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

Excerpt:
INFORMATION ABOUT IRAQI PROCUREMENT
AFTER THE CEASE-FIRE

D5.25 At a meeting of senior FCO and SIS officials in early November 1988 it was decided that “SIS should put Iraq at the top of its priorities”. The main areas of concern about Iraq included “Iraqi acquisition of what was described as the poor man’s nuke, that is, ballistic missiles carrying chemical war heads”. A telegram sent to SIS posts on 10 November 1988 as a result of this meeting said that “it seems likely we will need to boost our Iraqi [operations] ....” *54 Information about Iraqi procurement intentions continued, therefore, to be sought, continued to become available and included the following items:-

(i) In November 1988 an inquiry was made by representatives of RWR International, one of the procurement network companies, for sintered cobalt/samarium ring magnets. The inquiry, made to a UK company, came to the attention of the intelligence agencies. In a Report issued on 13 December 1988 *55, Mr C3 described the incident and said “We believe this incident provides further evidence of the Iraqi interest in developing gas centrifuge technology for uranium enrichment. A previously reported Iraqi procurement network, operating in the UK, now seems to be involved in acquiring equipment for this purpose.” The Report was distributed to the DTI, Customs, FCO/MED, FCO/SEND, MOD/DESO and to various DIS desks.

(ii) On 23 December 1988, Mr J wrote a minute for internal DIS circulation headed “Iraq - machine tools for various facilities.” The minute opened by saying that “...with the outbreak of peace [we understand] that DTI have returned to the fray in regard of the outstanding ELAs for these machines”, and then set out details about Hutteen - “It is the main ammunition manufacturing plant in Iraq” - and Nassr - “mentioned in the Box 850 report and ...quoted as being capable of producing 500,000 artillery rounds of assorted calibres annually.” *56

(iii) On 12 January 1989, Mr C3 issued a Report, the main source of which was information supplied by Mr Gutteridge to Mr P, describing the structure and activities of the Iraqi procurement organisation in the United Kingdom. *57 In its opening paragraph the Report referred to the activities of the network companies and said that “their interests have extended into the procurement of components for uranium enrichment, gas centrifuges, surface to air missiles and chemical/biological agents.” It referred to Meed International, which had changed its name to Technology Engineering Group (TEG) and was, it was said, Iraqi financed, and to the purchase by TEG of a UK company, Investacast Precision, which, said the Report, had been “involved in work on Project 395 (believed to be the designation of Iraq’s missile development programme) at the Al Fao General Establishment in Iraq”. Paragraph 3 of the Report referred to TDG, Matrix- Churchill and Dr Habobi, “a Brigadier in the Al Amn Al Khas Organisation which, created as Saddam Hussein’s Presidential Security Force, has since developed into an Iraqi intelligence and procurement service”, and who “controls the Iraqi procurement network in the UK ...”. Paragraph 4 of the Report referred to Matrix-Churchill “whose CNC lathes were used in the latter part of the Iran/Iraq war to produce armaments contrary to declared end use” and who “will also be increasing production for Iraq’s civil industry”. The Report was widely distributed around Whitehall. Recipients included FCO/MED, FCO/SEND, MOD/DESS, MOD/DESO, DTI, Customs and a number of DIS desks.

(iv) On the same day, 12 January 1989, a Report dealing exclusively with the Al Amn Al Khas Organisation was issued by another SIS department *58 This Report, too, referred to Dr Habobi, “a Brigadier in the Al Amn Al Khas” who “was formerly Director General of Nassr General Establishment For Armaments in Iraq and in a year has built up an extensive network in the UK”. This Report received the same extensive distribution as had been given to its sister.

(v) An SIS Report issued on 14 March 1989 reported on information that in February 1989 Iraq was using TMG and TDG in an attempt to obtain the know-how and equipment to manufacture polytetrafluoroethylene (“PTFE, Teflon”) and that, in a separate transaction, the procurement companies were seeking to obtain ten chemical milling machines. *59 The recipients of copies of this Report included those mentioned in paragraph (i) above.

(vi) On 18 December 1988 Mr P sent a telegram to SIS to the effect that a well placed Iraqi businessman (named in the telegram) 60 had said that Iraq wanted to purchase more machine tools but that military projects were to be halved and more effort and money to be allocated to the private sector. *61 Mr C3, in his written evidence to the Inquiry, said that “with the benefit of other available intelligence I should have been very sceptical about machine tools going to Iraq for other than military production purposes”. *62

(vii) Mr J in a Minute to Mr Barrett dated 11 January 1989 and copied to SIS referred to a recent AWP application relating to the export to Nassr of a moulding machine to produce polyurethane internal filler parts for missiles and said that there was “little doubt” that Nassr was involved in armaments manufacture. *63

(viii) The 12 January 1989 Report referred to in (iii) above had referred to Project 395. An SIS brief dated February 1989 *64 identified, tentatively, Project 395 as “a designation to describe work on all aspects of Iraq’s missile development programmes (ranging from SAMs to ballistic missiles)” and said that “A third plant at Al Taji (near the Nassr General Establishment) is believed to be involved in ballistic missile research and development work.”

(ix) A separate 12 January Report *65 identified Nassr as an organisation involved in the development of an indigenous defence industry in Iraq and, specifically, in Project 395 which “when completed will provide Iraq with the capability to produce its own ballistic missiles as well as other military technology”. The Report went on, however, to say that “Both organisations are also involved in many other civil and military industrialisation programmes that are unrelated to Project 395”. The Report was copied to FCO/Defence Department, FCO/MED, FCO/SEND and to various MOD/DIS desks. It was not copied to MOD/DESS nor to the DIS Defence Sales desk.

(x) On 25 January 1989 a submission from FCO to the Secretary of State said, inter alia, that “... intelligence has shown that TDG are at the centre of an Iraqi procurement network in the UK which is intent on breaking export guidelines and is also responsible for the procurement of chemical and biological precursors and nuclear and ballistic missile technology.” The submission said also that Dr Habobi was Chairman of TMG, that “through TMG he bought Churchill Matrix a machine tool company which has broken export guidelines by producing artillery shells for Iraq” and that Dr Habobi had been granted a visa “in the interests of maintaining bilateral relations and of source protection but it was stressed that Al Habobi’s activities should be closely monitored...”. The submission referred also to “... several [intelligence] requirements on Iraq’s armaments programmes and considerable current Whitehall interest in the subject because of its implications for UK national security and the regional security of the Gulf ...”. *66

(xi) The Minutes of a meeting of intelligence officers, including Mr C2 and Mr C3, on 31 March 1989 recorded that “at least ten companies have been identified to date as being Iraqi-controlled and involved in the procurement programme” and that the companies were “involved in both legitimate commercial activity and high technology procurement ....” *67 It recorded agreement that “hard policy decisions will soon have to be made on whether to close down the network.”

(xii) A Report issued on 29 March 1989 by Mr C3 referred to Iraqi attempts in late 1988 to obtain uranium enrichment gas centrifuge technology in West Germany. *68 A further Report issued on 31 March 1989 by Mr C3 dealt with attempts by an Iraqi controlled UK based procurement organisation to acquire centrifuge components and technology in the UK. *69 The recipients of copies of the Reports included those mentioned under (i) above. The Report of 31 March named two UK precision components manufacturers who had received requests for a quotation for the design and supply of centrifuge components. The approach had been made by TDG. These two Reports came to the attention of the Prime Minister whose comments on them led to a meeting in early May 1989 of officials from SIS, FCO/SEND, Cabinet Office and DTI. The SIS representative at the meeting referred to the earlier intelligence on the structure and activities of the Iraqi procurement network and commented that “there is a clear threat to UK companies from this network.” *70 It was agreed that the intelligence agencies would compile a list of UK companies likely to be targeted by the network. A further meeting was held on 10 May and in a letter dated 16 May 1989 Mr Beston, DTI, briefed Mr David Manning, Cabinet Office, on the discussions at that meeting. *71 Mr Beston’s letter recorded a decision at the meeting that a small working group should be formed “to help co-ordinate action on potential suppliers and targeted companies”. This small working group became the Working Group on Iraqi Procurement, the WGIP. A note dated 23 May 1989 from Mr Beston to Mr Mitchell, a DTI colleague, reported that the Cabinet Office were “very happy with the arrangements set out in my letter” and that the Cabinet Office “would wish to have periodic situation reports.” *72 The letter said also that the Cabinet Office would “be grateful for notice of any substantial action which the working group proposes to take both because of No 10’s interest and so that they may lend any support we may need”.

(xiii) An internal report dated 10 April 1989 on SIS files identified Project 1728 as being part of Project 395 and described Project 1728 as “responsible for at least metal fabrication, milling and machinery operations, and testing of various types of liquid fuel.” *73 Project 1728 was said to be located at Taji. Matrix Churchill ELAs dated 24 January 1989 sought export licences for machine tools stated to be destined for “Nassr State Project 1728.” *74

(xiv) At a WGIP meeting on 23 June 1989 the Matrix Churchill ELAs were referred to. The Minutes of the meeting record that “... the end-user was known to be the Iraqi missile programme. SEND want to refuse the request.” *75 Those present at the meeting included Mr Beston of the DTI, Mr Peter Clarke and Mr Stephen Lillie, both FCO/MED, Mr C2 of SIS, Mr Barrett of MOD/DESS, as well as representatives from Customs. Copies of the Minutes of the meeting went to Mr Martin Lamport of FCO/SEND and Mr Steadman, DTI. The “request” was not refused; the licences were granted. *76

(xv) A Report issued on 9 May 1989 by Mr C3 contained the list that had been promised of UK companies that might be targets of the Iraqi procurement network. Forty nine companies were named, with, in each case, a general description of the equipment likely to be sought from the named company. Those named included, of course, Matrix Churchill, in respect of which the equipment sought was “CNC machine tools”. *77 Mr C3 gave evidence to the Inquiry that he was in no doubt at this stage that Matrix Churchill was actively involved in the Iraqi military procurement effort. *78

(xvi) In the summer of 1989 information was received in Whitehall to the effect that an Iraqi- funded consortium had purchased the former Learfan factory in Northern Ireland. The factory had formerly been used for the manufacture of Learfan aircraft and constituted a composite manufacturing facility that included some very large furnaces. The purchaser of the factory was a company called Canira Limited. Canira submitted an application to the Northern Ireland Industrial Development Board (NIIDB) for financial assistance towards the cost of establishing a manufacturing facility at the factory for the production of components for the international aviation industry. Investigations revealed that Canira had two corporate shareholders each of which was an important cog in the Iraqi procurement network, namely, TDG and Space Research Corporation (SRC). SRC was a company established by Dr Gerald Bull (of Supergun fame, although that still lay in the future) which specialised in consultancy services for the defence industry and was under contract to the Iraqi government. A submission dated 4 August 1989 regarding the problem posed by the Canira purchase of the Learfan factory was put up to FCO Ministers by Mr Duncan, FCO/SEND. *79 Paragraph 7 of Mr Duncan’s submission said that “we have reason to believe that Canira’s primary objective is to use the plant to gain expertise in composite manufacture for the Iraqi missile programme. Composites can also be used in the manufacture of ballistic missiles. In particular they are a key component in the manufacture of heat shields for warhead re-entry vehicles and as such are controlled by the Missile Technology Control Regime. We are also concerned that Iraq may wish to obtain composite technology for use in her chemical and biological weapons, as well as her nuclear programmes.” Not surprisingly the Canira request for financial assistance for its proposed Learfan operations was refused. But in paragraph 15 of the submission Mr Duncan commented that “This whole episode reveals the extent to which Iraq is ready to go to develop (and mask) its procurement network in the UK.” Mr Duncan’s speculation about Iraqi intentions was confirmed by intelligence (supplied by Mr Henderson of Matrix Churchill) that Dr Khadum, “an Iraqi procurement official in the UK said that his company, TDG, bought a share in the Learfan factory to obtain access to carbon fibre technology.” *80 In the event the refusal of financial assistance seems to have frustrated Iraqi intentions in regard to the Learfan factory. Operations were never commenced and in September 1989 Dr Habobi decided that TDG should sell its interest in the factory.*81

(xvii) In February 1990 TDG attempted to purchase the Armadale steel foundry near Edinburgh. In the event TDG’s bid for the factory was rejected and the factory was sold to William Cook plc. The matter was discussed at a Cabinet OD meeting on 24 May 1990. A paper prepared for the meeting by the DTI said: “It is believed that [TDG’s] objective is to acquire expertise and technology in the production of specialised iron and steel castings which are used in the nuclear industry, and in the manufacture of a stainless steel composite known as Duplex.” Having referred both to the Learfan acquisition by Canira and the attempted Armadale acquisition by TDG, the paper expressed the Secretary of State for Trade and Industry’s view “that only new primary legislation could provide an absolute assurance that the necessary powers could be exercised to prevent an acquisition which is contrary to the national interest.” *82

(xviii) I have referred in paragraphs (xiii) and (xiv) above to the Matrix Churchill ELAs in respect of which the end use was stated to be “Nassr State Project 1728” and to the WGIP meeting on 23 June 1989 at which it was said that “the end user was known to be the Iraqi missile programme”. *83 In an Intelligence Report issued by Mr C3 on 28 July 1989 *84 and circulated within SIS, information that Project 1728 involved work on the modification of SCUD missiles was recorded. And in two Intelligence Reports each dated 5 September 1989 *85 Project 1728 was identified as a large Iraqi missile project headed by Dr Modher S Sabaa of the Nassr State Establishment. In one of the Reports it was stated that Iraq had negotiated with firms in the United Kingdom as well as in a number of other countries for the supply of “.... specially manufactured components, machinery, production tools, production lines, ....” for the manufacture of missiles. Other contemporaneous intelligence reports on SIS files also identified Project 1728 as a large missile project headed by Dr Mother S Sabaa of Nassr. *86 Copies of the two 5 September 1989 Reports were distributed to, inter alia, FCO/MED, FCO/SEND and a number of DIS desks (but not including the DIS Defence Sales desk). MOD/DESS and DTI did not receive copies.

(xix) A Report issued by Mr C3 on 8 February 1989 and updated on 21 August 1989 contained information about the “Condor” ballistic missile development programme in which Argentina, Egypt and Iraq were said to be co-operating. *87 The Report said that “Iraq is known to be interested in the technology associated with the two BM development programmes, and clearly wishes to develop an indigenous BM production capability” and, after referring to “the Iraqi missile programme designated Project 395”, said that “Iraq already has indigenous propellant production facilities and much of the infrastructure required for missile production.” The Report concluded that “were the [Iraqi Technical Corps for Special Projects] to pour money into Project 395, Iraq’s potential to achieve series production of a BM could be substantially enhanced ...” *88 Distribution of copies of this Report was, for all relevant purposes, the same as that of copies of the two 5 September reports.

(xx) An Intelligence Report dated 12 September 1989 referred to “The Central Tool Room Plant, a NEMI [Nassr Enterprise for Mechanical Industries] project to equip and operate an automated metal milling shop”. *89 Nassr’s Central Tool Room Project had been described in a telegram dated 23 June 1988 on SIS files in this way: “Shells, Cartridges and Mortars are being designed and manufactured in the Central Tool Room (CTR). There are not enough machines in the establishment to make large quantities of these armaments. Perhaps the only exception is the production of missiles where there might be sufficient resources for a production run”. *90 Distribution of copies of the Report was, for all relevant purposes, the same as that of copies of the two 5 September Reports.

(xxi) On 15 June 1989, the Defence Attaché, Baghdad, submitted his annual Report for the period July 1988 to June 1989. *91 The Report (copied to SIS) said: “Concurrent with the retention of the armed forces on a war footing and continued procurement of new equipment from abroad, Iraq has used the respite provided by the ceasefire to accelerate the development of its own defence industries. The priority being given to this task, which appears equal to that accorded to the oil industry and major power projects, is no doubt in part designed for the political purpose of re-enforcing Saddam’s ambitions for Iraq to secure a dominant role in the region. In military terms the Iraqis’ strategic aim is, as far as possible, to achieve self sufficiency” (paragraph 30). The Report said also that: “There is as yet no evidence that post-war restructuring has begun. There appears to be no slackening in delivery of new equipment to the Army and IAF” (paragraph 38) and “The Iraqi defence industry is developing formidable capabilities; Iraqi technological expertise has been underestimated” (paragraph 39). In a letter dated 6 July 1989 Mr Stephen Lamport referred to the “excellent report” and said “It gives us new understanding about Iraq’s military manufacturing capabilities.” *92

(xxii) In an Intelligence Report issued on 7 July 1989 *93 the importance of Iraq’s defence industry was again highlighted. The Report said that Iraq had had particular success in the following fields:

“(A) Petrochemical production for defence purposes was expanding and would achieve planned output in 1990;
(B) A five year project to develop the capacity to produce nuclear fuel had been successful and scientists had now mastered the technique of ‘uranium isolation’;
(C) Iraq was now self sufficient in the production of high explosive material;
(D) Iraq produced its own air to ground heavy bombs, although accuracy needed to be improved;
(E) Iraq had developed a large 900 kg, ground to ground bomb with a range of 200 km;
(F) Iraq and Egypt were jointly developing a long range ground to ground missile.”

Copies of the Report were distributed to DTI, FCO/PUSD, FCO/MED, FCO/SEND and various DIS desks (but not DIS’s Defence Sales Desk).

(xxiii) In an Intelligence Report dated 13 October 1989 *94 it was reported that the Chilean arms firm, Industrias Cardoen ltda, was preparing to turn part of a large munitions factory (the Nahrawan Plant) and associated workers camp it had been constructing in Iraq over to the Iraqi Government. The factory had been built by Cardoen under contract with the Al- Fao General Establishment. The contract called for the delivery of at least eleven machining centres between May and November 1989, although actual deliveries were predicted to be seven machines in September 1989, one in October 1989 and three in August 1990. A “UK firm” was to supply another 24 machining centres for various types of fuses. In addition, at least 18 CNC lathes were scheduled for delivery to the site between May 1989 and March 1990. The Report received a wide circulation. Copies were distributed to, among others, FCO/PUSD, FCO/MED, the MOD distribution point for intelligence reports relating to Defence Sales *95, MOD/DI(DS) (where it came to Mr J’s attention), a number of other DIS desks, DTI and Customs. No step was taken by any of the recipients of copies of the Report to identify the “UK firm” referred to in the Report until a request for identification was made by the DTI (Mr Steadman) at the REU meeting on 24 November 1989. *96 At the next REU meeting, held on 8 December 1989, Matrix Churchill was named as the “UK firm”. *97

(xxiv) On 16 August 1989, Mr O prepared and despatched to SIS stations worldwide a background brief on the Iraqi procurement network. *98 The brief had been prepared by Mr O after consultation with Mr C3, Mr C2 and FCO/MED. The brief said that “.... we knew that [the Iraqis] have been briefed on how to acquire licensable equipment from Western countries. They have learnt... that most chemicals and goods used in weapons production have overt commercial use as well. Thus by setting up bona fide industries and companies they acquire the materials they need”. The brief referred to Matrix Churchill as a company that “produces lathes which have a dual military/industrial end use” and commented that “because of European competition” export restrictions were not necessarily enforced.

(xxv) A Report dated 6 October 1989 *99 prepared by Mr C3 updated customer Departments on the activities of the Iraqi procurement network over the period January to August 1989. The Report said that the network had “continued to attempt to procure components for uranium enrichment gas centrifuges, missile technology and chemical and biological agents.” In paragraph 3 the Report referred to TEG, TMG, TDG, Canira and Matrix Churchill and to Dr Habobi and Dr Khadum “TDG’s senior directors, both are government officials who work under instruction from Hussein Kamel Al Majid’s Ministry of Industry and Military Industrialisation.” Copies of the Report were distributed to, among others, DTI, Customs & Excise, FCO/MED, FCO/SEND, MOD/DESS (specifically Mr McDonald) and a number of DIS desks (but not including the Defence Sales desk).

(xxvi) In a submission to Mr Waldegrave dated 6 October 1989, Mr Young referred to “Iraq’s military ambitions and the activities of its procurement network” and said “In its attempts to develop its military, CW/BW and nuclear capabilities, Iraq is pouring money into military procurement...” *100 He said that “...we must, with our partners, continue to do all we can to frustrate Iraq’s efforts to become a military nuclear power and to enhance her ballistic missile capability.” *101

(xxvii) In October and November 1989 intelligence about the Iraqi project to develop a very long range gun, Project Babylon, began to accumulate and led to two Reports prepared by Mr Q issued on 30 November 1989 and on 5 December 1989. The gun later became popularly known as the Supergun. The Supergun story is dealt with separately later in the Report. *102

(xxviii) A Report issued on 29 December 1989 by SIS’s Middle East Section referred to the development in Iraq of a programme to manufacture 155mm and 210mm self-propelled howitzers and said (inter alia) that “The British company Matrix Churchill had supplied many of the machine tools for the manufacturing plant”. The source of the information (neither Mr Henderson nor Mr Gutteridge) was described in the Report as one who reported regularly and reliably.. The Report was distributed to, among others, DTI, FCO/MED and a number of DIS desks but not to the DIS Defence Sales desk nor to Customs.

(xxix) During 1988 and 1989 Customs became aware of a plan by a British company, Euromac Ltd, to export certain electrical components from the United States via the United Kingdom to Iraq. The United Kingdom intelligence agencies regarded Euromac as a part of the Iraqi procurement network in the United Kingdom. UK experts formed the view that the electrical components were capable of use in the trigger circuits of nuclear weapons and would also be suitable for certain applications in ballistic missiles. *103 The proposed export to Iraq was frustrated by action taken by Customs. The arrest and prosecution of certain individuals followed. Convictions were obtained but were overturned on appeal. The prosecution is more fully dealt with later in the Report. *104

(xxx) In his Report dated 12 February 1990 on the “military situation in Iraq over the period July 1989 to January 1990” the Defence Attaché, Baghdad, referred to the Iraqi defence procurement programme and advised that “their priorities are likely to be the establishment of a missile capability ... and enhancement of their air defences and associated surveillance and C3 systems” and that “Sadoun Hammadi has stated that an expansion of defence production capabilities remains a major economic objective” (paragraph 23). *105 In a letter dated 26 March 1990 to Mr Stephen Lamport commenting on the Defence Attaché’s Report, Mr Kealy, Consul-General, Baghdad, commented on the importance with which Iraq regarded its “growing military industrialisation” and said that “there is no sign of a let-up in their military industrialisation programme, let alone of the international procurement schemes designed to support it.” *106

(xxxi) The JIC Weekly Survey of Intelligence for 6-12 July 1990 included a section entitled “Iraq: Procurement Efforts in Support of Strategic Weapons Programmes” which outlined the ways in which Iraq had been acquiring industrial capacity, components and technology for its various strategic weapons systems. *107 The section referred to the part played by Dr Habobi and TDG, by Gerald Bull’s SRC of Geneva and Brussels and by Cardoen of Chile. It said that Matrix Churchill had become “a major supplier to Iraq, probably for military purposes” and was “making parts for Iraqi project K1000, a possible weapons system.”

D5.26 In addition, information about Iraqi procurement was obtained from Mr Gutteridge and, later, Mr Henderson. In a Source Report dated 31 January 1989, based on information given by Mr Gutteridge and sent to SIS, Mr P reported that “the Iraqis continue to use Matrix-Churchill (MC) of Coventry to support deals being made with Chile. Within the MC factory, the machine tools being produced are now formally named as ‘the Chilean Project’.” *108 In a note made by Mr P on 28 February 1989, also sent to SIS, the Chilean Project was described as “a priority Iraqi activity setting up the manufacture of 210mm missiles with the help of SRC (Swiss) and a Belgian company” *109

D5.27 In April 1989 Mr Henderson had agreed to supply SIS with information on Iraqi procurement. His case officer was Mr T (Mr “Balson”) of SIS. *110 In June 1989 Mr Henderson provided Mr T with a copy of “the Iraq Fuse Plan contract.” This was the contract, worth some £24 million, between SRC of Belgium and the Iraqis under which SRC were to design and build a plant in Iraq with the capacity to manufacture 50,000 155mm artillery fuses a month. *111 Mr T made clear in the evidence he gave at the Matrix Churchill trial, however, that the nature of the information he was hoping to obtain via Mr Henderson did not include conventional artillery fuses. He said:

“...our obsession almost was with three things. It is our job to collect strategic intelligence which is vital to threats to Britain. The three things we were most worried about concerning Iraq were nuclear capability, long range missile capability, biological and chemical. These and trying to find out about efforts to obtain such technology had nothing to do in our understanding, with Matrix Churchill, but involved these companies in London. If Mr Henderson came along with something about conventional arms I would pass it on to the experts.... But our obsession was with these three areas, rather than conventional fuses.... So things about conventional weapons I would pass on to the experts but they are not what we were pursuing.... You have to concentrate on the strategically important things.” *112

D5.28 On 22 September 1989 a meeting in London between Mr Henderson, Mr T and three other SIS officers, two of whom, Mr O and Mr C2, were specialists on Iraq (Mr C2 on the technical side, Mr O on targeting possibilities), was arranged by Mr T. The particular purpose of the meeting, so far as Mr O and Mr C2 were concerned, was to enable Mr C2 to question Mr Henderson directly about his knowledge of Iraqi military related projects, to enable Mr O to question him about other potential sources of information and also for them to brief him on the type of information that would interest them. Accounts of the information given by Mr Henderson on that occasion differ in some respects. Mr Henderson has given evidence to the Inquiry that he identified various military factory sites by reference to a large scale map of Baghdad *113 and its surrounding area which was provided at the meeting; that he gave detailed information about Nassr, the Central Tool Room Project and Project 144 and mentioned that Matrix Churchill’s ABA machine tools (of which more later) were to be located in Shed ‘C’; that he handed over drawings of projectiles to be manufactured in the ABA project; that he gave information about the Cardoen fuse contract, *114 and other general information about the activities of Cardoen in Iraq; that he gave information about “1728” *115 and its involvement with missiles; that he gave information about Hutteen and its involvement in missile production as well as in the production of conventional weapons; and that he answered questions about Iraq’s Babylon project which he thought was the “Lion of Babylon” project. *116 The items mentioned above do not provide a comprehensive list of the topics on which, according to Mr Henderson, he supplied information on 22 September. *117 Mr Henderson has told the Inquiry also, however, that the information he supplied on 22 September 1989 was mainly a repetition of information he had previously given to Mr T and that he does not believe that he had told the meeting about anything new. *118 Mr O, in his oral evidence to the Inquiry, agreed that Mr Henderson gave information about various Iraqi projects of which SIS had knowledge and that these included Project 1728 and Project 144. Mr O did not recall any mention made either of Cardoen although he accepted the possibility that the name had been mentioned, or of ABA and firmly denied that Mr Henderson had handed over any drawings or other documents. He denied that any questions had been asked, or any information given, about the Babylon project.

D5.29 Mr C2 agreed that the information given by Mr Henderson at the meeting was not new. He agreed that Project 1728 had been talked about. He was emphatic that no mention had been made of Babylon, which, he said, he had not known about until 18 October 1989, and was firm, also, that no mention of ABA had been made at the meeting. He agreed that Project 144, an artillery shell project, had been discussed but was sure that no drawings had been handed over at the meeting. As to Cardoen, Mr C2 said that no detailed information had been given and that the Cardoen fuse contract had been discussed only in the context of the artillery shell project. *119

D5.30 Mr Henderson, in oral evidence on 7 July 1994, said that he “definitely talked about Project 144, of which ABA was a part”. *120

D5.31 At the end of the day the dispute as to what information was given to Mr O and Mr C2 during the 22 September 1989 meeting was less substantial than at one time seemed likely. I have concluded, contrary to Mr Henderson’s recollection, that no mention was made at that meeting of Babylon *121 and that the ABA drawings that Mr Henderson certainly did supply to SIS were handed over at a later meeting with Mr T on 27 October 1989, and not at the 22 September meeting. *122 I have concluded, also, that Mr Henderson’s remarks about the Cardoen contract did not include making it clear that it was a contract which Matrix Churchill was itself fulfilling. *123 Thereapart, I am satisfied that Mr Henderson’s account of what he told Mr O and Mr C2 was, broadly, correct.

D5.32 Mr Henderson gave evidence of an impression that Mr O’s and Mr C2’s interest lay in information relating to Iraqi development of nuclear weapons and other weapons of mass destruction and that they had little interest in information about Iraqi production of run-of-the- mill conventional weapons. Both Mr O and Mr C2 accepted that their interest at this meeting was mainly concentrated on Iraqi procurement that related to weapons of mass destruction and agreed that Mr Henderson might have received the impression that that was so. *124 Mr Henderson, Mr O and Mr C2 all agreed that Mr Henderson did not at the meeting tell them about anything new. In the circumstances, therefore, it is not surprising that details given by Mr Henderson of conventional weapon or conventional munitions production were not recollected by Mr O or Mr C2.

D5.33 It is a matter of regret that no record was made of the information on Iraq supplied by Mr Henderson. The failure was not consistent with proper SIS practice. Mr T, as Mr Henderson’s case officer, ought to have prepared a Contact Note recording the meeting. Each of Mr Henderson’s other meetings with Mr T were so recorded. Mr T was distracted, however, by his imminent departure (the next day) on his honeymoon. Mr C2 said in evidence that “[Mr T] mentioned that he was set up to go off to North America and that he therefore had problems completing all the paperwork, and so we decided that we would divide up the production of the paperwork from the meeting on functional lines .... so I .... would write up anything that was [Report] worthy. Mr O .... would write up any information on [potential sources] that he thought should be recorded .... and we left it that Mr T on his return from holiday, would do whatever else needed to be done.” *125 In the event Mr C2 produced a Report dated 28 September 1989 *126 reporting Canira’s decision to sell the Learfan factory (information which, obtained by Mr Henderson from Dr Habobi, had been supplied by Mr Henderson at the 22 September meeting) but, thereapart, no record of the Iraqi related information provided by Mr Henderson at the meeting was made. Indeed, no record was made to show that a meeting with Mr Henderson, at which information relating to Iraqi military projects was supplied, had ever taken place. *127 The Contact Note that Mr T should have prepared on his return from holiday would have constituted the requisite record.

D5.34 The meeting on 22 September 1989 between Mr Henderson and Mr O and Mr C2 is important for the purposes of this Inquiry for two reasons. First, it was a specially arranged occasion on which information was given by Mr Henderson to SIS officers, in addition to his Case Officer, of Iraqi conventional weapon production and, in that context, of the Cardoen fuse project and of Project 144. Secondly, the occasion serves to underline the contrast between the increasing concern by SIS to obtain information about Iraqi nuclear weapon development and their relative lack of concern about Iraqi conventional weapon production. Mr Henderson gave no relevant information about the former. His information about the latter added little to what was already known and was of so little interest to his audience that no written record was thought necessary to be made. It is, of course, the case that SIS’s priorities were to a large extent determined by the JIC requirements.

D5.35 Mr O and Mr C2 have disputed that SIS were lacking in concern about Iraqi conventional arms production and have referred me to fifteen Intelligence Reports which they regard as evidencing that concern. One of these Reports is referred to at paragraph E10.30 infra. Two are among the Reports listed at paragraph D5.25 supra (sub-paragraphs (xxiii) and (xxix)). One is the 30 November 1989 Report referred to in paragraph F3.80 infra. The others have only a peripheral relevance to Iraqi arms production. Taken as a whole these Reports do not, in my opinion, displace the impression of a relative lack of concern about Iraqi conventional arms production that is produced by the contemporary documents and evidence before the Inquiry.

D5.36 On 27 October 1989, at a meeting with Mr T, Mr Henderson handed Mr T a bundle of blueprints and told Mr T that Nassr had asked Matrix Churchill to provide machine tools to produce some of the components shown in the drawings. The drawings were marked ‘ABA’. In a note dated 30 October 1989 on intelligence agency files, Mr T referred to the “projectile shown in some of the subsidiary drawings” and surmised that it might have a range of 1200 Km and be connected with “Space Research Corporation’s involvement with long range artillery.” *128 The connection between the drawings and Matrix Churchill’s ELA 53234 which was expressed to relate to “ABA Project” *129 was, unfortunately, not made.

D5.37 On 5 March 1990 Mr T produced a Report, copies of which were distributed to intelligence agency desks, referring to information obtained in early March 1990 from Mr Henderson who was described as “A British businessman, whom we assess as reliable, who has extensive dealings with military-related State Establishments in Iraq.” The report referred to information given by Mr Henderson on “sensitive Iraqi military projects that he was familiar with.” *130 These included:

(a) Project 1010, an artillery fuse project “in which Brussels-based Space Research Corporation (SRC) is playing a role”;

(b) Project ABA: “The businessman believes this to involve the production of long range artillery rockets...”

(c) Project 144: “This seems to involve artillery rockets”;

(d) Project 117: “The Lion of Babylon Project. This seems to involve tracked vehicles”

Other information given by Mr Henderson was also mentioned. Here, again, the connection between “Project ABA” and Matrix Churchill’s ELA 53234 was not made.

D5.38 Throughout 1987 and 1988, Mr Gutteridge, via his case officer, Mr P, was a source of information about Iraqi military procurement. A number of Reports based on information he had supplied were circulated to Whitehall customers. Reference has already been made to the more important of these Reports. In August 1988, however, Mr Gutteridge left his employment with Matrix Churchill. His business visits to Iraq ceased, his access to information about Iraqi military procurement tailed off and, by the Spring of 1989, had come to an end. He had given Mr P several months notice of his impending departure from Matrix Churchill and had suggested to Mr P that his Matrix Churchill colleague, Mr Henderson, might be a suitable replacement.

D5.39 Mr C3 gave evidence to the Inquiry that by December 1988 “Access to the proliferation activities of the network did not rely heavily upon Gutteridge. His value would likely have been limited to his previously acquired knowledge of the network possibly useful for establishing other sources”. *131 It is surprising, therefore, to find that, at an REU meeting on 23 December 1988, the following discussion took place, recorded in a telegram dated 6 January 1989 from Mr C3 to Mr P:

“DESS *132 reported that at a meeting [on 21 December] which was chaired by Lord Trefgarne a decision on whether to relax export controls on machine tools for Iraq had been deferred pending our advice on how this would effect (sic) [Mr Gutteridge] and the future of Matrix Churchill. We [Mr C3] told the REU that the security of our source was now best guaranteed if reasonable exports of machine tools by Matrix Churchill were allowed to continue. We also drew attention to the recent expansion of activities of the procurement network into the nuclear proliferation field and the importance this placed on maintaining access through [Mr Gutteridge] to the general activities of the network.” *133

Mr C3 agreed in oral evidence to the Inquiry that there was a difference between his stated belief that access to the proliferation network was not heavily dependent on Mr Gutteridge and the statement to the REU meeting. that it was important to maintain access to the network through Mr Gutteridge. *134 He explained the difference partly by saying that he had not been kept up to date on Mr Gutteridge’s departure from Matrix Churchill and partly by attributing his remarks at the REU to his attempt to comply with a request made by Mr P that Mr Gutteridge’s position be protected. *135

D5.40 Over the period March 1988 to December 1989 regular meetings took place of a group of intelligence officers for the purpose of discussing, among other topics, the steps that might be taken to obtain information about the Iraqi procurement network in the United Kingdom. These discussions received added focus from the decision to permit Dr Habobi to enter the United Kingdom. *136 Mr O and Mr T, throughout the period mentioned, attended these meetings.

D5.41 The Minutes of the meeting held on 8 June 1988 record a discussion about the employees of TEG and about Dr Habobi. It seems from the minute that, at this point, the expectation was that Dr Habobi’s multi-entry visa and work permit applications would be refused. By the time of the meeting on 20 July 1988, however, this expectation seems to have been reversed. The Minutes record that Mr P (who was not present at the meeting) was to be asked about agents who might have access to Meed International or to TEG. The Minute continues: “Ricks and Henderson are possibilities.” The Minutes of the meeting on 28 September 1988 refer to “[Mr Henderson]: possible deployment against Safa Habobi et al”. And in a note dated 27 September 1988 made by Mr P, Mr Henderson was judged “suitable to be approached for information about Habobi”. *137

D5.42 These Minutes are important in the light they cast on the role envisaged for Mr Henderson. He was to be used particularly as an agent with access to, and who could therefore supply information about, the activities of Dr Habobi and the network. This was a role for which Mr Henderson was far better suited than Mr Gutteridge had been. Mr Gutteridge was a senior employee of Matrix Churchill but was not a director and had no obvious occasion to be in contact with Dr Habobi. Mr Henderson, on the other hand, was the managing director of Matrix Churchill. It was naturally to be expected that he would be in regular contact with Dr Habobi on a variety of procurement matters.

D5.43 The Minutes of the meeting held on 7 December 1988, too, are important. They record Mr O informing the meeting that “Safa Habobi and Anees Wadi were into nuclear procurement.” The best method of approach to Mr Henderson was then discussed. The proposed approach to Mr Henderson seems then to have been placed on the back burner for a while but was revived at the meeting held on 14 March 1989. The Minutes record that intelligence had been received regarding “Iraqi attempts to acquire nuclear and ballistic missile and CW Technology”, that “recent information from other sources was also providing insights into the methods used by the Iraqis to acquire equipment and know-how for use in these fields” and that the best means of approaching Mr Henderson was to be the subject of discussion with Mr P. The Minutes went on to record that “Indications are that although involved in exporting some equipment... to Iraq, [Mr Henderson] has no knowledge of the nuclear dimension to [Matrix Churchill’s] activities.”

D5.44 The time when the first meeting between Mr T and Mr Henderson took place is in dispute. Mr Henderson’s evidence to the Inquiry places the meeting in September or October 1988 at the Inn on the Park in London. *138 Mr T’s evidence is that the first meeting took place on 24 April 1989 at Matrix Churchill’s premises in Coventry. *139 Mr Henderson’s evidence on this point, both in his written statement and at an oral hearing, was detailed and circumstantial. *140 But a number of documents supplied to the Inquiry by the Intelligence Agencies, written at a time when there could have been no conceivable reason for dissimulation, are inconsistent with a state of affairs in which in late 1988 Mr Henderson had already had his first meeting with Mr T and was already supplying Mr T with information about Iraqi procurement. *141 Moreover, Mr T has produced to the Inquiry his Passport, the entries in which show that he was absent from England from early September 1988 until the end of the year. Mr Henderson has made the valid point that his meeting with Mr T on 24 August 1989 was a lengthy, working meeting, uncharacteristic of a first meeting between a case officer and a new agent. Nonetheless, in view of the apparent impossibility of Mr T having been in a position to have had any meeting at all with Mr Henderson at the time when Mr Henderson recalls that their Inn on the Park meeting took place, I conclude that Mr Henderson is mistaken in his recollection of the date and place of his first meeting with Mr T and that Mr T’s recollection on this issue is to be preferred.

D5.45 Mr T made a witness statement for use in the trial of Mr Henderson and his co- directors. In paragraph 3 of the witness statement, Mr T recalled that at his first meeting with Mr Henderson he told Mr Henderson “that [he] was interested in any knowledge of Iraqi procurement of nuclear, biological and chemical and missile technology which [Mr Henderson] might obtain through his business dealings with the Iraqis, particularly his connection with... TDG.” *142 In his formal record of the meeting on 24 April, Mr T said that he had “explained his specific interest in Iraqi nuclear chemical, biological and missile procurement ....” *143 In giving this description of the information wanted by the Intelligence Agencies, Mr T was pursuing the current intelligence requirements set by the Joint Intelligence Committee (JIC). *144 The description is entirely consistent with the impression later given by Mr O and Mr C2 at the 22 September meeting with Mr Henderson. *145 In summary, by the end of April 1989 Mr Henderson was in place as an agent from whom information about Iraqi procurement in regard to weapons of mass destruction and about the activities of Dr Habobi and the procurement network in that regard was hoped to be obtained.

PARAGRAPHS D5.46 TO D5.52 CLOSED*146

D5.53 It is important, also, to note that the FCO draft submission referred to information given by Mr Henderson that “Habobi is upset by the present anti-Iraq press campaign and with delays over the granting of export licences and is considering moving his operational base to France”. Any such move would, obviously, have frustrated the intelligence gathering system already in place, so far as Mr Henderson was concerned, *147 but would have had the positive consequence of disrupting the Iraqi procurement network. There would still have remained the possibility of gathering intelligence overseas.

PARAGRAPHS D5.54 TO D5.56 CLOSED

D5.57 At the end of March 1990 the execution of Mr Bazoft had produced a rift in diplomatic relations between Iraq and the United Kingdom and had occasioned a volume of media criticism of Iraq. On 20 March 1990 intelligence was obtained that Dr Habobi had discussed with a close business associate detailed plans for moving his operations to Paris. The note of this intelligence records that “he felt that present political constraints made it too difficult to operate efficiently from the UK.” *148 In a note dated 9 April 1990 from Mr T to Mr V, the view was expressed that Dr Habobi was contemplating moving his operations to Paris, that if Dr Habobi did move to Paris “we would find it more difficult to monitor his activities” and that “we may learn more about the network by letting [Dr Habobi] remain to carry on his activities in the UK.” *149 Mr V agreed with this view. In the event, by May 1990 Dr Habobi had based himself in Baghdad, rather than in London.

D5.58 In the meantime, Mr Henderson had continued to supply information, via Mr T, to SIS. On 27 October 1989 he had supplied Mr T with blueprints for the ABA long-range projectile. Mr T’s note dated 30 October 1989 said that “the Iraqis, probably NASSR Establishment, have asked his company to ‘machine’ (provide the machine tools) to make the circular part detailed in most of the drawings. [Mr Henderson] says that the part is for the projectile shown in some of the subsidiary drawings ...”. *150

D5.59 In March 1990 Mr Henderson provided intelligence, collected in a Report dated 5 March 1990, regarding “sensitive Iraqi military projects that he was familiar with”. The projects referred to were described. They included the ABA project. *151

D5.60 In April 1990 information was obtained by SIS about a Project K1000 at NASSR. The information suggested that the project involved the machining of “very, very sensitive components which are missile parts”. *152 Mr T believed that Matrix Churchill had some involvement in Project K1000 and questioned Mr Henderson about it. A number of drawings relating to the components that Matrix Churchill had manufactured were supplied by Mr Henderson to Mr T but Mr T believed that the drawings supplied were incomplete. It transpired that Matrix Churchill had produced components for Project K1000 but, according to an article in the Observer of 27 December 1992, Mr Henderson believed the components were to be for sophisticated pumps. *153 The suggestion that Project K1000 was connected with “sophisticated pumps” was disbelieved by SIS.

D5.61 A Report dated 6 July 1990 prepared by Mr C3 said, among other things, that “evidence has also emerged that MC is now manufacturing parts for Iraqi Project K1000. The purpose and location of this project are as yet unknown but it is possibly a weapons system ....” *154 The Weekly Survey of Intelligence for 6 to 12 July 1990 contained a section entitled “Iraq: Procurement efforts in support of strategic weapons programmes” and paragraph 22, after referring to Matrix Churchill, said that “the firm is also making parts for Iraqi Project K1000, a possible weapons system”. *155 Later investigations, made after the invasion of Kuwait, produced more information about Project K1000. In his written statement to the Inquiry Mr T said this: “Evidence from UN inspections of Iraqi facilities should also prove that MC did produce components for K1000 .... At first [SIS] experts could not make sense of the set of K1000 drawings. They took copies, sent the originals back to me and I handed them back to Henderson at my next and final meeting on 31 July 1990. It was only further specialist analysis, less than a month before the second Gulf War, that proved that under the K1000 Project, MC had helped engineer parts for Iraq’s nuclear centrifuge plant.” *156

PARAGRAPH D5.62 CLOSED

D5.63 It is evident that, from at least the time in 1988 when Dr Habobi was given permission to live and work in the United Kingdom down to the August 1990 invasion of Kuwait, very great importance was placed by SIS on the need to obtain access to the Iraqi procurement network. To SIS “procurement” meant procurement of equipment and technology relevant to the development or production of weapons of mass destruction. Procurement of conventional weapons or munitions or of the means to manufacture them, however important that might be to those charged with the enforcement of the Guidelines, was never a matter of importance to SIS. SIS was charged with the collection of intelligence regarding weapons of mass destruction. Iraqi procurement or production of conventional weapons or munitions was of limited interest. It is evident, also, that the sources of information that SIS had established, or hoped to establish, which included Mr Henderson, would be of little value if Dr Habobi were to remove himself and the procurement network abroad. And Mr Henderson, in particular, would be of little value as a continuing source of information if Matrix Churchill were to cease to be the recipient of Iraqi orders or, worse, were to go out of business. These are matters to be kept in mind when considering the manner in which Matrix Churchill ELAs were dealt with.

Endnotes
*54 - MI5/67.106B

*55 - SIS/11.1.43

*56 - MOD/24.1.72a

*57 - SIS/11.1.75

*58 - SIS/11.1.80A

*59 - SIS/11.1.115

*60 - The individual named in the telegram was identified in Mr C3’s written statement dated 11 August 1994, paragraph C.8.2; see also paragraph D6.81 infra

*61 - SIS/12.1.1.172

*62 - Written statement dated 11 August 1994, paragraph C.8.2; see also paragraph D6.81 infra

*63 - MOD/24.1.69

*64 - SIS/12.1.2.201

*65 - IR/12.Item 104

*66 - FCO/23.4.554; see also Mr Redwood’s answer to Ms Mowlam’s PQ in November 1989; paragraph D4.36 supra

*67 - IR/16. Vol. 7. Item 24

*68 - SIS/11.1.117

*69 - SIS/11.1.121

*70 - DTI/45.1.235b

*71 - DTI/45.1.236

*72 - DTI/45.1.239

*73 - SIS/12.2.2.636

*74 - DTI/100.2.6894 at 6905

*75 - FCO/27.1 at paragraph 7

*76 - see paragraphs D6.107 to D6.111 infra

*77 - SIS/11.1.126

*78 - see Mr C3’s written statement submitted on 11 August 1994, paragraph D.2.5

*79 - CO/9 see the attachments to the letter of 4 August 1989 from Mr Goulden (FCO) to Mr Appleyard (Cabinet Office)

*80 - Mr C3’s note dated 1 September 1989: SIS/14.4.16

*81 - SIS/14.4.28

*82 - CO/9 :ODO/SE (90)5

*83 - FCO/27.1 at paragraph 7

*84 - SIS/11.1..153A ; The connection between ‘Project 1728 and the Iraqis’ SCUD modification programme was made also in an intelligence Report circulated to Whitehall customers in March 1990 ( IR/8 Item 50)

*85 - SIS/12.4.1.1248 & SIS/12.4.1.1238

*86 - For example, the Report dated 27 September 1989: SIS/12.4.1.1326

*87 - ‘Condor’ is referred to in The Death Lobby by Kenneth Timmerman, pp 150 to 156

*88 - SIS/11.1.85.;see also SIS/11.1.157

*89 - IR/8 Item 44 and see also SIS/12.4.1.1267

*90 - SIS/12.1.1.108; A DIS memorandum of November 1990 described the CTR Project as ‘initiated to equip and operate a modern automated machining shop so that the defence industry’s needs for dies could be met indigenously; however the range of machines acquired suggests that a far wider range of machine functions is available’ (MOD/78.71 at 78)

*91 - FCO/510.170 at 190 and 193

*92 - FCO/510.198a; See also Mr Rob Young’s comment on the report in a letter to the Ambassador dated 27 September 1989 (FCO/510.199)

*93 - SIS/11.1.145

*94 - IR/8.Item 37

*95 - see the written statement of Sir John Kerr (CDI) dated 16 December 1993 ,paragraph 36; The Report should have been, but apparently was not, circulated to DESS. Both Mr McDonald (paragraph Y.2.3.2 of his written statement dated 6 July 1994) and Mr Barrett (paragraph 25 of his written statement dated 11 March 1994) said that they had not seen the Report

*96 - DTI/45.1.147 at 149

*97 - DTI/113.8712

*98 - SIS/12.3.2.1182

*99 - SIS/11.1.190

*100 - FCO/49.3.271A at 271D

*101 - FCO/49.3.271A at 271G

*102 - see Section F and Chapter J1 infra

*103 - SIS/11.2.252

*104 - see Chapter J4 infra

*105 - FCO/510.215

*106 - FCO/510.224

*107 - CO/147.2.966 at 967

*108 - SIS/9.2.222

*109 - SIS/9.2.223

*110 - The time at which Mr Henderson commenced his role as an SIS informant on Iraqi matters is in dispute: see paragraph D5.44 infra

*111 - MI5/14.11.(130); see also SIS/10.1.33 and Mr T’s evidence given on 3 November 1992 at the Matrix Churchill trial (Transcript pp.30 & 31). This SRC contract was sub-contracted to Allivane and, after the collapse of Allivane, to Ordtec (see paragraph E10.4 infra)

*112 - Transcript for 3 November 1992, pp.31 to 32

*113 - Mr Henderson referred to a photograph. See his written evidence to the Inquiry dated 5 July 1994, paragraph 3.2(i)

*114 - see paragraph D5.25(xxiii) supra

*115 - Mr Henderson spoke of ‘Factory 1728’ rather than ‘Project 1728’.

*116 - This is not the project which afterwards became known as the Supergun

*117 - see generally Mr Henderson’s written statement dated 20 October 1993

*118 - see Mr Henderson’s supplementary written statement dated 5 July 1994

*119 - Closed Session transcript of Mr C2’s oral evidence, 30 September 1994, pp 48 to 59

*120 - Closed Session transcript,7 July 1994, p 31

*121 - Government knowledge of ‘Babylon’ is dealt with in detail in Section F infra

*122 - MI5/14.11.(155)

*123 - In his oral evidence Mr Henderson said: “I do not believe we discussed the ELAs at that meeting”. (Closed Session transcript, 7 July 1994, p.46)

*124 - In giving evidence at the Matrix Churchill trial on 3 November 1992, Mr T said that when he first met Mr Henderson on 24 April 1989, he explained his ‘specific interest in Iraqi nuclear, chemical, biological and missile procurement.’ (Court transcript for 3 November 1992, p.7).

*125 Closed Session transcript of Mr C2’s oral evidence, 30 September 1994, p.61

*126 - SIS/12.4.1.1344

*127 - Mr C4 and Mr T2, line managers of Mr O, Mr C2 and Mr T, agreed in their respective written statements to the Inquiry that (per Mr T2) “their failure to produce either a contact Note or a record of the meeting cannot be condoned” and (per Mr C4) “a contact note should have been written by the case officer” and “the writing of contact notes is a discipline that all officers should carry out.” In mitigation of Mr O’s failure to make any note, he was not the case officer and it should be noted that on 14 September he commenced a three week absence from duties on sick leave. He had severe back problems. He came to the 22 September meeting during his sick leave because he thought it might be important but had to spend some of the meeting lying on his back on the floor. On his return to his office, two weeks after the meeting, he was faced with a formidable backlog of work and overlooked the need to prepare a note of the 22 September meeting.

*128 - SIS/14.4.31

*129 - see paragraph D6.73 infra

*130 - MI5/14.11.(162)

*131 - Mr C3’s written statement dated 11 August 1994, paragraph C.9.4

*132 - DESS must have been Mr Barrett: see the list of attendees at the meeting (DTI/45.1.65)

*133 - SIS/12.1.1.178

*134 - Closed Session transcript of Mr C3’s oral evidence, 28 September 1994, pp 95/96 135 Ibid. pp 98/99 and 106/107

*136 - see generally the minutes of the meetings in MI5/67.92A, MI5/67.94Z, MI5/67.95C and MI5/67.101A

*137 - MI5/14.11.(98)

*138 - Closed Session transcript of Mr Henderson’s oral evidence, 7 July 1994, p. 92

*139 - Mr T’s written statement (undated) in response to the Inquiry’s request of 10 August 1993

*140 - see Mr Henderson’s written statement dated 20 October 1993: oral evidence, Closed Session, 7 July 1994, pp. 1-4

*141 - see e.g. Mr T’s note dated 24 April 1989: “[Mr Henderson] did not seem to mind being picked up again after so many years ...” (MI5/14.11.(113)) and Mr T’s telegram of the same date (MI5/14.11.(112)

*142 - see Mr T’s witness statement for use in the trial of Mr Henderson et al dated 8 July 1991

*143 - MI5/14.11.(112)

*144 - see paragraph D5.51 infra

*145 - see paragraph D5.32 supra

*146 see paragraph B3.9 supra

*147 - see the evidence of Mr K referred to at paragraph D6.110 infra

*148 - SIS/14.2.227

*149 - SIS/14.2.228

*150 - SIS/14.4.31; see paragraph D5.36 supra. The machine tools referred to were those comprised in the ABA contract and in respect of which Mr Henderson and his co-directors were later prosecuted

*151 - SIS/14.4.49; see paragraph D5.37 supra

*152 - see the attachment to Mr T’s undated written statement to the Inquiry

*153 - Mr T’s written statement, p. 8

*154 - SIS/11.2.373

*155 - CO/147.2.966

*156 - Mr T’s written statement, p. 8

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