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:
SKYGUARD AIR DEFENCE SYSTEM (SKYGUARD) AND THE TRAINING OF GUN CREWS

D7.83 In his written evidence to the Inquiry Mr James explained that when Astra bought BMARC from Oerlikon, the “Faldingworth facility” was purchased “as part of the deal” *122 and that part of the Faldingworth facility consisted of a training centre for “training gun crews on Oerlikon equipment”. Mr James then stated the following:

“After the purchase of B.M.A.R.C., Astra became a main supplier to Oerlikon with a licence to build its (Oerlikon’s) products. Under this arrangement B.M.A.R.C. manufactured for Oerlikon the major parts of an anti aircraft system called Skyguard. It was normal practice to train ground crews ie military personnel belonging to the country who had purchased the system.... The part of the Faldingworth site which was the training centre was sold back to Oerlikon as they were anxious to retain it for their own purposes. They explained that it was politically easier to train foreign gun crews in the UK than in Switzerland. Officially the Skyguard system was exported to Jordan, Saudi Arabia, Kuwait, the United Arab Emirates and other countries. It is common knowledge that this particular anti aircraft system was heavily deployed in the defence of Baghdad. It is also common knowledge amongst anyone who had contact with the ground crews coming to Faldingworth for training that they were Iraqis, though often described as Saudis. In fact the former managing director at B.M.A.R.C., Werner Leuch, explained to me that after 1984 only Iraqis came for training but prior to that it was both Iranians and Iraqis. He believed that there had been a policy decision to favour Iraq after 1984.” *123

D7.84 An invoice dated 5 February 1988 (which was among the papers provided to the Inquiry by Coopers & Lybrand), details a “Skyguard System Simulator” to be dispatched by Machine Tool Works Oerlikon-Buhrle Ltd, Switzerland, to BMARC to the Faldingworth training facility. *124 Oerlikon still owned BMARC at this time. A further two invoices dated 11 June 1986 and 25 June 1986 respectively were also discovered during the inspection of documents held by Astra’s receivers. *125 These were addressed to Machine Tool Works Oerlikon Buhrle Limited, Switzerland and detailed “35mm Skyguard spares”.

D7.85 In response to questions from the Inquiry *126 Mr James was unable to give dates when Skyguard was exported to Jordan, Saudi Arabia and the UAE. However he did state that the exports were “throughout the 1980’s” and explained that “it was Oerlikon who was the exporter as they had the contract to supply but the equipment which was exported was manufactured at and dispatched from Grantham.” *127 According to Mr James the “common knowledge” that Baghdad was protected by Skyguard was derived from “an amalgam of information gained from the media, conversations with eye witnesses, namely people who had spent time in Baghdad and from knowledge accumulated by talking to others involved in the defence industry.” *128

D7.86 The Inquiry asked Mr James who had taken the “policy decision to favour Iraq” to which Mr Leuch had referred. Mr James stated that Mr Leuch had “indicated that the policy decision had been made by the MOD”. Mr Leuch had “learned this from Major General Isles” who had been “recruited by Oerlikon”. Mr James said that “What Mr Leuch told me was that Isles had learned of the policy from his contacts [at the MOD].” *129 This was most likely a reference to the government’s guidelines on the provision of military training in the United Kingdom to Iraq and Iran and to the decision in 1985 to refuse all training for Iran. *130

D7.87 Mr James described the Iraqi presence at Faldingworth as “an open secret” amongst those who worked at BMARC. The Inquiry asked Mr James for the names of individuals who knew of the “open secret”. *131 Mr James was unable to provide “a complete list of those persons working at B.M.A.R.C. who were aware of Iraqi trainees.” However, he said that “the entire B.M.A.R.C. Board was aware of it” in addition to a number of senior managers whom he named. *132

D7.88 As referred to above, in July 1993 an article was published in Business Age magazine by Mr Kevin Cahill entitled “What Lord Justice Scott hasn’t been told.” *133 The article purported to reveal information which had not been given to the Inquiry by Government departments. The article included a reference to Mr Aitken and his relationship with BMARC. The article said:

“.... Aitken was a director of BMARC, the British subsidiary of Swiss armaments manufacturer Oerlikon, a major supplier of anti-aircraft ammunition to Iraq. This ammunition was intended for the 35mm anti-aircraft guns surrounding Baghdad that were used extensively against Allied aircraft and missiles during the Gulf War in 1990.”

Presumably “35mm anti-aircraft guns” was a reference to the Skyguard anti-aircraft system.

D7.89 On 8 September 1993 the Inquiry sent Mr Aitken a copy of the Business Age article for comment. *134 Mr Aitken said that he had “no knowledge” of exports to Iraq by Oerlikon and pointed out that “BMARC was not a subsidiary of Oerlikon during my 20 month period of service as a non-Executive Director of BMARC in 1988-90”. *135 Mr Aitken became a non- executive director of BMARC in September 1988. Astra had acquired BMARC from Oerlikon in May 1988.

D7.90 The MOD was also sent a copy of the Business Age article by the Inquiry for comment. The response from the MOD stated:

“... the [MOD] has no knowledge of the export of 35mm guns from Oerlikon to Iraq. No such export to Iraq was made by BMARC in any of its forms between 1984 and 1990; export of this lethal equipment would of course have been in direct breach of the Guidelines in operation during that period.” *136

The MOD’s reference to “35mm guns” was intended to encompass ammunition for the 35mm guns. *137

D7.91 Neither in any of the documentary evidence submitted to the Inquiry nor in any of the Astra/BMARC documents examined by the Inquiry is there any indication that the Skyguard system or any ammunition for the system had been exported to Iraq, whether via diversionary routes or direct. In particular, there is no documentary evidence to support the allegation of British Government approval for the export of such equipment. Training for the system is, unless linked to exports destined for Iraq, outside my terms of reference.

Endnotes:

*122 - Mr James written statement of 8 June 1993, p. 9

*123 - Mr James’ written statement of 8 June 1993, p. 9 and 10

*124 - AST/102 ,Appendix III, p. 80

*125 - AST/102, Appendix III, pp.78 and 79

*126 - see request for supplementary written evidence of 25 June 1993, paragraph 7

*127 - Mr James’ supplementary written statement dated 29 September 1993, p.11 and 12

*128 - Ibid, p.11

*129 - Ibid, p.12

*130 - see paragraphs D3.186 to D3.201 supra

*131 - Request for supplementary written evidence dated 25 June 1993, paragraph 7(e)

*132 - Mr James’ supplementary witness statement dated 29 September 1993, p.12

*133 - Business Age - July 1993, pp.32 to 34

*134 - letter from the Inquiry to Mr Aitken dated 8 September 1993

*135 - Letter from Mr Aitken to the Inquiry dated 14 December 1993, pp 3 to 4

*136 - Letter from MOD to the Inquiry dated 28 July 1993 (MOD/354)

*137 - AST/126

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