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 6 Specific Export Licence Applications After the Cease-Fire

Excerpt:
(X) CONSARC ENGINEERING LIMITED: VACUUM FURNACES

(X) CONSARC ENGINEERING LIMITED: VACUUM FURNACES

D6.312 On 22 December 1988 Consarc Engineering Limited (Consarc) submitted an informal rating application to the DTI in respect of 9 vacuum furnaces which it proposed to export to the Ministry of Industry and Minerals in Iraq. *588 On the basis of the specifications given, the DTI were unable to assess the licensability of 4 of the furnaces, the other 5 being rated NE/NLR (Not Embargoed/No Licence Required). On 10 March 1989 Consarc submitted an ELA (3G/02484/89) in respect of three of the furnaces which had been included in the rating application, two of which had been rated NE/NLR. Consarc informed the DTI that a further three furnaces were going to be supplied by their parent company in the United States, Consarc Corporation.*589

D6.313 On 14 March 1989, the ELA was circulated to MOD (DESS) and FCO (MED and SEND) for consideration. On 22 March, DI (Defence Sales) objected to the export of one of the furnaces, on technology transfer grounds, because it had a Directional Solidification (DS) facility. *590 On 18 April Mr Martin Lamport (SEND) wrote to Mr Steadman, with a copy to MED, to register SEND’s objection to the export of all three of the furnaces because of their “potential applications in the development of nuclear weapons”. *591 On 25 April, Mr Steadman informed Consarc that 2 of the furnaces covered by the ELA were not licensable and, on 27 April 1989, told Mr M Lamport of this assessment. *592 In a minute dated 16 October 1990 to Charles Allen (DTI Solicitor’s Office), in the context of a compensation claim made by Consarc arising out of the post Kuwait invasion embargo on exports to Iraq, Mr Steadman said:

“At that time we followed our normal practice of rating the goods and advising the company of non licensability. This could have been on the basis of technical specifications only but Consarc had submitted an application for 3 furnaces, 2 of which were found on rating to be non licensable. The application was circulated to OGD’s [Other Government Departments] to save time before the rating decision was known but they were subsequently advised of the answer”. *593

D6.314 The ELA was then considered at a meeting of the IDC on 28 April 1989. The Summary Record recorded that “The MOD Working Group had recommended refusal because of the risk of technology transfer to the USSR. The IDC noted however that FCO/SEND had already given their approval for the same application....The Committee therefore asked the MOD to reconsider this application and recommended that it remain Pending”. *594 SEND’s views were clearly misrepresented at the IDC meeting. *595 Yet the meeting was chaired by a senior FCO official, Mr Stephen Lamport (Mr S Lamport) of MED and attended by Mr Stephen Lillie (FCO/MED). Mr M Lamport’s letter to Mr Steadman dated 18 April had been copied to MED. Mr S Lamport has told the Inquiry that he was unaware of the SEND letter of 18 April either because he had not seen it or because its contents had not been drawn to his attention. *596 However, it is unsatisfactory that, some ten days after Mr M Lamport’s letter was written, the senior MED official due to attend the IDC on 28 April had still not seen the letter or had its contents drawn to his attention. If Mr S Lamport was unaware of the SEND letter, the system for dissemination of information copied to MED was seriously defective. In any event, it remained, in my opinion, his responsibility, as the senior MED representative present, to have informed himself sufficiently in advance in order to ensure that the views of SEND were accurately reflected at the IDC meeting.

D6.315 The misrepresentation might still have been corrected after the IDC meeting. But it was not the practice of the MED officials who attended to circulate the IDC minutes to other departments within the FCO. Thus if, as in this case, the views of SEND had been misrepresented at the IDC, there was no obvious means by which SEND would have become aware of it. *597 The minutes should, in my view, have been circulated to those FCO departments involved in considering ELA’s. The absence of such circulation made it the more important that the MED officials who attended IDC meetings should ensure that they were adequately briefed as to the views of other interested FCO departments. The steps taken in this case were clearly unsatisfactory and inadequate.

D6.316 On 20 June 1989 Roland Smith, deputy head of SEND, wrote to Mr Beston to re-affirm SEND’s objection to the Consarc ELA. He stated that, in addition to concerns about the potential use of the furnaces for the development of nuclear weapons, SEND were concerned that they could be used for missile proliferation. *598 On 30 June the MOD, having reconsidered their position at the behest of the IDC, told the DTI that they maintained their objection to the export. Consarc were accordingly informed that the licence had been refused for the furnace with the DS facility. At a meeting of the SXWP on 19 July, all departments which were represented agreed that, given the potential nuclear and missile production capabilities of the furnaces, the EG(C)O controls in respect of them were inadequate. *599 It was suggested that consideration might be given to amendment of the EG(C)O.

D6.317 In May 1990, Consarc, in an attempt to avoid dock-side inspection which might have attracted media attention, invited Customs to undertake a factory inspection of the two furnaces which had been rated not licensable. Customs refused the invitation. On 3 July 1990, Consarc wrote to Mr Steadman requesting confirmation that the two furnaces (which they said that they proposed to export on 16 July *600) remained not licensable. The confirmation was sought, at least in part, because the US authorities had seized a number of furnaces which Consarc Corporation had proposed to export to Iraq. The seized furnaces were the same model as those for which Consarc had submitted a rating application in December 1988 *601 and were destined for use in the same project as the UK furnaces.

D6.318 Mr Steadman requested a rating assessment from Mr Langman who confirmed that the furnaces remained not licensable. On 12 July, he also sought the views of Mr Duncan, FCO/NPDD (which, for these purposes, had taken over the responsibilities of SEND *602). On 12 July Mr Cooke of Consarc, after consulting Mr Steadman, agreed to delay the transport of the furnaces to the docks “until [DTI] enquiries were further advanced,” but informed Mr Steadman that Consarc had “a confirmed booking of shipping space on a ship [due] to sail on 26 July.” *603 In a letter dated 13 July Consarc informed Mr Steadman that it would be necessary for the furnaces to be transported to Harwich Docks by 19 July at latest. The letter pointed out the serious financial consequences that might befall Consarc if shipment were prevented. *604

D6.319 On 17 July Mr Steadman sent a minute to Mr Coolican on the problem. He said:

“The situation is a difficult one. The FCO feel we should await the US decision before we decide what should be done. If the US decide to stop the export an amendment to the US regulations will be needed. The US furnace is regarded as more sophisticated and has a higher temperature range than those to be shipped from the UK.... and it may be that we need not necessarily follow US. I have suggested we, FCO and MOD experts meet urgently to come to a view. This is being arranged through FCO.” *605

It is clear that the possibility of an amendment of the EG(C)O so as to bring the Consarc furnaces under export control was being kept open.

D6.320 The Consarc furnaces were considered at a meeting of the SXWP on 18 July. *606 It was suggested that the US authorities be asked to provide any information which they had on the likely end use of the UK furnaces. Mr Langman (DTI) told the meeting that “the DTI would not wish to extend the scope of existing legislation to ‘catch’ this type of plant”, and the meeting concluded that “At present .... there was no justification, given their specifications, for preventing the UK exports”. However, it was “specifically said that [the FCO] would want to put to their Minister before [the] company were given the go-ahead to export.” *607 On the next day, 19 July, Mr Steadman spoke on the telephone to Mr Rennie of Consarc. His note of the conversation records that he told Mr Rennie that “we would not have an answer by [3.00pm this afternoon]” and that Mr Rennie was “going to cancel the space and hope it can be re-booked if our decision is favourable.” *608

D6.321 On 19 July the British Embassy in Washington sent a telegram to Mr Smith (head of NPDD) stating that the US authorities had concluded that they could prevent the export of the seized furnaces under the US Nuclear Non-Proliferation Act and the US Export Control Act. *609 The telegram also stated that the US authorities had made a démarche to the British Embassy pressing the UK to prevent the export of the Consarc furnaces. In a note dated 20 July Mr Steadman recorded:

“Since it was now evident we could not reach a decision today (the final day for movement of the goods to the dock for the sailing on 26 July) I spoke to Mr Rennie of the company to tell him so. He said he would now have to tell the Iraqis that the shipment would have to be delayed while we reconsider.

He confirmed that the space had been cancelled to save payment of shipping charges. He was naturally upset at the delay, the company having taken steps to clear the licensability of the kit over a year ago. I promised to keep him informed.” *610

D6.322 Mr Cooke recorded his recollection of his discussions with Mr Steadman regarding the cancellation of the shipping space in a letter to Mr Coolican dated 1 August 1990. He said:

“...During these telephone discussions the aspects of ‘voluntary hold’ were discussed and at that time, on behalf of the company, I agreed on the `voluntary hold’ on the understanding that matters would be finalised by early the following week (i.e. week commencing 16 July 1990).

Also during these discussions I posed the question as to the position which would occur if we had decided to proceed with the shipment as planned. The response was that it was possible that HM Customs could, in such circumstances, be asked to ‘hold’ the goods at the docks and that the likelihood of media interest could result.” *611

The possibility that Customs could be asked to “hold” the furnaces if Consarc attempted to export them without the agreement of the Government is not recorded in any of Mr Steadman’s telephone notes that the Inquiry has seen. However, in a paper prepared by Mr Steadman in September 1990 for the purposes of obtaining advice on the compensation claim made by Consarc *612, he said:

“23 The company feel aggrieved that having seemingly done all that they could reasonably have done to establish that the furnaces were not licensable in April 1989 before production was started, that the export of the goods has been frustrated through a subsequent review of the licensability of the furnaces which confirmed them as not subject to control. They co-operated with HMG in withholding the export from the shipment on 26 July only to be prevented subsequently from doing so by the sanctions upon Iraq.

24. Had the company attempted to export the furnaces whilst the review was taking place, it is fair to say that, in common with normal practice, arrangements would have been made with Customs to detain the goods for further investigation with the same end result.” *613

Paragraph 24 of Mr Steadman’s paper is consistent with Mr Cooke’s assertion that, when he asked what would happen if Consarc went ahead with the shipment, he was told that Customs might be asked to “hold” the goods at the docks. Mr Steadman’s remark about ”normal practice“ is consistent with a remark made by Mr Langman at a later meeting on 17 August. The minutes of the meeting record Mr Langman as saying that “Customs would probably... ‘hold’ the goods, ...if either the MOD or FCO had intimated that they would be applying to the Secretary of State at the DTI to change the Export Regulations.” *614

D6.323 On 25 July Mr Steadman telephoned Mr Rennie of Consarc “to explain that the furnace shipment was still under review”. Mr Rennie said that, as the furnaces were not licensable, Consarc were contemplating shipment without the Government’s agreement. Shipment on 26 July had been missed but there was a boat leaving on 21 August. He asked Mr Steadman what would happen if they decided to do so. Mr Steadman replied that “if there were concerns about the export, the EG(C)O could be amended to make the furnaces licensable.” *615 Mr Rennie, contrasting the types of materials the UK and US furnaces were capable of producing, also told Mr Steadman that the UK furnaces were not suitable for nuclear weapon production and invited MOD technical advisers to talk to the company’s technical advisers. *616 This invitation led to arrangements being made for MOD experts to inspect the furnaces. The inspection took place on 3 August. *617

D6.324 On 27 July the Consarc ELA was considered at a Cabinet Office meeting of senior officials. *618 The Committee decided, as the SXWP had done, that it would not be appropriate to amend the EG(C)Os to cover the furnaces because to do so would “risk cutting across the wider recommendations on exports to Iran and Iraq to be put by the Foreign and Commonwealth Secretary to the Prime Minister following the meeting of Ministers on 19 July.” The Committee also commented that there was “some indication that certain aspects of the furnaces.... might bring the furnaces within the scope of the current order. A considered assessment of the goods should be completed as soon as possible.” The reference to a “considered assessment” was presumably, a reference to the proposed MOD inspection of the furnaces and the conclusions that might follow.

D6.325 On 31 July Mr Noakes (NPDD) put up a submission to Mr Waldegrave explaining the problems faced in respect of the Consarc furnaces (i.e. that DTI had initially ruled that they were not covered by the EG(C)O, that the US had made a démarche pressing the UK to prevent their export and that their licensability was being re-examined by MOD’s technical experts). *619 Mr Noakes put three hypothetical conclusions to Mr Waldegrave regarding the licensability and likely end use of the furnaces, the third of which was that “it falls outside the EG(C)O but has physical properties that could nonetheless enhance Iraq’s nuclear or missile capabilities”. Mr Waldegrave’s response to that hypothesis was recorded in a minute from his PS, Mr Asquith, dated 1 August:

“... Mr Waldegrave again thinks that action is clear - we will have to let the furnaces go. We are unable to stop the export of screwdrivers on the grounds that they may be useful for bomb making. The only option would be to invent a whole new category of potentially nuclear related machinery the export of which we could stop worldwide (it would be impossible to singularise Iraq) and we cannot sensibly do this in time for this case....”

D6.326 The inspection of the furnaces by MOD experts took place on 3 August 1990. They were accompanied by Mr Langman of the DTI. A note dated 6 August 1990 *620 from Mr Langman to Mr Coolican described the purpose of the inspection as being “to determine if there were any features which would indicate that the equipment had been specially designed for use in any of the following areas: Super alloy production, Directional solidification casting, Nuclear materials processing.” Following the inspection and perusal of the MOD experts’ report, *621 Mr Langman expressed the conclusion, in a Note to Mr Steadman dated 15 August 1990, *622 that the furnaces were not licensable. By then, however, the issue had become academic. On 9 August 1990, following Iraq’s invasion of Kuwait on 2 August, the Export of Goods Control (Iraq and Kuwait Sanctions) Order came into force prohibiting all exports to Iraq. Further discussion about Consarc’s vacuum furnaces became irrelevant, save for the purpose of Consarc’s claim for compensation.

D6.327 The story of Consarc’s proposed export of vacuum furnaces to Iraq throws up two matters on which some additional comment may be desirable. The first matter is the propriety of Customs detaining and preventing the export of goods pending the completion of a review by Government of licensability of the goods. Whether or not it is a proper practice in a case where their licensability is in doubt, it is certainly not a proper practice in a case where the goods are known to be not licensable. If goods are not licensable under the EG(C)Os currently in force then Customs have no power to detain them, even if an amending EG(C)O whereunder the goods would become licensable is imminent. *623 Until an amendment has been made to the EG(C)O the exporter can legitimately export the goods and any intervention by Customs to prevent them from doing so would, in my view, constitute an abuse of Customs’ powers. It does seem, however, in the Consarc case that, notwithstanding the view expressed by Mr Langman at the SXWP meeting on 18 July, the possibility that the furnaces might be licensable remained open until the inspection by and report from the MOD experts in early August 1990.

D6.328 The limits on the ability of Government to prevent or postpone the export of goods were referred to in the course of the evidence given by Mr Meadway (Head of the DTI Overseas Trade Division 2) to the Trade and Industry Select Committee (TISC) on 26 November 1991. At paragraph 176 of the transcript of the evidence to TISC the following exchange is recorded between Mr Meadway and Mr Menzies Campbell MP:

“176. What consideration was given to the fact that these items [the Supergun barrels] were being sought by a military dictatorship located in the Middle East with one of the largest military machines in the world which had ballistic missiles, was engaged in the development of ballistic missiles, and had nuclear aspirations?

(Mr Meadway) Those would have been some of the factors which would have led the Ministry of Defence to have this dialogue with the company in order to endeavour to establish what the grounds for concern might be and whether there were appropriate grounds for saying the things needed an export licence.

177. Would the proper approach not have been to say: ‘If we cannot exclude a military use of these items we will not give them approval’?

(Mr Meadway) I think that is, with respect, not the question that was before us. We do not have the power to say: ‘There is this item here, we cannot pin it down specifically. We cannot say it is any particular item in our control list but we do not like the look of it and therefore you cannot export it’. It is essential before we can tell someone that they need a licence and we can grant them a licence that we can pin it down to a particular item on the list and that is a point on which we have to be sufficiently certain we are prepared to rest on that opinion from a legal point of view [sic].”

Mr Meadway’s remarks are applicable, also, to the vacuum furnaces for so long as they remained unlicensable.

D6.329 The second matter to be mentioned concerns the Nuclear Nonproliferation Treaty (NNPT) and the implication of the proposed export of the vacuum furnaces on the UK’s obligations under that Treaty. The NNPT was ratified by the UK in November 1969 and came into force on 5 March 1970. Article 1 of the NNPT provides that:

“Each nuclear-weapon State Party to the Treaty undertakes not to transport to any recipient whatsoever nuclear weapons or other nuclear explosive devices or control over such weapons or explosive devices directly, or indirectly; and not in any way to assist, encourage, or induce any non-nuclear-weapon state to manufacture or otherwise acquire nuclear weapons or other nuclear explosive devices, or control over such weapons or explosive devices.” (emphasis added)

The UK is a nuclear weapon State Party to the NNPT and Iraq is a non-nuclear weapon State Party.

D6.330 Group 2 (the Nuclear List) of the EG(C)Os in force at the time these discussions were taking place prohibited the export without a licence of a wide variety of specific items of nuclear materials and equipment. Prior to 1991, however, there was no export prohibition based on the intended use of the goods for the production of nuclear weapons. In a written statement to the Inquiry dated 22 July 1994 Mr Roland Smith *624 accepted that the lack of such a prohibition meant that “when the 1987 and 1989 Orders were in force, it was possible that a machine tool which was known to be destined for use in a nuclear facility might not be licensable.” *625 The same would have been true for a vacuum furnace. He did not however accept that the consequence of this was that the UK was in breach of its obligations under the NNPT. As to that, Mr Smith said:

“I consider much too broad the proposition that the United Kingdom was obliged by Article I of the Treaty to take all possible steps to prohibit the supply, to a non-nuclear State, not only of goods specially designed for the manufacture of weapons and devices of a nuclear nature but also any goods which could (I say “could” rather than “would” because the use of the word “would” implies greater certainty regarding end-use than is usually available) in any way assist in the manufacture of such weapons or devices. The particular obligations of the nuclear-weapon States under Article I correspond directly to their special capabilities as nuclear-weapon States; similarly, non-nuclear weapon States Party to the Treaty have particular obligations under Article II. In all nuclear-weapon States it is of course the Governments which own and control nuclear weapons and which have a monopoly of the technology for the manufacture of those weapons. Through the Article, nuclear weapon States parties to the Treaty undertake not to transfer the weapons to anyone and not to transfer the technology to any non-nuclear weapon State.

In considering the obligation in relation to Iraq, one should bear in mind that Iraq was herself a party to the Treaty.... I do not think anyone would argue that the UK at any time transferred to Iraq nuclear weapons or other nuclear explosive devices or control over such weapons or devices, or that it ever encouraged or induced Iraq to manufacture or acquire such weapons or devices. The issue is more difficult as regards the word “assist”. But since the Article concerns specifically the obligations of nuclear-weapon States, I understand it as being directed at the kind of assistance which they and they alone would be in a position to give. I also understand the word “assist” as implying an intention, and I do not believe the UK ever intentionally assisted Iraq in its efforts to acquire nuclear weapons.” *626

D6.331 Article 2(b) of the Export of Goods (Control) (Amendment No 7) Order 1991, which came into force on 10 July 1991, prohibits the export of “any equipment (including clothing), software or materials capable of being used in the development, production, handling or storage of nuclear weapons or missiles capable of delivering nuclear, chemical or biological weapons” which the exporter knows or suspects is intended for use for the “development, production, handling or storage of nuclear weapons.” *627 The 1991 Order thus established stricter criteria for the prohibition of nuclear-related exports. The new criteria created a regime which was more obviously in compliance with the UK’s obligations under Article 1 of the NNPT than had previously been the case. If Article 2(b) had been in force in 1989 and 1990 Consarc’s two vacuum furnaces would, if judged capable of being used in the production of nuclear weapons and intended for that use, have required an export licence. *628

Compensation Claim Made by Consarc

D6.332 On 17 August 1990 Mr Steadman held a meeting with a number of the Consarc directors to discuss the events of the previous month. *629 Consarc were proposing to export the furnaces after the sanctions had been lifted. Mr Steadman confirmed that the furnaces were not licensable; he also repeated that “it was possible that OGDs may for strategic reasons propose that the Order should be amended”. On 22 August Consarc submitted a claim for ex-gratia compensation. *630 Mr Steadman referred the claim to Mr Charles Allen (DTI Solicitor’s office) for consideration. Mr Allen’s initial view on the claim, which he felt would be based on an action for negligence, was that “the prospects for a claim to damages do not look at all promising.” *631 However, in a draft Advice (which was, in the event, not sent to his administrators), Mr Allen said that, having considered the documents in more detail, he was “very much less optimistic.” *632 Mr Allen did not fully consider a possible claim for misfeasance.

D6.333 The claim was referred to Mr Andrew Leithead (Treasury Solicitor’s Department) for further consideration. In an Advice dated 3 December 1990, he concluded that he could “see no grounds for alleging that the DTI were negligent at all”. Mr Leithead also considered whether Mr Steadman’s statement on 25 July that the “EG(C)O’s could be amended” amounted to an abuse of power or misfeasance. His conclusion was that “by 25th July it was too late to arrange to ship the furnaces on 26th July and in any event I cannot see how, in the circumstances, Mr Steadman’s remark was unreasonable or oppressive.” *633

D6.334 On 5 December 1990 Mr Allen wrote to Jane Richardson, another DTI lawyer, enclosing Mr Leithead’s Advice and referring to the fact he disagreed with it. He said:

“I do not think that the DTI was entitled to hold up the export after it had been definitively concluded (on 18 July) that the goods were not licensable. They did so because the FCO and US were concerned about the end-use; but assuming that the end-use was as suspected, that would not have made goods licensable. I think that the export was clearly delayed under false pretences in order to take time to consider whether to amend the Order. I think there is a strong case that this amounts to misfeasance.” *634

D6.335 Mr Allen also wrote to Mr Steadman on 6 December 1990 about Mr Leithead’s Advice, saying “...the Department has a great evidential advantage, in that until Consarc discovers that it was decided on 18 July that the goods were not licensable but that the company... would for the time being not be told so, *635 it will not know the strength of its case, or even whether there are any grounds for alleging misfeasance; and until it starts proceedings, it will not be able to get discovery of the papers relating to the meeting of 18 July...”. *636 On 10 January 1991 Consarc were informed that their claim for compensation had been rejected.

D6.336 Mr Steadman, in his discussions with Mr Cooke in July 1990, had, according to Mr Cooke, indicated that, if Consarc proceeded with the shipment of the two furnaces, Customs might be asked to detain the furnaces at the docks. There was, in my opinion, no legal basis on which Customs could have done so. However, whether Consarc agreed to delay shipment of the furnaces because of Mr Steadman’s indication, or whether they would have agreed to do so in any event, is a matter which the evidence before the Inquiry leaves open. I accept that Mr Steadman genuinely believed that Customs had the power to detain the furnaces although they were not licensable. And it is also true that, despite the opinion Mr Langman had given at the SXWP meeting on 18 July, consideration continued to be given until mid-August 1990 to the question whether the furnaces might perhaps be licensable. In the circumstances, I have reached no conclusion as to the merits of Consarc’s compensation claim. The issue depends, in my opinion, on whether Consarc were materially influenced, when agreeing to postpone shipment of the vacuum furnaces, by a belief induced by Mr Steadman that, if they tried to ship the furnaces, Customs would detain the furnaces at the docks.

Endnotes:

*588 - DTI/681.21433

*589 - DTI/681.21462

*590 - MOD/349

*591 - DTI/681.21482

*592 - DTI/681.21489; He also outlined one matter which raised some doubt about the true end use of the furnace with the DS facility: “One point which the company themselves cannot reconcile is the fact that the DS facility is only useful for the manufacture of rotating parts. The Iraqis have apparently said that they need the equipment for research into materials for the manufacture of artificial limbs”.

*593 - DTI/689.21709 at paragraph 4; see paragraphs D6.332 to D6.336 infra.

*594 - FCO/6.2.78 at 79, paragraph c(ii)

*595 - paragraph B4.4 of the written statement of Roland Smith (former deputy head of FCO/SEND) dated 22 July 1994.

* 596 - In his written statement to the Inquiry dated 14 October 1994 Mr Stephen Lamport said “I do not know which papers the IDC would have had in front of it for that meeting [28 April 1989]. If the SEND minute of 18 April 1989 had been drawn to my attention, it is inconceivable that the Committee could have said ‘FCO/SEND have already given their approval for the same application’. I conclude that I was unaware of the SEND minute of 18 April - either because I had not seen it, or because its contents had not been brought to my notice. I am certain, as a matter of principle, that the IDC would have made recommendations in good faith on the basis of the information known to it”. Mr Lillie, too, has said that if he had seen Mr M Lamport’s letter of 18 April he would have corrected the misrepresentation of SEND’s view that was made at the IDC meeting (see Mr Lillie’s letter of 23 May 1995).

*597 - see also paragraph D1.125 supra.

*598 - In this letter (DTI/681.21495) Mr Smith suggested that the furnaces had already been exported. This view, which was mistaken, was also expressed at a meeting of the Working Group on Iraqi Procurement on 23 June 1989 (FCO/27.1)

*599 - DTI/681.21514

*600 - Consarc were unable to secure space on the 16 July shipment and the shipping date was deferred to 26 July (DTI/689.21538)

*601 - see paragraph D6.312 supra.

*602 - Section A of the written statement of Roland Smith dated 22 July 1994; and paragraph C2.43 supra.

*603 - DTI/689.21538 and DTI/689.21539

*604 - DTI/689.21539

*605 - DTI/689.21553 D6.320

*606 - FCO/62.13.2632 at p. 2635

*607 - Mr Steadman, who was present at the meeting, recorded the FCO requirement in a manuscript note on his copy of the minutes of the meeting: DTI/689.21636

*608 - DTI/689.21555 D6.321

*609 - DTI/689.21562

*610 - DTI/689.21566

*611 - DTI/689.21612

*612 - see paragraph D6.332 infra

*613 - FCO/62.14.2687 at p. 2693

*614 - DTI/689.21661

*615 - DTI/689.21582

*616 - The furnaces were inspected on 9 August 1990 (DTI/689.21623). The inspection report was inconclusive about possible use for nuclear production.

*617 - Mr Steadman’s minute to Mr Allen dated 3 January 1991: DTI/689.21845: see also paragraph D6.326 infra

*618 - CO/9; the Defence and Overseas (Official) Committee Sub-Committee on Strategic Exports.

*619 - FCO/62.8.1864

*620 - DTI/689.21618

*621 - DTI/689.21624

*622 - DTI/689.21640

*623 - Customs powers to detain goods are contained in section 139 of the Customs and Excise Management Act 1979 (“CEMA”) which provides:

“(1) Any thing liable to forfeiture under the Customs & Excise Acts may be seized or detained by any officer or constable or any member of Her Majesty’s armed forces or coastguard.”

Liability for forfeiture based on the licensability of goods which the exporter proposes to export is provided for by Section 68(1) of CEMA:

“(1) If any goods are -

(a) exported or shipped as stores; or

(b) brought to any place in the United Kingdom for the purpose of being exported or shipped as stores, and the exportation or shipment is or would be contrary to any prohibition or restriction for the time being in force with respect to those goods under or by virtue of any enactment, the goods shall be liable to forfeiture...”

*624 - Mr Smith was deputy head of FCO/SEND in May 1990. Thereafter he was head of FCO/NPD, later NPDD

* 625 - Ibid paragraph B2.3 of Mr Smith’s written statement submitted on 22 July 1994

*626 - paragraph B.1.3

*627 - The prohibition was consolidated in Article 2(xv) of the Export of Goods (Control) Order 1991 which came into force on 31 December 1991 (S.I. 1991/2666)

*628 - According to a minute prepared by Stuart Nunn (DTI/OT2/3) on 10 July 1991 (DTI/744) the Amendment No 7 Order was introduced:

“... to strengthen our ability to prevent the export of materials, equipment, technology and software which are to be used for purposes associated with chemical, biological and nuclear weapons and missiles. The end-use conditions effectively bring under export control a very wide range of items if the exporter knows or suspects they are to be used for any of the purposes stated above, or if he has failed to make all reasonable enquiries to make sure that they are not to be used for such purposes.”

The amendment was stated to be an extension of “the end-use control introduced last December [1990] for chemical and biological weapons”. The end-use control for chemical and biological weapons was contained in the Export of Goods (Control) (Amendment No 6) Order 1990 (SI 1990/2632)

*629 - DTI/689.21643

*630 - DTI/689.21645

*631 - DTI/689.21707 at paragraph 5

*632 - DTI/689.21758 at paragraph 1

*633 - DTI/689.21824 at 21826

*634 - DTI/689.21828

*635 - DTI/689.21831; The minutes of the SXWP on 18 July 1990 originally recorded “If the company contacted DTI then they would be told that the export could proceed unless grounds for delay emerged”. Having considered the minutes Mr Steadman commented “Not accurate. FCO specifically said they would want to put to their Minister before company were given the go ahead to export” See paragraph D6.320 supra.

*636 - DTI/689.21831 at paragraph 3

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