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:
35MM AMMUNITION TO IRAQ VIA CYPRUS

D7.71 Mr James expanded on his allegation that 35mm ammunition was supplied to Iraq via Cyprus. In his written evidence to the Inquiry he stated that:

“B.M.A.R.C. manufactured 35mm ammunition to Cyprus on a contract which was valued at £16M. This calibre ammunition was normally made by Oerlikon but by agreement B.M.A.R.C. could enter into contracts to manufacture and supply this ammunition. It was known by all on the B.M.A.R.C. Board, as a result of open discussion, that Cyprus was being used as a diversionary country to Iraq. This has been reaffirmed to me subsequently by a member of the present Greek Cypriot Government who stated that in 1988/89 Cyprus had no use for 35mm ammunition and that the equipment supplied by B.M.A.R.C. was received into Cyprus and re-exported to Iraq. As with L.I.S.I. and the booster pellet contract the Cypriot 35mm contract was openly discussed. I can only repeat that these things simply would not have happened had those in the company responsible not been satisfied that proper approval had been given. Astra would simply not have risked exports of this type without proper approvals because we were so dependent upon M.O.D. And D.O.D. contracts that we would never have risked jeopardising our relationship with those Departments for the sake of these contracts.” *104

D7.72 Mr James had also referred to the supply of 35mm ammunition in the written evidence that he submitted to TISC on 5 February 1992. *105 He stated that Astra quoted for 35mm ammunition for Cyprus but did not secure the order because “General Isles created problems under the licence agreement with Oerlikon” and that the “real problem” appeared to be that “the security services had already agreed Oerlikon as the supplier and the Astra competitive intervention upset their plans and those of their representative General Isles”. *106 In his written evidence to the Inquiry Mr James explained that “it was clear that he [Major General Isles] had already set up sales/commission lines which had been agreed with the U.K. authorities and which would have been jeopardised by direct sales.” *107

D7.73 Mr James’ comment that the security services had agreed Oerlikon as the supplier of the 35mm ammunition to Iraq via Cyprus is, in my view, implausible. Since Oerlikon’s application for export licences for the ammunition would have had to be considered in the usual way, by both the MOD and the FCO, the security services were not in a position to have delivered their side of the suggested agreement. Mr James’ suggestion that Major-General Isles had “set up sales/commission lines which had been agreed with the UK authorities” has no support from any of the extensive papers submitted by departments and the intelligence agencies to the Inquiry.

D7.74 The Inquiry has also obtained a number of documents from the Astra receivers, Coopers & Lybrand, relating to BMARC’s efforts to obtain a licence to export 35mm ammunition to Cyprus in July 1987 and January 1989. *108 There is no suggestion from any of these papers, however, that the ammunition exported to Cyprus was destined for Iraq or that the Government had knowledge that Iraq was its destination.

Endnotes:

*104 - Mr James’ written statement of 8 June 1993, p. 28 and 29

*105 - Memorandum by Gerald James, Minutes of Evidence taken before TISC, 5 February 1992, 86- x at p. 331-332

*106 - Major-General Isles was Deputy Managing Director of BMARC until his retirement on 31 July 1990

*107 - Letter from Irwin Mitchell to the Inquiry dated 15 June 1993, page 2 (GENR/127)

*108 - see AST/102, Appendix III, p. 58 to 64

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