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:
CUSTOMS INVESTIGATION

D7.35 During the course of the investigation initiated as a result of the VAT Control Officer’s visit to Oceano in August 1989, Customs ID prepared a number of briefs and Interim Reports. *48 In response to the VAT Control Officer’s report Mr I Graham, a Customs investigation officer, made enquiries of DTI Export Licensing Branch. On 25 August 1989 he reported that he had been told that during 1989 no applications for export licences had been received by the DTI from Global. On 21 December 1989 Mr B Fletcher, an MOD equipment expert, wrote to Customs and gave his opinion that explosive detonator transponders would be licensable under ML4(2) of the 1987 EG(C)O. He said also that “If MOD were asked its advice on whether an export licence would be granted for this device to be supplied to Iraq, I am advised by DOR (Sea)/RST [an AWP member] that it would be opposed under the present Ministerial Guidelines as being lethal.” *49

D7.36 ML4 of the 1987 EG(C)O requires a licence to be obtained for the export of (inter alia)

“....demolition charges... apparatus designed for use therewith, and specially designed components and software therefor, the following -

(1)....military demolition charges....

(2) Apparatus and devices specially designed for the handling, control, activation... laying, sweeping, discharging, detonation... of items mentioned in head (1) of this entry or ... of explosive devices”;

D7.37 It transpired, on investigation, that the transponders had been manufactured by a French company and imported into the United Kingdom by Global with a view to export to Iraq pursuant to the contract. The import into the United Kingdom had been authorised under a French export licence and an International Import Certificate issued by the DTI. Under the 1987 EG(C)O, an export licence is required for the export from the United Kingdom of goods “in relation to the export of which from any country an international import certificate has been issued and which have been imported into the United Kingdom....” *50

D7.38 Accordingly, the transponders required an export licence:

(a) on the footing that they were covered by ML4(2); but alternatively,

(b) because they had been imported into the United Kingdom under an International Import Certificate (IIC).

D7.39 Notwithstanding the possibility of a prosecution based on licensability of the transponders under ground (b) referred to in the foregoing paragraph, it was decided at a case conference in June 1990 attended by Customs ID and Customs Solicitors Office representatives that “evidence of special design would be required to meet criteria set by ML4 of...” the 1987 EG(C)O, and that the requisite evidence would have to be obtained from the French company that had designed and manufactured the transponders. *51

D7.40 The former chairman and director general of the French company, a M. Tardivon, was, accordingly, interviewed. He was reluctant to co-operate but did, on 13 July 1990, provide a statement. In his statement M. Tardivon said that “The company Oceano In[s]truments manufactured the remote control acoustic receivers according to the specification which they had been given in order to ensure compatibility with the detonators which were to be used. [The] company supplied only the remote control acoustic receivers which were specified for the detonators project, and [had] never received, adapted or despatched the actual detonator component.” *52 The detonators themselves had been manufactured by another company.

D7.41 M. Tardivon’s statement did not contain the information required to prove special design of the transponders and, on 24 October 1990, a second statement was obtained from him. In this statement M. Tardivon explained the development of the unit which the company had manufactured and which had been sold to Global and said (as translated):

“...To meet Global’s specifications about the intended use [the Company] modified our design to meet [Global’s] needs....” *53

He was not, however, willing to come to the United Kingdom to give evidence and was not prepared to allow Customs experts access to the design drawings. Customs took the view, understandably, that M. Tardivon’s two statements did not establish that the transponders had been ‘specially designed’ for ML4 purposes. *54 In any event, if M. Tardivon was not willing to give evidence in Court, a prosecution could not have been based on his statements.

D7.42 On 22 April 1991 Customs ID submitted a final report *55 which concluded that “the evidence required from the French company [would] not be forthcoming in any form” and that “As a result there would be less than 50% chance of a successful prosecution if this case were to be progressed to Court.” The prosecution referred to was a prosecution for exporting without an export licence goods licensable under ML4(2) of the 1987 EG(C)O. The requisite evidence was evidence of special design. That evidence could not be obtained. The alternative, namely, a prosecution for exporting without an export licence goods imported into the United Kingdom under an International Import Certificate was considered. But after consultation with Customs Solicitors Office it was decided that for a prosecution to go ahead on that basis “would smack of sour grapes.” Moreover, the EG(C)O 1989, which had replaced the EG(C)O in force when the transponders were exported, had effected an alteration in the law in that export licences for goods imported under an IIC were no longer required unless the goods were licensable in their own right. The report recommended, therefore, that no prosecution be brought.

D7.43 The Customs ID recommendation was accepted and no proceedings were instituted against Mr Blackburn or Mr Mellor. Each was sent a letter from the Customs Directorate Division, which stated that no further action would be taken, but emphasised the directors’ responsibility to ensure that DTI licensing provisions were fully complied with.

D7.44 In my opinion, the institution of the Customs investigation into the circumstances in which the transponders had been exported was justified, the conduct of the investigation was thorough and the final decision that no prosecution should be brought was a proper one in the circumstances.

Endnotes:

*48 - see paragraph D7.26 supra

*49 - CE/457.19

*50 - 1987 EG(C)O, Article 2(x)

*51 - CE/457.113, CE/457.123 at 124 and CE/457.119 at 120

*52 - CE/457.107 at 108-109

*53 - CE/457.111 at 112

*54 - CE/457.113 at 116

*55 - CE/457.125-127

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