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:
INFORMATION SUPPLIED BY MR GUMBLEY TO THE MOD

D7.20 On 26 October 1989 a meeting was held between Mr Roger Harding (Director General Marketing in MOD/DESO), Mr Robert Primrose (Director Marketing Services, DESO), Mr Christopher Gumbley (Chief Executive of Astra Holdings plc) and Mr Jolly (Astra). *26 The purpose of the meeting was for Mr Gumbley to provide details of various contracts held by the Belgian firm PRB which had recently been acquired by Astra. Mr Gumbley provided a list of specific export contracts held by PRB, including a number which he suspected might be intended for an Iraqi end-user. *27 Under the heading “General” contracts, Item 2.5 of the list was as follows:

“2.5 PRB have reliable information that ordnance hardware has been cast in the UK, machined by RO [Royal Ordnance] and exported with UK approval to the Kingdom of Jordan for Iraq.”

D7.21 Mr Primrose and Mr Harding were asked by the Inquiry to explain what steps were taken to follow up the information provided in Item 2.5. *28 Mr Harding said that he “did not examine it [the list provided by Mr Gumbley] closely at that time or subsequently as I asked Mr Primrose, in whom I have the utmost confidence, to do so following the meeting.” *29 In his written statement to the Inquiry Mr Primrose said:

“[4] Paragraph 2.5 of Annex 3 to Astra document. I believe we discussed most of the items in the Astra document; and, as I recall, it was Mr Gumbley who drew our attention to this item. My impression was that he was rather dismissive of the allegation made by some PRB managers. I am certain that he did not produce any supporting evidence. I too was rather sceptical, given the origin of the allegation and the circumstances in which it had been made to him. However, it would have been wrong to ignore it, so I copied the papers to my colleague, the Head of DESS, [Mr McDonald] as well as to the AUS DES Admin, [Mr Tidy] to be dealt with as appropriate in the UK export control/enforcement forum. This I did on 14 Nov 89”. *30

D7.22 It does not appear from the papers which I have seen that Mr Tidy or Mr McDonald took any steps to follow up the information provided in Item 2.5 of the list. However, given that the list was focussed predominantly on Project Babylon and both Mr Gumbley and Mr Primrose were “sceptical” and “dismissive” of the allegation about Royal Ordnance, I do not find this omission (if it was) to be surprising. In any event, the non-specific description of the export (“ordnance hardware”) would have made it very difficult for the MOD usefully to investigate the allegation. For these reasons I did not consider it necessary to ask Mr Tidy or Mr McDonald what, if any, action they took to follow up the information.

D7.23 In his oral evidence Mr Primrose made a more general comment on the way in which he treated allegations made about Royal Ordnance when he was in post at DESO. He referred the Inquiry to the various favourable deals which Royal Ordnance had with the MOD. *31 He then said that he was “fairly certain that Royal Ordnance would not have knowingly done this [supplied ammunition or defence equipment to Iraq]” because “It would have been commercial suicide deliberately to have violated the control procedures.” *32 The point made by Mr Primrose, in my view, carries significant weight. In the period from its incorporation until 31 March 1993, Royal Ordnance had agreements in place with the MOD which, in effect, guaranteed that a certain amount of equipment/ammunition would be purchased from Royal Ordnance each year. If the MOD had suspected that Royal Ordnance had knowingly supplied equipment/ammunition to Iraq in breach of the Guidelines there is a strong possibility that these agreements would have been revoked. This would have had a very significant impact on the company. The risk of losing its preferential status with the MOD represented, in my view, a strong incentive for Royal Ordnance not to supply equipment to Iraq in breach of the Guidelines. I have borne this in mind when considering whether the various allegations which have been made about Royal Ordnance had any substance.

Endnotes:

*26 - MOD/125.1 at 2 (see paragraph F3.23 infra)

*27 - MOD/125.1 at 3; This list was provided to the Trade and Industry Select Committee investigating “Exports to Iraq”, see the Minutes of Evidence, 19 February 1992, page 413

*28 - see the letters to Mr Primrose and Mr Harding dated 16 April 1993 (MOD/151 & 150 respectively); Mr Gumbley was also asked by the Inquiry to explain the provenance of item 2.5. For understandable reasons Mr Gumbley indicated that he was not prepared to provide evidence.

*29 - see his written statement dated 11 May 1993, page 3

*30 - see Mr Primrose’s written statement dated 11 May 1993, page 3; In his oral evidence Mr Primrose confirmed that a copy of the list provided by Mr Gumbley was annexed to the minute which he sent to Mr McDonald on 3 November 1989 (MOD/125.7) (Closed Session, 26 May 1993, p.27 et seq)

*31 - In a letter to the Inquiry dated 1 February 1994 (MOD/716) the MOD Scott Inquiry Unit explained the arrangements which were in place between the MOD and Royal Ordnance as follows:

“Until incorporation in January 1985, the MOD satisfied the requirement of the UK Armed Forces for ammunition through a Preferred Source Policy, by which the ROFs were given first refusal on the production of all the MOD’s ammunition requirements other than a few items proprietary to other manufacturers. When the ROFs were incorporated, MOD decided that, although future ammunition orders would be subject to competition, almost all requirements for explosives and propellant would continue to be bought from RO under a special pricing formula for a further period of five to seven years....
6. In addition to this, MOD agreed in September 1986 to an RO proposal that the Department should buy the bulk of its small arms ammunition requirements for the three year period up to 31 March 1989 from RO to ensure orders were maintained while the company made the transition to full commercial operation. When the sale to BAe was completed in 1987, the MOD and BAe signed Heads of Agreement setting out the basis for a new five year agreement effective from April 1988. A new agreement, replacing the earlier agreements mentioned above, was signed in July 1988 and committed MOD to buy defined products incorporating explosives and propellant worth a certain value, at fixed prices reducing in real terms. The 1988 Agreement expired on 31 March 1993 and was not replaced.”

*32 - see the transcript of his oral evidence, Closed Session, 26 May 1993, p.24 et seq

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