November 1987 Report - Consequences

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 Two
Section D Arms and Defence-Related Exports to Iraq
Chapter 5 Iraqi Arms and Defence Equipment Procurement
after the Cease-Fire

D5.2 I have already referred *2 to the Intelligence Report dated 30 November 1987 prepared by an SIS officer, Mr C3, and based upon information provided by Mr Gutteridge to Mr “Ford” (Mr P). The Report disclosed that Iraq, which had been paying inflated prices for munitions from the Soviet Union, intended to manufacture its own cartridges, shell cases, mortars and projectile nose cones. The production was to take place, the Report said, in two Iraqi factories, Hutteen and Nassr.

D5.3 In 1987 and 1988 Mr Gutteridge was the only regular SIS source of information about Iraqi procurement and, as Mr O, an SIS officer put it, “the subject broke new ground for SIS”. *3 One of the companies mentioned in the 30 November 1987 Report as having entered into contracts for the supply to Iraq of “general purpose heavy machinery for the production of armaments” was “TI (UK)”. It was known, from information supplied by Mr Gutteridge in November 1987, that TI (UK) (later re-named Matrix Churchill) had been recently purchased from Tube Investments plc, its original parent company, by a company called TMG Limited (TMG), that TMG was a wholly owned subsidiary of TDG Limited (TDG), and that TDG was an Iraqi controlled company believed to have been established by Meed International Limited. Individuals said to be associated with TDG included Dr. Habobi (of whom much more later) and Anees Wadi. Mr Paul Henderson, it was reported, had been appointed Managing Director of Matrix Churchill. *4

D5.4 On 1 March 1988 a meeting of seven officers from the intelligence agencies took place in order to discuss the “wider implications” of the 30 November 1987 Report. Those present included Mr O, Mr P and Mr C3. Mr C3 informed the meeting that there was “high interest on further information on attempts to export armaments or means to produce armaments”. He said that it was Government policy to prevent such exports and that he was expecting a further report from Mr P after Mr P had had another meeting with Mr Gutteridge. Mr C3 reported in due course that TDG had been established in London as a “buying mission for Iraq”, that “as long as twelve months ago Wadi discussed possible difficulties over export licences”, that “there was and still is talk of moving the whole operation to Switzerland” and that “in source’s opinion the Iraqis would have little difficulty in placing their orders for machine tools elsewhere.” *5 Mr C3’s reports led to a request from DIS for “details on the precise nature of armaments production in Iraq, such as production facilities, weapons systems produced and the state of their armaments technology” *6, and in an SIS response dated 12 April 1988, DIS were told that Mr C3’s reports had “aroused a great deal of interest in Whitehall”.

*4 - Also involved in the procurement network were RWR International Limited and Mr Roy Ricks (whose initials were ‘RWR’). RWR International, Meed International, TMG and TDG all used the address, Duke House, 37 Duke Street, London

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