Return to an Address of the Honourable the House of Commons
dated 18 July 1996 for the Appendices to the Report of the Inquiry into the Export of Defence Equipment and Dual-Use Goods to Iraq and Related Prosecutions laid before The House on 15 February 1996*

Volume One
Section D Arms and Defence-Related Exports to Iraq
Chapter 2 Applications of The Guidelines in the period
December 1984 to August 1988

Excerpt:
Specific Cases - (v) The Integrated Weapon Complex

D2.168 In 1981, IMS obtained a contract from Iraq to supervise the construction of an Integrated Weapons Complex (IWC) with a design based on the design of a Royal Navy IWC at Gosport. Sir John Nott, the then Secretary of State for Defence, in a letter dated 24 July 1981 to the Iraqi Ambassador to the United Kingdom said that the UK Government, “desiring to facilitate the institution of contractual relations between the Iraqi Ministry of Defence and [IMS] in accordance with which [IMS] shall be required to perform certain technical military services to the Iraqi Armed Forces”, had “decided to guarantee fully the performance of all the contractual obligations of [IMS] at all stages in such manner as to ensure acceptance by the Iraqi Ministry of Defence in accordance with the provisions of the concluded contracts”. The letter sought the “acceptance of the Government of the Republic of Iraq of this guarantee.” *253 Some queries have been raised in evidence given to the Inquiry as to the legal enforceability of this guarantee. I have not examined the legal position, but, on its face, the letter appears to me to constitute an enforceable guarantee.

D2.169 In a letter dated 30 July 1985 to Mr Collins, Mr Lavender (Sec (D Sales)) drew the attention of the FCO to three naval construction projects in which IMS was engaged. *254 The IWC, some 30 miles from Basra, was one. *255 The details and implications of the IWC project, as described by Mr Lavender in his letter to Mr Collins, were as follows:

“...an export licence was granted for safety and monitoring equipment to the value of £1.24 million in September 1981, and further equipment was delivered in 1983, but the equipment remains in store and has yet to be installed and commissioned. In May of [1985] the software necessary for the maintenance and testing of missile systems was handed over to the Iraqis. It is understood that IMS wish to train two Iraqi officers in the operational aspects of the IWC... In discussion it was agreed that, as the complex would be used to maintain naval weapons including missiles, it would have represented an unacceptable enhancement of capability had it been the subject of a new application. However it can be argued that this project falls within Ministerial guidelines as it was an existing contract. Given that and the earlier Ministerial encouragement we have not yet decided whether or not to seek to prevent IMS from completing this work. It is hoped that further technical details of the complex will be forthcoming to enable our experts to provide a more precise assessment of its capabilities”

D2.170 Further details about the IWC project were supplied by Mr Peter Rooney of IMS in a letter dated 31 July 1985. He said that: “the IWC concept... is meant to provide a facility capable of maintaining and servicing a variety of weapon systems e.g. Air to Ground, Ground to Air, Air to Air etc. and would encompass weapons such as Exocet, Rapier, Hawk, Sea Dart etc. As for the Iraqi Exocet missiles, I believe these are being maintained by the French in temporary facilities at present. A point to remember is that the IWC facility will not be operational before the end of 1986”.

D2.171 A special meeting to discuss the three IMS projects was arranged for 2 August 1985.

D2.172 The meeting on 2 August was chaired by Mr Lavender. Those present included other Sec. (D. Sales) representatives, RMD2, D.Cts (ROW)1 and, from the FCO, Mr Aron of MED. Mr Lavender explained that “IMS’ status as a company wholly owned by HMG dictated that their proposed activities in the field of naval projects in Iran and Iraq should be examined by the [IDC] even when the export of licensable goods was not involved to determine whether Ministers needed to be informed”. The Note of the discussion at the meeting records that “The consensus in MOD was that while no purpose would be served by discouraging IMS from taking any further part in the project at this late stage, it would be advisable to remind Ministers of its existence” and that “FCO/MED said that their view was also that the project was a fait accompli and while their Ministers should be informed, no recommendation to deter IMS should be made, although they should be advised to maintain a very low profile.” *256

D2.173 On 23 September 1985 the Minister (DP) was briefed on the three projects. The submission to him recommended “that IMS be allowed to proceed in each case with the proviso that they maintain as low a profile as possible.”*257

D2.174 By a letter dated 8 January 1986 to Mr Renton, Mr Lamont (Minister (DP)) asked whether FCO was content for IMS to proceed with the three projects. The letter confirmed that “the view of MOD officials is that, although [the IWC] project would not be approved under the current ‘enhancement’ guideline, it falls within the Ministerial guidelines in that it is an existing contract.” *258 Mr Renton by letter dated 4 February 1986, agreed to IMS proceeding with the IWC contract, but only “on the assumption that the complex would not improve Iraqi capability to attack shipping in the Gulf and we could defend it in public on this basis”. He asked that “this... be confirmed before IMS are given the go-ahead.” *259

D2.175 A draft reply to Mr Renton’s letter was supplied to Mr Lamont by Mr McDonald (Head of DESS). *260 Advice was sought from MODWG members as to whether or not the IWC would improve Iraqi capability to attack shipping in the Gulf. The advice (given by DOR(Sea)RST) was that “...the IWC is a flexible facility capable of being used for ‘third-line’ servicing of any missile or torpedo. The Iraqis could only use it for Exocet servicing if the French were to supply them with spares and special-x-type test equipment. Currently, if any ‘third-line’ servicing is done, which is unlikely, the missiles would be returned to France. However, I expect they are fired soon after receipt.” *261

D2.176 This response from DOR(Sea)RST plainly did not provide the confirmation Mr Renton had sought from Mr Lamont. The Note from DOR(Sea)RST was attached (without comment) by Mr Hextall to a handwritten note which he sent to Mr McDonald. Mr McDonald did not, however, send on the DOR(Sea) RST note to the Minister. *262

D2.177 Mr Lamont replied to Mr Renton by a letter, dated 21 February 1986 in the form of the draft supplied by Mr McDonald. In this letter Mr Lamont stressed that IMS’ remaining responsibilities were “supervisory and relate only to the construction of the building and the installation in it of the general safety and monitoring equipment which has already been delivered by IMS.” He said “All this equipment is directed exclusively to the physical safety of those who conduct the tests on the weapons” and concluded thus: “...the nature of the IMS work involved and the fact that the missiles are already being monitored and tested in temporary facilities convincingly demonstrates that the proposed IMS work cannot be interpreted as a real enhancement of the Iraqi war effort.” *263 Presumably no distinction was intended to be drawn between a “real” enhancement and a “significant” enhancement. Mr McDonald has made the point that Mr Lamont’s letter was not dealing with the enhancement of Iraqi capability that the IWC itself might produce, but merely with IMS’s “remaining responsibilities.” These involved only supervisory work that, he said, “could not in itself constitute a danger to shipping in the Gulf and was not essential to the working of the complex.” *264 Nonetheless, the original MOD assessment of the IWC project was that it would “represent an unacceptable enhancement of capability.” *265 The view of MOD officials in January 1986 was that the subject “would not be approved under the current enhancement guideline....” *266 DOR(Sea)RST had advised that the IWC was a “flexible facility capable of... servicing any missile or torpedo”. The reality of treating IMS’s remaining work on the Project as if, for enhancement capability purposes, it were not part of the Project seems to me questionable. The IMS work was, in my opinion, compatible with the Guidelines only because the IMS work fell to be performed under an existing contract.

D2.178 Mr Renton, by letter dated 7 March 1986 to Mr Lamont, agreed that the IMS work on the IWC project could proceed “since there is no question of the UK supplying equipment which will help in weapons testing, and given that we have good presentational arguments to refute any criticisms of IMS.” *267 It is not clear what those “presentational” arguments would have been.

D2.179 In my opinion, the proposition that Ministerial guidelines were not breached by the approval given to IMS to complete the work on the IWC project must rest on guideline (ii). Since there was already in existence at the time the Guidelines were adopted a contractual obligation on IMS to do the work, Guideline (ii) applied. The confirmation requested by Mr Renton in his letter of 4 February was not, and could not have been, given. It is of interest to notice that in a DTI submission dated 18 April 1986 to the Minister for Trade, the IMS work in the IWC project was described as “the most potentially lethal business that has been agreed.” *268

Endnotes
*253 - see MOD/8.2.245 at 247

*254 - see MOD/8.2.245

*255 - The other two were the construction (for Iraq) of a naval base at Basra and the repair (for Iran) of existing dockyard facilities at Bandar-e-Abbas

*256 - see MOD/8.2.313

*257 - see MOD/8.4.109

*258 - see MOD/9.1.30A at paragraph 3

*259 - see MOD/9.1.253

*260 - MOD/9.2.37

*261 - see MOD/9.2.15

* 262 - see MOD/9.2.31 and MOD/9.2.37

*263 - see MOD/9.2.47

*264 - Written comments submitted on 26 July 1995

*265 - Mr David Gibbons, a former IMS Commercial Manager, told the Inquiry that the capability of the IWC was described in an IMS brochure as follows:

The IWC, designed by the British Ministry of Defence, is the most advanced type of depot in the world available for the assembly, test and repair of sophisticated weapons, when in their explosive form. An IWC can process virtually all types of missiles, torpedoes and other weapons, whether for navy, army or airforce regardless of country of origin .... The IWC contributes to the achievement of maximum operational effectiveness of modern weapon systems through its standardised approach to servicing and testing.”

Mr Gibbons’ view was that possession of an IWC, or of any similar complex devoted to one particular type of missile, could not have failed significantly to enhance the military capability of the possessor of the IWC. That was, he told the Inquiry, its entire purpose (see paragraph 45 of his written statement to the Inquiry dated 31 August 1993). Mr Hextall, in his written statement to the Inquiry dated 1 November 1993, accepted that Mr Gibbons’ view was consistent with the MOD initial assessment that the IWC project would not have been approved under the ‘enhancement’ guideline. (see page R-3 of the statement).

*266 - MOD/9.1.30A at 30C

*267 - see MOD/9.2.67

*268 - see DTI/110.8423 at paragraph 4

* The Full report is available from The Stationery Office Ltd., PO Box 276, London, SW8 5DT.