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:
(XIX) MARCONI AND FERRANTI AIR DEFENCE TRAINING SIMULATORS

(XIX) MARCONI AND FERRANTI AIR DEFENCE TRAINING SIMULATORS

D6.437 In November 1988, an ELA submitted by Marconi for the export of an Air Defence Training Simulator to Iraq was refused by the IDC on grounds of ‘significant enhancement’. Contemporaneous MOD correspondence records that “The Minister (DP) would, however, be prepared to consider further advice on this in changing circumstances, and he noted that approval would be given if at all, to both Marconi and Ferranti”. *835 Applications by both Marconi and Ferranti, for similar equipment, were once again under consideration in 1989. Marconi appealed against the refusal of their 1988 ELA and the appeal appeared on the MODWG lists in February 1989. The DTI were, at that time, to seek “full details of the computers and origin of database”. *836 Ferranti lodged an AWP application on 10 January 1989 *837 which was refused on 14 April. The Minister (DP) was notified on 9 May that DESO were to appeal on Ferranti’s behalf *838 and thereafter the MODWG/IDC listings recorded “Company to provide full details in support of their appeal (RM1c)”, “MOD WG to consider further” and later “RMD1c to provide further detail on timescale”. The entry on the DTI copy of the MODWG/IDC list of pending ELAs dated 12 May relating to Marconi’s appeal was marked “TAKE OUTSIDE IDC” and “pushed for by OT4”. *839 On 7 September 1989 Mr Gallaher wrote to Mr Barrett concerning the Marconi case. He said:

“You will probably not need reminding of the circumstances behind this particular case, but it bears stating briefly to put the matter on record and in context.

Marconi first applied for an export licence to enable them to supply Iraq under this radar simulator contract, valued at £7,750,000, on 5.7.1985. The case was considered in IDC, approved and the licence issued on 23.10.85. (Application reference 1A/5097/85).

In the event the final contract was not negotiated and goods shipped before the time limit of the licence two years later. Consequently Marconi were required to resubmit. This they did in 1988 under 1A/9699/88. That application was refused in July 1988, and understandably, Marconi appealed against refusal. In view of the fact that they had received approval two years earlier and the circumstances of the Gulf War are now significantly different with the ceasefire, Marconi have DTI full support.

You may recall that MOD said that further detailed information was required from Marconi - but no formal request was made to the company for this information due to an oversight within the Whitehall machinery. Subsequently papers were mislaid within MOD and generally the case became one of those nightmares where everything which could go wrong did go wrong.

At our IDC meeting on 18 May I explained that Marconi had been pressing their case having heard nothing and, despite numerous requests had apparently got nowhere. I asked that the matter be treated exceptionally in view of the circumstances and that an urgent review take place between Export Licensing Unit and MOD to ensure that all information was held and that it was considered as a matter of top priority. This course of action was agreed.

I was surprised and disappointed to note that the case was referred to in the list of ‘pending’ applications following the AWP meeting of 15 June, the note on the schedule stating “Specs sent 2 June”. *840 This bad situation is made even worse when I see that the case still appeared in the AWP Pending list produced for their meeting of 3 August. The note now reads “SY3(RAF) and DESS2 (MOD) to consider further”. In reply to my enquiries of ELU and your Section yesterday I am told that this is still the situation.

Marconi have approached me again and I am unable to give any credible reason or explanation for the failure on behalf of the IDC to provide any decision. They are being pressurised by the Iraqis who are equally unable to understand the situation. I have managed to gain a few days grace but, as I explained to your Mr Devlin, unless Marconi can be given some assurance by early next week that there is likely to be a satisfactory result in the very near future they will certainly write to Ministers.

It would not be helpful at this stage to ask what happened to the “special treatment” which I was assured this case would receive. I hope that you can ensure that immediate action is taken to conclude MOD consideration. Naturally I hope that you will be able to recommend acceptance of the appeal because it is not going to be easy for MOD to explain how it took over a year to reconsider and say No”. *841

Mr Gallaher copied his letter to Mr Simmons (MED) FCO and Mr Steadman.

D6.438 Marconi’s appeal was next raised at the IDC meeting on 25 September 1989. The summary record shows:

“Marconi had appealed against earlier refusal of this application arguing that it was a basic training tool for air traffic controllers. The preliminary view of the RAF however was that this advanced equipment would enhance Iraqi capability to control military aircraft movements, and therefore their ability to resume the conflict. MOD therefore expected that they would recommend the appeal be turned down. DTI pointed out the need to explain such a decision carefully to the company.” *842

D6.439 On 26 September 1989 Mr Gore-Booth, indicated that he would be “inclined to approve the Marconi simulator on the grounds that it could just as easily be used for civil air traffic control which must be in the interest of international civil aviation”. *843 Both Mr Waldegrave and Mr Young agreed.

D6.440 Mr Simmons informed Mr Steadman and Mr Barrett of the FCO view of the Marconi simulator. He said:

“You will recall that comments are still awaited from MOD experts about Marconi’s appeal against the refusal of Licence 1A/9699/88, a simulator for Iraq....You and copy recipients will wish to be aware that on the basis of the information available at present, FCO Ministers are inclined to approve this application. I hope the comments from MOD experts will be available in time for the next IDC on 16 October.” *844

D6.441 Mr Barrett brought the Minister (DP)’s attention to the Marconi appeal in his minute of 10 October 1989:

“c. Annex A-2, 1A/9699/88, Iraq

In 1985 Ministers approved in principle an ELA from Marconi Radar Systems Ltd to supply an Air Defence Training Simulator and a Fighter Controller Simulator to the Computer Directorate of the Iraqi Air Force. Last year the company reapplied for an ELA but without highlighting the previous approval. Ministers agreed a MOD WG and IDC recommendation that it be refused on enhancement grounds. It is difficult to understand how the original application was approved, except that at that time the MOD was still training Iraqi pilots in the UK despite the Iran/Iraq conflict, whereas this had ceased by last year. Since then, however, Ministers have agreed to a more flexible interpretation of the guidelines in respect of Iraq. The equipment, worth £7.75M, is intended for training radar operators in air defence. But it will also improve their combat capability, and, in the view of the RAF Member of the MOD WG, would provide direct and significant assistance to Iraq in operations in breach of the ceasefire. He accepts, however, that it would probably take two years from installation and commissioning to train enough operators to provide significant assistance. The MOD WG is, unusually, divided on this case. But in view of the earlier approval and the relatively long term before assistance would be significant, Minister (DP) is advised to approve the application.” *845

It is to be noted that Mr Barrett was using the language of the revised guideline (iii). A note dated 16 October 1989 from Mr Clark’s Assistant Private Secretary informed Mr Barrett that Mr Clark approved the application.

8D6.442 Following Minister (DP)’s endorsement of the IDC’s 25 September recommendations, Mr Barrett wrote to Mr Steadman:

“You will also be pleased to note, as will John Gallaher to whom I am copying this letter, that MOD Ministers have agreed that Marconi’s application 1A/9699/88 for an air defence simulator and a fighter controller simulator may now be granted.” *846

D6.443 The IDC had met on 16 October 1989, three days before the date of Mr Barrett’s formal notification of MOD Ministers approval. The summary record of that meeting recorded:

“Iraq: licence 1A/9669/88: Marconi Simulator. MOD Ministers have now agreed the supply of this equipment on the grounds that the simulator would take 2 years to commission and install and a further 2 years would be required to train operators to combat level and therefore could not be regarded as a significant enhancement of Iraq’s capabilities. It was agreed that the Ferranti simulator (page D-2), a potential rival, should be approved in parallel”. *847

D6.444 In submitting the summary record to FCO Ministers on 23 October 1989 Mr Sherrington drew particular attention to the Marconi case:

“Mr Gore-Booth minuted on the submission covering the minutes of the last IDC meeting that he believed that the Marconi Simulator (page C-6, licence 1A/9669/88) should be approved on the grounds that it could just as easily be used for civil air traffic control, which would be in the interests of international civil aviation. The MOD have said that the equipment is specifically for air defence and fighter control but have told us that their Ministers have now agreed to its supply on the grounds that it would take 4 years to install the equipment and train the operators to their full capacity” *848

He attached the relevant text of the MOD 10 October submission for reference.

D6.445 Mr Sherrington’s subsequent letter to Mr Steadman dated 25 October (copied to Mr Barrett) reads:

“You will notice that FCO Ministers have given their approval to the Marconi Simulator (Licence 1A/9699/88), now also agreed by MOD Ministers. This applies also to the Ferranti Air Defence Trainer AWP application (Reference 178/38), which we agreed at the meeting should be considered in parallel with the Marconi equipment.” *849

Endnotes:

*835 - MOD/15.4.373

*836 - MOD/24.1.257 at 265

*837 - MOD/24.1.73 at 91

*838 - MOD/25.1.219 at 233

*839 - DTI/157.2.13977 at 13986

*840 - DTI/157.2.14016 at 14023

*841 - DTI/44.2.2686

*842 - FCO/6.1.97 at 98, paragraph (vii)

*843 - FCO/6.1.96: See Mr Gore-Booth's manuscript notation.

*844 - FCO/6.1.93

*845 - MOD/30.2.11 at 13

*846 - MOD/30.2.183

*847 - FCO/6.1.64

*848 - FCO/6.1.62

*849 - FCO/6.1.61

*850 - MOD/30.2.207

*851 - MOD/30.2.231

*852 - FCO/6.1.36

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