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:
(XI) POLIBUR ENGINEERING LTD

(XI) POLIBUR ENGINEERING LTD

D6.337 An interesting contrast to the approach adopted to the Consarc ELA is provided by the way in which the Government dealt with a proposed export to Iraq by Polibur Engineering Limited (Polibur). In October 1989 Polibur entered into an agreement with the Ministry of Industry in Iraq, to supply the equipment for a hydrogen fluoride processing plant. The processing plant, which was to be set up at the Al Kaim Phosphate Fertiliser Factory, was intended to produce hydrogen fluoride from calcium silica fluoride which is a natural by-product of the fertiliser production process. None of the equipment which was to be supplied by Polibur was licensable under the then current EG(C)O.

D6.338. In a letter to Mr Steadman dated 9 November 1989 Mr Pullen (FCO/ACDD) recorded the FCO’s opposition to the export:

“2. Export controls. We control (and effectively ban) the export of hydrogen fluoride to Iraq, among other countries, because of its role as a major precursor for chemical weapons, in particular nerve agents such as VX. Hydrogen fluoride is also an essential chemical for the production of uranium hexafluoride, which is the gas used in the enrichment of uranium. There has been evidence recently that Iraq has been procuring equipment for the development of an enrichment plant. Such a plant could be used to obtain the highly enriched material necessary for nuclear weapons. It is however true that we have no legislative control over export of plant and equipment unless specifically designed for military purposes (but see para 4 below).

3. Al Kaim. We have information that the Al Kaim plant is one of the main sources of phosphorus for the Iraqi CW programme, and it is very likely that a hydrogen fluoride capability would be used as a resource for both CW and nuclear weapons production.” *637

MOD/DIS agreed with the FCO’s opposition to the export because “it would be totally unacceptable for the UK to be seen to be taking a very strong line on the export of HF [Hydrogen Fluoride] while at the same time permitting the export of a plant to produce HF.” *638

D6.339 The proposed export was discussed at a meeting of senior Cabinet Office, MOD, DTI and FCO officials held on 24 November 1989. *639 At the meeting it was acknowledged that “there was a high probability from the evidence that the plant would be used for producing uranium hexafluoride which would be of considerable value to the Iraqi nuclear programme” and that “the plant could assist the Iraqi chemical warfare programme”. The possibility of amending the EG(C)O was considered but the meeting concluded that “such a course of action [is] not without problems as past experience [has] shown that drafting the amendments sufficiently tightly so as not to have wide ranging implications for other legitimate bulk standard equipment would be extremely difficult”. *640

D6.340 In the event it was decided that the DTI should approach Polibur and seek to persuade them not to proceed with the export:

“Polibur Engineering were already aware that the Government were concerned about the contract and it might be possible to persuade the company that it was not in their own interests to proceed with it. If such an approach was to succeed it would be important to give the company as much evidence as possible of the known intentions of the Iraqis, without compromising intelligence sources.... it would have to be made clear that any decision would be a matter for commercial judgement”.

D6.341 On 7 December 1989 Mr Steadman held a meeting with representatives of Polibur. *641 From the papers which the Inquiry has seen, it would appear that Polibur were informed that the equipment which they proposed to export was not licensable. However, having been told by Mr Steadman that the equipment, and the end product associated with it, could have a potential application in the Iraqi nuclear/chemical weapons programme, Polibur agreed not to proceed.

D6.342 This is, in my view, the approach which should have been adopted in respect of the Consarc ELA. Provided any given company is aware that it can, if it wishes, export the equipment without the Government’s consent, it is entirely legitimate - and, indeed, may be highly desirable - for the Government to approach the company with a view to persuading it not to export because of concerns about possible end use. In many cases (as in this one) responsible companies will be prepared not to export when they are informed that their product may be used for nuclear/chemical weapon production.

Endnotes:

*637 - MOD/30.2.293

*638 - MOD/31.1.90B

*639 - MOD/31.1.91

*640 - A note compiled by Mr McDonald (MOD/31.1.49) who attended the meeting records: “It was suggested that the control order might be amended by a phrase to catch equipments “intended” for a specific purpose contrary to HMG policy. (I brightened at this thinking how useful such a catch all control would be in other contexts such as carbon carbon). DTI predictably drew a long face and talked about legal and practical difficulties”; a “catch-all” provision of the type envisaged was contained in Article 2(xv) of the Export of Goods (Control) Order 1991 (see paragraph D6.331 supra). If Article 2(xv) had been in force in 1989, the Polibur equipment would have been licensable.

*641 MOD/31.1.137; The DTI have been unable to locate a note of the meeting (see the letter from the DTI Scott Inquiry Unit dated 16 March 1995 (DTI/795))

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