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:
(XVII) MARCONI COMMAND AND CONTROL SYSTEMS LIMITED AND MARCONI COMPANY LIMITED

(XVII) MARCONI COMMAND AND CONTROL SYSTEMS LIMITED AND MARCONI COMPANY LIMITED

Application for AWP Clearance dated 27 July 1988

D6.406 AWP clearance had been given in October 1986 for supply of the Quickfire Artillery Fire Control System (Quickfire) to Iraq after the cessation of hostilities. *772 Marconi Command and Control Systems Limited (MCCS) made a further application on 27 July 1988 for AWP clearance for the supply of Quickfire to Iraq. This application was included in the list of AWPs to be considered at the MODWG meeting of 4 August 1988. The list was circulated under cover of a minute dated 1 August 1988 to all the MODWG members. *773

D6.407 On 2 August 1988 an IDC meeting was held at the request of the FCO to discuss the implications of a settlement of the Iran/Iraq conflict for current policy on defence sales to those countries. MED prepared a summary record of the IDC meeting and paragraph 10 recorded that:

“10. Mr Scanlan (DESO) pointed out that our competitors would take full advantage of the opportunities, and our restrictive approach. Mr Blackley said that this had always been a risk. But Ministers would not wish to change our policy in the short term, and would seek to maintain the high moral ground. However, we should not discourage British companies from preparing the ground and promoting their goods in the expectation of a relaxation in the medium term.” *774

D6.408 The MODWG at its meeting on 4 August 1988 assessed the Quickfire AWP application as “A(I)”. The remarks column on the list of applications stated, as had its 1986 predecessor, “Promotion only. No supply before end of hostilities”. *775

D6.409 The recommendations of the MODWG were discussed at the next IDC meeting on 11 August 1988 *776 and the IDC agreed to approve the application. *777

D6.410 The IDC’s recommendations were attached to a minute from Mr Barrett to APS Minister (DP) dated 16 August 1988. The minute requested the Minister (DP)’s approval of the recommendations. In a letter from Mr Barrett (DESS 2) to Mr Steadman (ELB) dated 2 September 1988, Mr Barrett confirmed that “MOD Ministers have now endorsed the recommendations of the IDC meeting held on 11 August 1988...”. *778 It was to be expected, therefore, that once the cease-fire took hold, an ELA for the supply of Quickfire to Iraq would be made.

Export Licence Application dated 29 September 1988

D6.411 On 29 September 1988 the Marconi Company Limited (Marconi) made an application for a licence to export Quickfire to the Iraqi Ministry of Defence in Baghdad. The export licence application form stated the purpose for which the goods were to be used to be “Demonstration Purposes Only”. *779

D6.412 The application was added to the list of ELAs to be considered at the next MODWG meeting on 23 November 1988. On 9 November 1988 a minute attaching the list of ELAs and AWPs was circulated to the MODWG members. *780 On 23 November the MODWG recommended “A for Demo” and that there be “No supply before formal cessation of hostilities.” *781 The addition of the adjective “formal” to the text of the previous recommendation is to be noted. The cease-fire was still regarded as fragile. Peace negotiations had yet to be commenced.

D6.413 At a previous meeting of the IDC on 22 September 1988, the IDC had agreed “that the time is now right to allow early promotion to begin for equipment, which in the longer term, we would be prepared to agree to supply”. *782 This recommendation was in line with the discussion at the IDC meeting on 2 August 1988. *783 The recommendations of the MODWG made on 23 November 1988 were considered by the IDC on 1 December 1988. The IDC agreed to recommend approval of the application. The words “for in-country demonstration” were written in manuscript next to the entry of the application on the list of applications. The Summary Record of the IDC meeting of 1 December 1988 recorded the meeting’s agreement regarding the supply of Quickfire as follows:

".... APPROVED FOR DEMONSTRATION

This equipment could not be approved for supply under current guidelines but the IDC recommended approval for demonstration only. The endorsement ”no supply before formal cessation of hostilities“ is being used as a holding formula to pass on to companies. It gives no guarantee that future licences for supply will be granted”. *784

D6.414 The summary record was submitted to Mr Lamport and Sir David Miers of the FCO on 12 December 1988. The submission recommended endorsement of the IDC’s recommendations. Mr Lamport endorsed the recommendations by signing the submission on 12 December 1988. Sir David Miers commented “None of this seems controversial I agree” and signed the submission on 13 December. *785

D6.415 The recommendations of the IDC were formally put up by Mr Barrett (DESS 2) to the Minister (DP), Lord Trefgarne, by way of a submission dated 9 January 1989. *786 The submission stated that on 1 December 1988 the IDC meeting had discussed the question of what responses should be given to “companies interested in seeking to secure future defence contracts and, in practical terms, how to respond to the increasing number of applications for approval to promote equipment to both countries” [i.e. Iran and Iraq]. *787 The submission explained that the MODWG took the view that “promotion, even of equipment associated with lethal systems, such as fire control systems for tanks, should be allowed provided that it was made clear to companies that no supply could be allowed before formal cessation of hostilities at the earliest”. *788 The reference to “fire control systems” related to systems such as Quickfire. The submission said that the FCO were concerned about the prospect of supplying such equipment (to Iran in particular) as it “might be some years before supply could be agreed” *789, and that the DTI officials had “pressed for clear guidance to be given to companies on the prospects for eventual supply to enable them to decide whether to actively pursue the business”. *790 The submission stated that the IDC had “agreed that it was difficult to give a clear steer as there were many factors to be taken into account”, but that the MODWG “recommendations on current business should stand”.

D6.416 In a minute dated 12 January 1989 from the APS to the Minister (DP) to Mr Barrett, the APS recorded that “Lord Trefgarne was most grateful for your minute of 9 January ... Minister (DP) is content to agree the recommendations as proposed in your minute”. *791 Mr Barrett wrote to Mr Steadman on 13 January 1989 to inform him that “MOD Ministers have now endorsed the recommendations of the IDC meeting held on 1 December”. *792 The licence was accordingly issued on 27 February 1989 endorsed with the proviso “The Equipment must not be supplied before formal cessation of hostilities”. *793

D6.417 The licence was valid for only 12 months. In February 1990 Marconi applied for revalidation of the licence. At its meeting on 7 March 1990 the MODWG assessed the application as “A(I)” still with the comment ‘No supply before formal cessation of hostilities.’ The recommendation was discussed and agreed to at the IDC meeting on 19 March. *794 It was noted in manuscript on the list of applications “(Revalidation) No supply before formal cessation of hostilities”. *795 The IDC recommendation was agreed by the Minister (DP), Lord Trefgarne and Mr Waldegrave, the FCO Minister. *796 In his submission dated 22 March to the Minister (DP), Mr Barrett said:

“Marconi’s ELA covers the demonstration in Iraq of their ”Quickfire“ artillery fire control system, as part of the promotion to Iraq which was approved by Ministers in October last year, on the understanding that supply could not be sanctioned before the formal cessation of hostilities. The IDC agreed to recommend that the export of one system for demonstration should be agreed on the same basis.” *797

D6.418 In a manuscript note dated 18 April 1990 made on the revalidation form Mr Fearis (ELU/DTI) made the following comment on the proviso attached to the licence: “Rather an odd proviso given hostilities may never formally cease and the case to remain open? Would it not be better to issue an approval in principle with a request they re-apply if hostilities formally cease?” *798 Mr Bouttell (ELU/DTI) replied the same day: “The licence is for temporary export for demo. The proviso covers supply should an order be obtained”. *799

Application for Quickfire to be taken to Baghdad International Exhibition by MCCS

D6.419 In a minute dated 6 March 1989 from Mr Barrett to the APS to Minister (DP), Mr Barrett referred to the Minister (DP)’s agreement “in principle that equipment could be exhibited at the Baghdad International Exhibition for Military Production (26 April - 2 May), subject to export licences being obtained” and on the basis that the “licences were solely for the exhibition and that the equipment must come back to the UK”. *800 The minute went on to explain that because companies could provide no guarantee to bring equipment back from an exhibition nor be made to bring it back “in legal terms”, MOD officials had advised companies that they should not take equipment to the exhibition. Having considered Mr Barrett’s minute on 8 March 1989 the APS to Minister (DP) wrote to Mr Barrett stating that Lord Trefgarne was now content for companies “wishing to exhibit equipment at the Exhibition to be told in principle that they may do so, subject to the granting of the relevant export licence which both the [IDC] and subsequently Ministers have to approve on a case by case basis.” *801 On 9 March at the request of the head of DESS, Mr McDonald, Lord Trefgarne’s APS asked Lord Trefgarne “to agree that ELAs can be cleared at official level”. The APS spoke to Mr McDonald on 10 March and told him that “Minister (DP) wishes to see all ELAs for the exhibition.” *802

D6.420 On 16 March 1989 a MODWG meeting was held. MODWG members had been informed of the meeting in a minute dated 7 March 1989. The meeting considered, inter alia, an application by MCCS to export Quickfire to Iraq for display at the Baghdad International Exhibition. The application was not included in the list of ELAs and AWPs attached to the minute of 7 March 1989. However, the application was considered at the MODWG meeting, which was attended by Lieut-Colonel Glazebrook who noted in manuscript on his copy of the minute “QUICKFIRE - Licence to demo to IRAQ but not open exhib”. *803

D6.421 In a minute dated 17 March 1989 from Miss Johnson (a DESO desk officer responsible for sales to Iraq) to Mr Hextall of DESS, Miss Johnson recorded that “the application for Marconi to take a Quickfire Unit out to demonstrate at the Baghdad Exhibition was refused on security grounds”. *804 Miss Johnson went on to request the “MOD reasons for the refusal of Quick Fire”. She explained that having told MCCS that the application had been refused they had complained to Mr Sindall (the Regional Marketing Director for Iraq at DESO), who had requested that she seek the MOD’s reasons for the refusal. MCCS had referred to the export licence which had already been granted to them for Quickfire *805 “to be taken out to Iraq to demonstrate to the Armed Forces”. Mr Hextall noted on the minute from Miss Johnson that the reason for the refusal of the application was that the exhibition “was ‘open’ - a very different matter from a demo to a ‘closed’ Iraqi audience ...”. *806 Mr Hextall, on receipt of the minute from Miss Johnson, sent a copy to Lieut-Colonel Glazebrook under cover of a memorandum dated 30 March 1989 asking for his comments on the request. *807 Lieut-Colonel Glazebrook’s response to Mr Hextall on 4 April 1989 stated:

“1. You are correct, this is an open exhibition. The largest supplier of arms to IRAQ is USSR and we have no reason to doubt that the Russians will be there in force.

2. On equipment security grounds, we do not wish to find that a working model of QUICKFIRE has been demonstrated to the Russians”. *808

The recommendation for refusal of the application was therefore not based on the guidelines but on security grounds. *809

D6.422 In a submission dated 21 March 1989 from Mr Barrett to the APS to the Minister (DP), Mr Barrett explained that the IDC had “recognised that 7 April was the deadline date for shipment by air [of the goods to be displayed at the Exhibition] ... and agreed in principle to allow equipment to be exhibited, subject to scrutiny by the [MODWG], and subsequently Ministers, to ensure that only equipment was exhibited which complied with current Ministerial guidelines” ie without the scrutiny of the IDC. *810 The submission recommended refusal of the MCCS application on security grounds. Lord Trefgarne accepted the recommendation. Quickfire was not exhibited at the Exhibition. *811

Application by MCCS for AWP clearance dated 21 July 1988

D6.423 On 21 July 1989 MCCS applied for AWP clearance to promote Quickfire in Iraq. The application was included in the list of applications to be considered at the MODWG meeting on 3 August 1989. The MODWG assessed the application as “A(I) - provided that no British Army firing table data is included. No supply before formal cessation of hostilities”. *812 The recommendation of the MODWG was discussed and agreed at the IDC meeting on 10 August 1989. *813 The proviso that no British Army firing table data should be included had not been used in relation to previous applications by MCCS for the export of Quickfire to Iraq. *814

D6.424 The recommendations of the IDC were formally put up to Mr Waldegrave by way of a submission from Mr Lillie (MED) dated 10 August 1989, *815 via Mr Young and Mr Tomkys (Deputy Under Secretary for Middle East Affairs at the FCO) and were agreed by Mr Waldegrave on 14 August 1989. The DTI was so informed. *816

D6.425 The recommendations of the IDC were also formally put up to the Minister (DP), Mr Clark, by way of a submission dated 8 September 1989. Mr Clark had been appointed Minister (DP) on 26 July 1989 and Mr Barrett explained in the submission that “AWP clearance is sought as a preliminary to the ELA by companies wishing to promote their goods”. *817 Mr Barrett went on to explain that “All applications, both AWPs and ELAs,continue to be scrutinised against both the current interpretations of the Ministerial guidelines and normal security, strategic and political considerations”.

D6.426 On 18 September 1989, by a minute to Mr Barrett, the APS to Mr Clark requested “further background details” on a number of applications including the MCCS application:

“C. Annex B Iraq - MCCS - Quickfire, Artillery Fire Control System. Whilst Minister (DP) has no strong views himself, he has commented that this would appear to be inconsistent with other decisions and would appreciate further background details.” *818

D6.427 In a minute dated 13 October 1989 from Mr Barrett to APS to the Minister (DP), Mr Barrett responded in relation to the MCCS application as follows:

“d. Iraq - Quickfire

Marconi Command and Control Systems application is for preliminary clearance to promote their artillery fire control system to a number of countries, including Iraq, at unclassified level. The MODWG took the view that, as there were no security or other grounds for recommending refusal, promotion could be recommended for approval within the guidelines, subject to the proviso that no British Army firing table data was included, and that MCCS were left in no doubt that there could be no question of agreement to supply the system before the formal cessation of hostilities. This formula has been adopted in a number of cases throughout the conflict to enable companies to keep a foot in the door by promoting equipment, the supply of which is blocked only by the operation of the guidelines. The entry in Annex B2-1 of my submission dated 8 September did not spell out these provisos, and I believe it is their commission which causes Minister (DP) to view this recommendation as inconsistent with others put forward in the same submission.” *819

Mr Clark’s concerns were understandable. The previous application for Quickfire to be exported for demonstration purposes had been granted. The application for export for exhibition had been refused because the equipment was to be exhibited “openly” and there were particular security concerns about the Russians. The APS to Mr Clark confirmed in a minute dated 17 October to Mr Barrett that “Minister (DP) is now content with the IDC recommendations”. *820

Endnotes:

*772 - see paragraph D2.411 to D2.418 supra

*773 - MOD/15.3.212a and MOD/15.3.213 at p. 221

*774 - MOD/15.3.269 at p. 273. See also paragraph D3.7 supra

*775 - MOD/15.3.241 at 249

*776 - MOD/15.3.241 at 249

*777 - MOD/15.3.277 at 289

*778 - MOD/15.4.53

*779 - DTI/39.3.1116 at 1121

*780 - MOD/15.4.246A at 255

*781 - MOD/15.4.335 at 343

*782 - MOD/15.4.205 at 207

*783 - see paragraph D6.407 supra

*784 - FCO/2.6.4 at 5, paragraph 1(v)

*785 - FCO/2.6.3

*786 - MOD/24.1.29

*787 - MOD/24.1.29 at 31

*788 - MOD/24.1.29 at 31

*789 - MOD/24.1.29 at 33

*790 - MOD/24.1.29 at 33

*791 - MOD/24.1.103

*792 - DTI/157.2.13858

*793 - DTI/39.3.1116

794 - MOD/31.2.219

*795 - MOD/31.2.269 at273

*796 - DTI/157.4.14371 and FCO/6.4.102

*797 - FCO/6.4.103. In fact the APS to Minister (DP) confirmed that the Minister (DP) was “content” with the recommendations on 12 January 1989 - MOD/24.1.103

*798 - DTI/39.3.1116 at 1117

*799 - DTI/39.3.1116 at 1117

*800 - MOD/24.2.55. The minute was principally concerned with whether BAe could take the Hawk trainer to the exhibition. See paragraph D6.36 and D3.169 supra

*801 - MOD/24.2.95

*802 - MOD/24.2.95

*803 - MOD/24.2.59

*804 - MOD/24.2.207

*805 - This was most probably a reference to the licence granted in January 1989 and revalidated in March 1990

*806 - Ibid

*807 - MOD/24.2.205

*808 - MOD/24.2.203

*809 - see D1.111 and D1.112 to D1.115 supra

*810 - MOD/24.2.133

*811 - MOD/24.2.157

*812 - MOD/28.2.243 at 263

*813 - FCO/6.1.166

*814 - The RMIPC was responsible for assessing the maximum level of release of military or technological information that could be released to other countries (including Iraq) as a consequence of the supply or promotion to those countries of defence equipment from the United Kingdom - see D1.111 and C2.34 supra

*815 - FCO/6.1.154

*816 - FCO/6.1.153

*817 - MOD/30.1.41

*818 - MOD/30.1.107 at 109

*819 - MOD/30.2.153 at 155

*820 - MOD/30.2.161

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