, although they had to sign confidentiality agreements saying they would never discuss the details.

This grossly unequal treatment justifiably angers many of the passengers. Only now, after all these years, has it been possible to piece together the full story of what happened to BA 149. It may take just as long to learn what really happened in the inner sanctum of the British government in the weeks and months leading up to the second Gulf war.

Stephen Davis is a former Fleet Street journalist and New Zealand newspaper editor-turned-television producer. He can be contacted at: theeditor@xtra.co.nz