Documents have reportedly revealed that Margaret Thatcher was made aware of allegations involving the Liberal MP before he was given the honour.
The papers, released to the Mail of Sunday following repeated demands for disclosure, also show that the country’s most senior civil servant wrote to the director of public prosecutions to find out why Smith did not face justice for alleged offences against teenage boys.
The 19-page dossier of information on the decision to confer a knighthood on former Rochdale MP Smith in 1988 included one undated letter, marked secret, from a member of the Political Honours Scrutiny Committee to Mrs Thatcher, warning of “the risk that such an award could give rise to adverse criticism”.
In the letter Lord Shackleton spelled out that police had investigated Smith in 1970 for “indecent assault against teenage boys” between 1961 and 1966, but the Director of Public Prosecutions (DPP) had decided “there was no reasonable prospect of conviction”.
The then cabinet secretary Sir Robin Butler – now Lord Butler of Brockwell – wrote to the DPP on the committee’s behalf to seek more information about Smith’s case.
He said the committee wanted to know “whether the case against Mr Smith was not well founded: or whether it was a sound case, but that the evidence was not likely to stand up in court”.
The newspaper said no reply from the DPP is recorded in the file.
A Cabinet Office spokesman said: “There is no cover up nor was the Cabinet Office forced to release this information by the Information Commissioner.
“This is a sensitive and complex case and it is right that we considered advice from a range of officials. After considering the advice, the Cabinet Office decided to disclose information.”