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:
(XXII) EXPLOSIVE BOLTS

(XXII) EXPLOSIVE BOLTS

D6.468 In October 1989 an Intelligence Report was distributed to, amongst others, FCO(MED and SEND) and MOD. The report referred to two orders for explosive bolts placed by the Swiss office of an international consortium with a UK firm for an Iraqi connected with Iraq’s missile development programme. No supplementary report identifying the UK firm (the Company) was issued to Whitehall customers; nor was any request for its identification made. *887

D6.469 On 8 December 1989, amid heightened concerns over the proliferation of missile technology, the British Embassy in Baghdad advised MOD and FCO (MED) of Iraqi media reports announcing the successful launch of an Iraqi built three stage rocket, capable of carrying satellites into space. Iraq also claimed that the rocket had been developed without outside assistance. *888 The FCO’s initial reaction to the news was sceptical. They took the view that there was no evidence to suggest that Iraq was anywhere near the advanced stage they claimed to have reached. *889 Mr A, a member of DIS specialising in missile technology, also expressed doubts over the accuracy of the Iraqi claim. In a telegram to the British Defence Attaché in Baghdad, dated 20 December 1989, he endorsed the view that Iraq would have required foreign assistance in a number of areas including those of stage separation and missile guidance technology, which he said “probably still elude [the] Iraqis”. *890 Mr A’s views on the Iraqi claim were repeated in January 1990 in a much fuller assessment of Iraq’s likely missile developments and other known missile projects. *891 I have found no reference in the papers submitted to the Inquiry to the October 1989 Report having been raised or discussed at any meetings of the REU in the period between the circulation of the October 1989 Intelligence Report and January 1990, when the Company filed an ELA. Nor is there any evidence that the Report was passed to the DTI.

D6.470 The ELA was dated 15 January 1990. The application stated that two types of explosive bolts (M24 and M16), 150 of each, 300 in total, were to be exported. The consignee was named as SRC Engineering SA, Geneva, Switzerland and the ultimate end user as ‘State Company for Oil Projects’, Baghdad, Iraq. The precise purpose for which the goods were to be used was given as “Oil pipe release”. The application was rated by the DTI under ML8. A copy of the end user certificate, copies of two consecutively numbered order forms, specifications and technical details of the goods were also provided. The details contained in the end user certificate and order forms matched the information given in the October 1989 Intelligence Report. The end user certificate, headed “Republic of Iraq, Ministry of Oil, State Company for Oil Projects”, numbered 01/1/920 and dated 20 September 1989 simply stated:

“TO WHOM IT MAY CONCERN

The following items are for use in the Iraqi national Oil industry and will not be Re- exported:

Explosive bolts M 24 Qty 150 off

Explosive bolts M 16 Qty 150 off”

D6.471 The DTI ELA cover sheet was marked to indicate that copies of the ELA had been circulated by the ELU to the FCO Defence Department and MOD DESS 2a on 17 January 1990. DESS 2a included the application on the lists of ELAs circulated under cover of Mr Devlin’s letter dated 31 January 1990 for consideration by the MODWG at their meeting on 7 February. The MODWG recommended ‘A(I)’ - approval (insignificant). *892 At the subsequent IDC meeting on 16 February 1990, the FCO SEND representative said that he had not received a copy of the application and raised the point that the bolts could be used in missile separation. Mr Gall (DTI) annotated his copy of the IDC agenda with “? MTCR ELU to send copy of licence FCO/SEND for clearance (next meeting)”. *893 The FCO summary record of the meeting noted that “SEND had asked for further information on this equipment as the bolts could be used in missile separation. It was agreed that a decision on this application be deferred until the next IDC meeting in view of the sensitivities about Iraq’s missile programme”. *894

D6.472 On 19 February 1990 Mr Gall circulated a minute about the 16 February 1990 IDC meeting to ELU staff. Commenting on the ELA by the Company (and on another ELA, by a different company concerning the export of cathode ray tubes to Iran), he wrote:

“I made the point that with our revised guidelines for circulation of cases if there are any MTCR or NNPT implications FCO/SEND should receive a copy of the application from ELU automatically and I therefore doubted the need for FCO/SEND to see these cases. However it emphasises the need for all sections to check with STU [Sensitive Technologies Unit] the correct rating of the equipment before cases are circulated to ensure all relevant cases are seen by the appropriate advisers”. *895

D6.473 On 1 March 1990, Mr Q visited intelligence agency colleagues to discuss SRC’s involvement with Project Bird (associated with Iraq’s development of a space launch vehicle) and Project Babylon. A short note of the meeting *896 recorded that SRC had appeared to be heavily involved with the development side of Project Bird. Mr Q was reported to have been shown a chronology on ‘Bird’ related developments. In conclusion, it was agreed that further information on Project Bird should be circulated.

D6.474 On 6 March 1990 Mr Lyster-Binns (FCO SEND) wrote to Mr Sherrington:

“MOD Working Group - Iran and Iraq
[The Company’s ELA]
I am somewhat suspicious of SRC’s involvement in the oil industry. I have asked [Defence Intelligence] for a technical opinion on whether the bolts could be useful in the stage separation process of missiles of MTCR concern. However I am inclined to agree this licence on account of the bolts small size and quantity”

A note in the margin of the minute, referring to the requested technical opinion, said:

“Not yet given, but the bolts may be useful for missile separation. To be held pending at March IDC”. *897

At the IDC meeting held on 19 March 1990 the application was marked ‘Pending’. An annotation on the list of applications before the IDC, reads “FCO (SEND) to consider for next IDC”. *898

D6.475 On 20 March 1990, a member of MOD DIS staff sent the following note to a colleague:

“ MTCR - EXPORT CONTROL LICENCE APPLICATION.... [The Company]

[A colleague] asked for comments on export of 150 each of M16 and M24 explosive bolts to the Iraqi State Oil Company.... FCO have just sent me the DTI licence application with details of the devices. The explosive content is very low - milligrams only - and there is no advanced technology content.

However, in addition to the perfectly legitimate civil uses eg by an oil company, explosive bolts are used on missiles and space launchers for stage separation, in fact there are a multitude of uses for rapid separation, unlatching, pushing & pulling separations etc.

The MTCR list does not catch them, save possibly in item 12, Category II - “Launch and ground support equipment.” (a) “Apparatus or devices.......for control, activation or launching of the systems ....”.

I am wary of UK selling these to this country because of collateral in [an intelligence report dated 6 March 1990] where 50 off M24 explosive bolts and 100 off M16 explosive bolts are sought from another country, this time for an identified missile project. The coincidence is rather worrying. We have an end user certificate as per MTCR requirements .... Cat II, but on balance I would not like to be seen selling these to the country concerned.”

The Head of the Defence Intelligence section passed the note on to Mr G, another member of MOD DIS staff. Mr G added the (undated) comment:

“Under no circumstances must these be sold. I have 1st class collateral confirming the real end-use as missiles. SRC is now closed”.

It should be noted that Mr G had been a regular attendee of MODWG meetings and had worked closely with Mr J. In a written statement to the Inquiry dated 2 June 1993. *899 Mr G said that whilst he vetted all Iran/Iraq applications, he did not always attend the MODWG meetings. Mr J on the other hand, always went and was in Mr G’s opinion, competent to express Mr G’s own views.

D6.476 On 29 March 1990 the Company wrote to the DTI ELU. The Company expressed their concern over the possibility of the order being cancelled as a result of the delay in obtaining an export licence and sought urgent consideration *900 The DTI advised the Company by telephone that the case was still under consideration and that the next IDC meeting was to be held on 19 April 1990. *901 No decision was however reached at the IDC meeting on 19 April 1990. The application remained ‘pending’ on the IDC list of applications but the annotation shown against the ELA became “MOD (Sy 3) to seek RAE advice”. *902

D6.477 On 22 April 1990 Mr G advised DESS by way of a short note, that the application “Must be refused. On no account is it to be released”. *903 Mr G attached a copy of the ELA (which had been sent to him by Mr Lyster-Binns FCO SEND on 12 March 1990). Against the ‘stated end use’ on the copy application, Mr G wrote “THIS IS FALSE!!”.

D6.478 Meanwhile an Intelligence Report was issued on 27 April 1990 concerning Iraq’s development of a space launch vehicle (Project Bird) with the help of SRC.. *904 The Report was circulated to desks within the intelligence and security agencies, FCO, MOD, DTI and Customs. The Report referred, inter alia, to the order for the explosive bolts.

D6.479 The MODWG, at its meeting on 8 May 1990, amended its recommendation to ‘R(Leth)’ *905 apparently in view not only of the written DIS advice but also Mr G’s advice given at the meeting. *906 The IDC, at its meeting on 18 May 1990 agreed with the MODWG’s recommendation. *907 Following the IDC meeting, Mr Nead circulated a minute to DTI ELU staff. Dated 24 May 1990, his minute noted that the Company’s ELA “should be refused now”. *908 On 1 June 1990 Mr Barrett submitted the list of IDC recommendations to Minister/DP (Mr Clark) for endorsement. Drawing the Minister’s particular attention to the Company’s ELA, he wrote:

“[The Company’s] application covers the supply of qty.300 explosive bolts worth some £26k to the Iraqi State Company for Oil Projects. A small number of the bolts are for delivery to Ordnance Technologies Ltd. in the UK and the balance to Iraq via SRC Engineering in Geneva. In view of the involvement of these two companies, and intelligence suggesting that the stated end use was false and that the bolts were in some way connected with the Iraqi Big Gun project, the IDC agreed to recommend refusal.” *909

Mr Hatcher, APS/Min(DP), replied on 5 June that Mr Clark was content to endorse the proposals with the exception of the Company’s ELA. He wrote:

“Minister(DP) would be grateful for some further explanation, in particular a description of the use to which the explosive bolts would be put and what their connection is likely to be with the “supergun” project. It might also be useful to know the exact basis of the suspicion that the stated end use is false. Furthermore, is it now the policy of the IDC to recommend a refusal as a matter of course to applications from certain “suspect” companies?”. *910

D6.480 Mr Barrett asked Mr Hextall to prepare a draft reply. Mr Hextall in turn wrote to Mr G on 12 June. He explained that the recommendation for refusal had been referred to in a submission to the Minister(DP) and continued:

“In responding to that submission APS/Minister(DP) records that Minister(DP) would be grateful for some further explanation, in particular, a description of the use to which the explosive bolts would be put; what their connection is likely to be with the “supergun” project and the exact basis of the suspicion that the stated end use is false. 3. In order to respond quickly to Minister (DP)’s queries, I should be grateful for your very early advice together with a suitable form of words to use in reply. It may be that the classification of the intelligence supporting the recommendation to refuse the application is of such a level that a separate briefing for Minister might be the only satisfactory way to meet the remit. If that is the case, I should be grateful if you would put action in hand to arrange it.” *911

Meanwhile, a junior DTI official acting on Mr Nead’s 24 May minute, wrote to the Company on 6 June 1990 and notified them that their application had been refused. *912

D6.481 On 11 June Mr Barrett wrote to the Director of the DTI ELU and reported:

“MOD Ministers have asked for further background information on [the Company’s] ELA....covering the export to Iraq of explosive bolts, before they are prepared to endorse the IDC recommendation to refuse it”. *913

The letter was copied to Mr Sherrington FCO MED who drew it to the attention of the FCO Nuclear Non Proliferation Department. Mr Sherrington annotated his copy with “I imagine NPD would resist any attempt to approve”.

D6.482 Mr G, on 4 July 1990 wrote to Mr Hextall:

“Explosive Bolts for Iraq. [The Company]....

2. ....Under no circumstances should this.... application be granted.

3. Our refusal is based strongly on [very highly classified] data. Do we need to show this to the Minister ?” *914

D6.483 Mr Barrett, in his submission to APS/Min(DP) dated 10 July 1990 concerning the latest IDC recommendations, said:

“You will recall that, following my latest submission, Minister(DP) requested further information regarding [the Company’s] ELA for explosive bolts for Iraq. The DIS were in receipt of intelligence in advance of the submission of this application indicating precisely the details of the application and alerting them to the fact that these explosive bolts were for an Iraqi missile programme (not necessarily the Big Gun project as we mistakenly inferred) and not for the Iraqi State Oil Company. This is a perfect example of a deliberately misleading ELA, and should in any event be refused under the MTCR. The DIS’s intelligence, and hence their refusal, is based strongly on [very highly classified] data, and a briefing would probably have to be arranged should Minister(DP) require further background.” *915

On 20 July 1990 Mr Hatcher APS/Minister DP replied to Mr Barrett’s 10 July submission:

“I believe that Minister (DP) is content with your report about the uses of explosive bolts”. *916

Mr Barrett wrote to the Director of DTI ELU on 24 July 1990 and sent a copy to FCO MED. He confirmed that “MOD Ministers are content for this ELA to be refused”. *917

D6.484 This case is a good example of the MODWG and IDC procedure working well and leading to a recommendation for the refusal of an ELA for equipment which relevant intelligence had shown to be intended for the Iraqi missile proramme.

Endnotes:

*887 - IR/185 & 186

*888 - MOD/704.3.123

*889 - FCO/583.1.157

*890 - MOD/663; MOD/663 was added to MOD/704.3

*891 - MOD/586.32

*892 - MOD/31.2.7 at 17

*893 - DTI/157.4.14296 at 14301

*894 - FCO/6.4.167 at 169, paragraph 1(vi)

*895 - DTI/865

*896 - IR/8.56

*897 - FCO/6.4.141

*898 - FCO/6.4.136

*899 - GENR/143

*900 - DTI/865

*901 - DTI/865

*902 - MOD/32.1.141 at 167 ‘RAE’ was Royal Aircraft Establishment

*903 - MOD/32.1.189

*904 - IR/8.49

*905 - MOD/32.1.281 at 305

*906 - Reported in Mr Hextall’s later minute dated 12 June 1990 MOD/32.2.187. *907 - MOD/32.1.327 at 351

*908 - DTI/45.2.2867

*909 - MOD/32.2.1

*910 - MOD/32.2.13

*911 - MOD/32.2.187

*912 - DTI/865

*913 - FCO/6.3.114

*914 - MOD/32.3.143

*915 - MOD/32.3.151 at 153

*916 - MOD/32.3.317

*917 - DTI/157.4.14526

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