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 7 Other Allegations of Illegal Arms Exports to Iraq

Excerpt:
(I) ROYAL ORDNANCE

(I) ROYAL ORDNANCE

D7.1 Until 1984 the Royal Ordnance factories were an integral part of the Ministry of Defence and were the principal suppliers of ammunition, land weapons and fighting vehicles to the UK armed forces. *1 On 20 August 1984 the factories were incorporated and became Royal Ordnance plc. *2 All of the shares were vested in the Secretary of State for Defence and the company therefore remained wholly Government-owned. Although after its incorporation Royal Ordnance plc operated as a commercial organisation, it was obliged to prepare annually a corporate business plan which had to be agreed by the Secretary of State. The Secretary of State was also answerable to Parliament for the Government’s investment in Royal Ordnance. After an unsuccessful proposed public flotation, in April 1987 Royal Ordnance was sold in its entirety to British Aerospace plc.

D7.2 Prior to its incorporation Royal Ordnance, by virtue of its status as part of the Crown, was not required to obtain licences for the export of its goods. *3 However, there was an informal system in place which ensured that its exports were authorised by the relevant Departments. In particular, AWP applications were submitted before contracts were signed and were considered by the MOD and FCO in the normal way. *4 After incorporation Royal Ordnance became subject to the ordinary export licensing regime. This obviously continued after its sale to British Aerospace.

D7.3 A number of allegations have been made, both in press articles and in letters to the Inquiry, that Royal Ordnance exported ammunition to Iraq in breach of the Guidelines. *5 The volume of allegations made about Royal Ordnance seems disproportionately high compared to those made about other companies involved in the manufacture and export of arms, ammunition and defence equipment. I attribute this, in no small part, to the fact that it used to be a Government-owned company and, in the absence of publicly available information about the company’s export licence applications, speculation has mounted without any sustainable evidence to support the allegations. Nonetheless I have investigated two of the more specific allegations and my conclusions on these are set out below. As to the more general allegations, I have no reason to believe from the evidence with which I have been supplied that export licences or AWP clearances were granted to Royal Ordnance to export ammunition to Iraq in the period covered by my terms of reference. I have, however, also investigated the possibility that Royal Ordnance ammunition ostensibly exported to a third country was diverted for use in Iraq.

D7.4 In investigating the possibility of diversion I have asked Lieut-Colonel Glazebrook detailed questions about a number of individual Royal Ordnance ELAs/AWPs. *6 I have also obtained a list from British Aerospace’s Royal Ordnance Division (who have cooperated fully with the Inquiry), of all exports of ammunition by the company to Austria, Portugal, Spain, Yugoslavia, Egypt, Saudi Arabia and Jordan in the period 1987 to 1990. *7 The list was sent by the Inquiry to Lieut-Colonel Glazebrook with a request for him to assess whether, having regard to the quantities and specifications of the ammunition exported, there was any reason to suspect that the end-user was likely to have been different from that stated. In his written statement to the Inquiry dated 31 October 1994 Lieut-Colonel Glazebrook, after dealing individually with each of the exports contained in the list, said as follows: “In summary, I have found no instance in which I have good reason to believe that the end-user was likely to have been different from that stated.” *8

D7.5 Given Lieut-Colonel Glazebrook’s expert assessment, I am satisfied that there would have been no reasonable ground for the Government to have suspected that the Royal Ordnance ammunition specified in the company’s list would be diverted for use in Iraq. As to whether actual diversion took place after export, I am not in a position to investigate this fully, nor do I consider it necessary for me to do so. I have taken the view that investigation of potential export control offences, committed without Government knowledge or acquiescence, is best left to those who have that responsibility and the resources to do so, viz, the Commissioners of Customs and Excise. That said, I have seen no tangible evidence that Royal Ordnance was knowingly involved in the diversion or trans-shipment of ammunition to Iraq in the period covered by my terms of reference.

Endnotes:

*1 - see the letter from the MOD Scott Inquiry Unit dated 1 February 1994 (MOD/716)

*2 - The incorporation of Royal Ordnance took effect pursuant to the Ordnance Factories and Military Services Act 1984 (MOD/716)

*3 - see the letter from the DTI Scott Inquiry Unit dated 20 September 1993 (DTI/523). The Import, Export and Customs Powers (Defence) Act, 1939, did not bind the Crown.

*4 - From 1983 AWP applications were processed by MOD/DESS who would, in appropriate cases, seek advice from other MOD branches and from FCO/NPDD. From December 1984, AWP applications in respect of exports to Iraq were considered by the MODWG and the IDC: see the letter from the MOD Scott Inquiry Unit dated 23 December 1992 (MOD/12)

*5 - see, for example, the article in the “Financial Times” of 19 November 1989 “Company Shrugs off Allegations”

*6 - see paragraphs E2.17 and E2.59-E2.61 infra.

*7 - The list provided by Royal Ordnance gives details of contracts for the sale of ammunition which includes technical specifications, quantities and prices. Those details are regarded by Royal Ordnance as being of commercial sensitivity. Since I am content with Lieut-Colonel Glazebrook’s assessment that he has found no instance in which he has “good reason to believe that the end-user was likely to have been different from that stated” there is no need for me to publish the list.

*8 - In respect of a few of the exports Lieut-Colonel Glazebrook said that he would require further technical information before he could make a final assessment of the possibility of diversion. However, given his conclusions on the many exports on which he was able to express a final view, I did not consider it necessary to obtain this additional information. For the reasons stated in the footnote 7 above, Lieut-Colonel Glazebrook’s statement dated 31 October 1994, which deals exclusively with his consideration of the Royal Ordnance list of ammunition exports, will not be published.

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