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:
PROJECT LISI

D7.75 The contract known as Project Lisi is currently the subject of a TISC inquiry into export licensing and BMARC. *109 Papers relating to Project Lisi have been supplied to the Inquiry both by the Astra receivers and by Mr James and others. I have examined the papers relating to Project Lisi below to the extent necessary to enable me to conclude, as I have, that it falls outside this Inquiry’s terms of reference.

D7.76 Mr James referred to “Project Lisi” in his written evidence to the Inquiry. *110 Mr James said:

“I had direct personal knowledge of the L.I.S.I. contract as this was discussed openly at Board meetings. The equipment was to be delivered to Singapore for onward delivery to Iran probably to be installed on the Oerlikon Pilatus Aircraft which was being developed by Iran as a cheap ground support system. I have never seen the contract document but the essential ingredients of it are well known to me from those discussions.”

The name ‘Lisi’ was apparently derived from ‘Licence Singapore’. *111 The monthly board report of BMARC for February 1989 made reference to Project Lisi under the sub-heading “Existing Major Contracts”. The project was described as “Singapore (Proj Lisi)” and gave an update in relation to “20mm GAM-1301 Mounts and Accessories.” *112

D7.77 In a statement submitted to the Inquiry, Mr Tim Laxton alleged that BMARC had supplied “140KAA cannon and cannon mounts to Iran via Charter Industries of Singapore.” *113 Mr Laxton also referred to “Project Lisi” *114 as providing:

“....an illustration of an elaborate scheme, involving a licence agreement with a company in a country notorious for its lax arms export controls, devised by a multinational arms manufacturer to evade the UK ban on the export of lethal defence equipment to Iran. I believe that this project was carried out with the knowledge of the MOD. Whilst I appreciate that this project falls outside the direct remit of your Inquiry I have no doubt that similar schemes were used by UK companies to channel arms to Iraq.”

D7.78 Mr James, in his evidence to TISC of 5 February 1992, explained that “Astra had through its BMARC subsidiary in Grantham a contract called LISI to supply medium calibre armaments - ammunition, weapons and tooling to Singapore for onward transmission to Iran.” *115 Mr James added that the LISI contract had ‘government approval’ and in his oral evidence to TISC went on to say that “There would have been no way we could have exported that sort of equipment without government approval.” *116

D7.79 The various papers before the Inquiry relating to Project Lisi contain nothing to support the suggestion that the BMARC equipment licensed for export to Singapore was to be diverted to Iraq. In the absence of any special feature involving Iraq, and there was none, Project Lisi was not, in my view, a matter which fell within the remit of the Inquiry. It was not, therefore, necessary for me to investigate any further the Project Lisi allegations. I have not done so and have no conclusions to express.

Endnotes:

*109 - The terms of reference for TISC’s inquiry are:

“To examine the role of the DTI in granting licences to BMARC for the export of naval guns to Singapore (’Project Lisi’) and whether past failings in the export licensing system have now been corrected”.

*110 - Mr James’ written statement of 8 June 1993, p.26

*111 - Written submission of Mr Laxton of 30 June 1993, p.8 (GENR/162)

*112 - AST/12. See also the invoice dated 14 February 1989 for the 20mm GAM spares destined for Oerlikon Singapore Ltd - AST/102, Appendix III, p.38

*113 - see letter from Mr Laxton to the Inquiry dated 8 January 1994 (GENR/284). Mr Laxton told the Inquiry that from September 1985 to December 1990 he had worked in the corporate finance department of Stoy Hayward where he spent a “considerable amount” of his time working on the affairs of Astra including the acquisition of BMARC - letter from Mr Laxton dated 30 June 1993

*114 - Written submission of Mr Laxton of 30 June 1993, p. 8

*115 - Memorandum by Gerald James to TISC 86-x p. 331

*116 - Minutes of Evidence taken before TISC, 5 February 1992, paragraph 2330, p. 355

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