Have followed your blog for some time with great enjoyment, but I do not want to enter the public arena. However, the story you have here is most unusual, and as a former Civil Servant with a little experience I might help you understand the context.
What you have uncovered is a Letter of Direction. Dynamite stuff, and described HERE.
2. Where an Accounting Officer of a government department considers that a Minister is contemplating a course of action that would be likely to infringe financial propriety or regularity, or the Accounting Officer’s wider responsibilities for economy, efficiency and effectiveness, it is the duty of the Accounting Officer to so advise the Minister. If that advice is then overruled the Accounting Officer will be required to seek a written Direction from the Minister to enable that action to be carried out. If such a Direction is issued by the Minister, the Accounting Officer must comply with it but must also notify the Treasury and pass the relevant documents to the Comptroller and Auditor General as soon as possible.
Very, very rare beasts, only used as a last resort. Permanent Secs never wish to send them as they show that they have lost influence over a Minister who is determined to press ahead regardless and that fact must be disclosed to others, including the C&AG. Unhappy does not begin to describe it.
So there you have it. Now, would someone in the mainstream media like to get on to this?
UPDATE: The Guardian is now covering the story HERE.