Professor Maggie Bruck from the department of psychiatry and behavioral science at Johns Hopkins University in Baltimore, Maryland, USA, said the children made allegations of abuse after very suggestive interviewing practices.
Prof Bruck was giving evidence on behalf of Christopher Lillie and Dawn Reed, former workers at Newcastle's Shieldfield Nursery, at the resumed hearing of their libel action.
They are suing Newcastle City Council and the four-member team it commissioned to investigate Shieldfield complaints. In its 1998 report, the team concluded the two workers emotionally, sexually and physically abused children from the nursery.
Four years earlier the pair was acquitted of indecently assaulting young children from Shieldfield.
Professor Bruck told the court she has spent more than the past decade doing research on the reliability of children's statements and the everyday memory of adults and children. She has also been involved in cases where young children make allegations.
She has prepared a lengthy report on the Shieldfield case, focusing on the allegations made by children in 1993 and 1994 that led to the trial of Mr Lillie and Ms Reed.
She also focused on the reliability of the evidence used by the review team to arrive at their decision that the pair had abused children.
In her report, Professor Bruck concluded the original statements and much of the children's later testimony were unreliable.
'It is my expert opinion that the review team members did not have the appropriate background, knowledge, or skill to investigate this complicated case,' she said.
'As a result, the review ream relied on the least reliable evidence to support their view that Lillie and Reed were paedophiles.
'And the comittee ignored or misinterpreted the most important evidence, which was the evolution of the children's statements.'
Since writing her report which was based on transcripts of the children's interviews, Professor Bruck told the court she has since now seen the videos of those interviews.
'The video tapes are quite a lot worse than looking at the transcripts themselves,' she told Adrienne Page, QC for Mr Lillie and Ms Reed.
The videos revealed that many of the interviews were taken up with the child playing - 'being terribly involved in drawing, playing with clay, running around the room.'
'Sometimes, I think, children mindlessly answer questions as they are playing away,' she said, adding that no matter how young a child you did not want distraction.
Her evidence is continuing before Justice Eady, who began hearing the case on 14 January.
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