§ The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Nicholas Ridley)
With permission, Mr. Speaker, I wish to make a statement on export controls in relation to Iraq.
On Tuesday 10 April, Customs officers at Teesport detained eight large steel tubes destined for Iraq, which they considered might require an export licence under the Export of Goods (Control) Order 1989. Subsequently, Customs obtained related documents from firms believed to be involved. Experts from the Ministry of Defence later inspected the tubes and documents and advised that all the indications were that the tubes were components of a large-calibre armament, albeit of a scale outside anything previously experienced. The tubes were therefore seized, and Customs are making inquiries to see if any individuals or firms within the United Kingdom have committed customs offences.
The House will want to know that, in the summer of 1988, the DTI was approached by two of the companies now known to be connected with the manufacture of those components. In June 1988, Walter Somers asked if licences were needed for the export of metal tubes to Space Research Corporation in Belgium. In July, Sheffield Forgemasters asked if licences were needed for the export of tubes to Iraq for use in the polymerisation of polyethylene, and in August, Walter Somers made a further inquiry related to that contract.
On the information available at that time, it was decided that the export licences were not needed for those goods. Until a few days ago, my Department had no knowledge that the goods were designed to form part of a gun. If my Department had known that purpose, then it would of course have advised that licences were necessary, and they would not have been granted.
The Government recently became aware in general terms of an Iraqi project to develop a long-range gun based on designs developed by the late Dr. Gerald Bull. The goods that were seized at Teesport, and related documents, are consistent with what is known of Dr. Bull's design. Subsequent to the seizure, the Government have also received information about further aspects of the gun's development. The Government are entirely satisfied that the tubes form part of a gun and that the Customs' action was correct.
I would like to congratulate Customs on last week stopping the export of those parts of the gun. I understand that it will not be possible to build a complete, full-sized gun from parts that have been supplied from the United Kingdom. I hope that the House will understand that, while Customs' inquiries are continuing into possible criminal offences, it is not possible to go further into the details of this case.
§ Mr. Gordon Brown (Dunfermline, East)
I hope that the Secretary of State will begin by not just congratulating Customs and Excise staff but making a full apology to them. They have been subjected to a week of hostile briefings, critical leaks, off-the-record criticism, and an attempt by the Secretary of State's own Department to walk away from its proper responsibilities for what has gone wrong. Will the Secretary of State confirm that 44 1426 pipes have already been shipped to Iraq, and that they are part of a major armament being constructed by the Iraqi Government, that is, in his own words,of a scale outside anything previously experienced"?Will he confirm that the military equipment may be used for hostile purposes, and so should never have been allowed to leave this country? Will he futher confirm that, since 1988, his Department has had access to the specifications and the drawings, could have had access to the contract governing the export order and at any time has had the powers to investigate it in full?
Will the Secretary of State explain why his Department took no action during the months when it had access to the specifications and the contract? Will he confirm that his Department took no action, even when it was known in June 1988—as he has confirmed today—that the Space Research Corporation of Dr. Gerald Bull—known not for its petrochemical expertise but for its military interests—was involved, but told the companies that no export licence even needed to be investigated? Will he confirm that he took no action even when Walter Somers told his Department that it had evidence of the aiming and positioning of the devices being ordered for Iraq?
Will the right hon. Gentleman confirm that, even if his Department had made a mistake and judged that a licence was needed for military equipment, section IL 1142 in the Export of Goods (Control) Order 1987 could have required a licence for pipes for petrochemical use, and that a meeting should have taken place on that matter between his Department, the Ministry of Defence and the Foreign and Commonwealth Office?
Will the right hon. Gentleman explain why his Department said nothing for an entire week, even after Customs and Excise seized the goods? Will he tell us who was briefing the media that it was merely a petrochemical order? Is it not the case that the Government have been deceived and duped on a grand scale, and that, but for the intervention of Customs and Excise staff, serious military consequences could have resulted? Will he confirm that it is not enough to admit that a mistake has been made, and that he should also accept responsibility for it? Will the right hon. Gentleman confirm, finally, that it is clear that, through slackness and complacency of almost criminal dimensions, the Government allowed through an order that could have made it possible for Iraq to acquire a weapon that he has himself described asof a scale outside anything previously experienced",and whose use could affect regional and even world stability? Which Department will accept the responsibility?
Will the right hon. Gentleman now announce that he will set up an independent inquiry to establish the degree of culpability, and tell the House what the Government's commitment is to the arms embargo with Iraq? Finally, will he tell the House what immediate changes he has ordered in export controls so that this deeply embarrassing and sorry episode, which has made the British Government the object of ridicule, will never be repeated?
§ Mr. Ridley
To coin a phrase, that was going over the top on a scale outside anything previously experienced. I seriously counsel the hon. Member for Dumfermline, East (Mr. Brown) not to believe every word that he reads in the press. I can tell him straight that the Customs personnel have released no confidential information to the media. They have fully respected the confidentiality of material that they have obtained during their inquiries. There has 1427 been no statement until now, and, in the light of the fact that Customs and Excise is considering taking out prosecutions, I cannot answer detailed questions without prejudicing the rights of people who may be on trial. It would be wrong to pre-empt any such trial by what I should say in the House.
The hon. Gentleman seems to suggest that the gun has been exported, that it is a fait accompli. I emphasise that the gun cannot be in operation without all its parts, and it is a great success on behalf of this country to have prevented that. The hon. Gentleman should be paying tribute and congratulating the Customs and Excise on having frustrated this unpleasant export.
§ Sir John Stokes (Halesowen and Stourbridge)
Is my right hon. Friend aware that Walter Somers is a long established and highly respected firm in Halesowen in my constituency? My understanding is that it has always acted in the closest co-operation with his Department. I do not agree with the absurd charges made by the hon. Member for Dunfermline, East (Mr. Brown). I am somewhat concerned to safeguard the good name of that excellent company and the jobs of its workers, yet when I sought reassurance from his Department and another Department, the replies were rather in the style of the television series, "Yes Minister". Surely this difficult matter should be cleared up as soon as possible; otherwise, many good men in the midlands will be deeply upset.
§ Mr. Ridley
I am aware of my hon. Friend's interest in that firm. However, it would be wrong to comment on the contacts between my Department and the firm, for the reason that I have given twice already—that I must say nothing that would prejudice the possibility of criminal proceedings at a later stage.
§ Sir David Steel (Tweeddale, Ettrick and Lauderdale)
Should the Secretary of State not only give the Customs and Excise department thanks, but apologise for the press briefings that were given throughout the week saying that it had got it wrong? Could he enlighten the House by explaining exactly what is polymerisation of polyethylene —[Laughter.] The reason I ask that is that the wider issue is why the Government are allowing the export of high technology of any sort to a regime that engages in chemical warfare.
§ Mr. Ridley
No apologies are needed. I have answered the question about what the Customs and Excise department has said and done, and the right hon. Gentleman should accept that. However, he does not have to accept every word that he reads in the press. The polymerisation of polyethylene is, I understand, a chemical process that takes place in petrochemical activities under very high pressures. It is possible to export material for petrochemical works freely, and no export licence is required.
§ Mr. David Howell (Guildford)
Is not the alertness of Customs and Excise officials in interrupting this sinister shipment a matter for warm congratulation? My right hon. Friend has my full support in that. Does he accept that Iraq may have already used chemical long-range delivery weapons, and that it recently threatened to do so again against Israel? Will he reassure us that nothing will be done to appease the immensely dangerous ambitions of that ugly regime and its dictator?
§ Mr. Ridley
Nobody could condone the plans that it is thought Iraq has in that area. On the other hand, it is quite right strictly to control the export of armament materials. If we are aware that that is happening, we will, of course, refuse a licence.
§ Mr. Tam Dalyell (Linlithgow)
Will the Secretary of State ask either the Secretary of State for Defence or the hon. Member for Plymouth, Sutton (Mr. Clark) a factual question? On what date did the Ministry of Defence or its Procurement Executive first know that there was something that could be said to be in the nature of a weapon? When did the Ministry of Defence first know that there was a problem? On what date did that occur?
§ Mr. Ridley
My right hon. Friend the Secretary of State for Defence will have heard the question that the hon. Gentleman put. I think that it would be better for him to reply for himself.
§ Sir Hal Miller
Since, more than two years ago, I made an offer to his Department, to the Ministry of Defence and, I believe, to a third agency, on behalf of Walter Somers, to withdraw from the contract, to meet the contract and to enable it to be traced, or to carry on with the contract, and as I repeated that offer 12 months later, does my right hon. Friend share my surprise that there can be any question of prosecuting the company for any contravention of regulations or lack of good faith in the matter?
§ Mr. Ridley
If any company believes that it is exporting or has an order to export any piece of equipment which might have a military application, it is for it to apply for an export licence, and in that case it is considered. Concerning the question that my hon. Friend has asked, I think that it would be wrong for me to answer the last part, since that could prejudice any possible decision.
§ Mr. Alan Williams (Swansea, West)
In view of the comment of his hon. Friend the Member for Bromsgrove (Sir H. Miller), when those approaches were made by the firm, did the right hon. Gentleman's Department make any approaches to the Ministry of Defence? If so, on what date did they make those approaches? If they failed to do so, why on earth did they so fail?
§ Mr. Michael Jopling (Westmorland and Lonsdale)
While I endorse my right hon. Friend's comments about the efficiency of the Customs in this case, could he say whether there is any track record by the Space Research Corporation of equipment which did not have a military use?
§ Mr. Ridley
Yes, sir. Space Research Corporation was involved in many types of project, many of a civil nature.
§ Mr. Jeff Rooker (Birmingham, Perry Barr)
Does the Secretary of State accept that at some time the House will have to know whether or not the Defence Export Services Organisation or International Military Services, which are both 100 per cent. controlled by the British Ministry of Defence, were ever involved or approached regarding those contracts? Does he appreciate that this country is the world's second largest arms supplier? That being so and being common knowledge, it is bound to be the case that every riff-raff country around the world that is looking for weapons of destruction—sometimes to use against its own people—will come knocking at British doors. Therefore, extra vigilance has to be maintained, and that has clearly been lacking.
§ Mr. Ridley
That is not quite right. Extra vigilance has been exercised in the Customs operation for some time, and it has been a great success, not long after a previous success was achieved with the nuclear trigger devices, which the House will remember. I do not know why the House is accusing the authorities of not succeeding in that respect. On both occasions, success has been achieved.
§ Mr. Kenneth Warren (Hastings and Rye)
Is my right hon. Friend satisfied with the co-ordination standards between Customs and Excise and his Department? Secondly, while I have no truck whatsoever with the horrendous regime in Iraq, what evidence does he have in his Department from those engaged in oil refinery design that the material and the tubes in question are not for the application intended? Thirdly, what information has he, metallurgically, to show that the tubes would be able to sustain the firing of a shell or a missile?
§ Mr. Ridley
On my hon. Friend's first point, yes, I am satisfied that contact between my Department and the Customs and Excise is of a high order. Secondly, as I said in my statement, from examination of the parts which have been seized at Teesport, Ministry of Defence experts have come to the firm belief and strong conclusion that those are parts of a gun. They do not believe that they were intended for any other purpose.
§ Mr. Peter Hardy (Wentworth)
The Secretary of State appeared to be implying that there is guilt on the part of some or all of the companies involved. If, after appropriate investigation, he finds that they are completely innocent and that the fault lies with public Departments, will he return to the House to make that clear?
What happens if other countries that may be within the targeting arrangements of this odious regime decide that they should have enormous guns? Will it be all right for Sheffield Forgemasters to go on making these tubes?
§ Mr. Ridley
On the first point, I do not believe that "guilt" is the right word. That would be prejudicing any trial that might take place. It is correct to allow Customs to consider whether it wants to take proceedings, and all these points would come out in any proceedings that might be taken. After the proceedings have concluded, it will be right for the House to find out the further details that it may wish to know, but I cannot prejudge Customs' decision on whether to take proceedings.
On the second point, any firm that receives an inquiry or order to make parts that it believes could be part of an offensive weapon must apply for an export licence. If it is 1430 confirmed that it is a gun of this type, that licence will not be granted. We can be quite certain that nothing will come from this country.
§ Mr. Speaker
Order. Sit down, please. We have a very important debate today and a ten-minute rule Bill. I shall allow three more questions from each side.[Interruption.]
§ Mr. Robin Maxwell-Hyslop (Tiverton)
Since my right hon. Friend is also responsible for the Export Credits Guarantee Department, will he tell us whether this contract was underwritten by the Export Credits Guarantee Department, and what are the implications of any such underwriting for the present situation in which supply has been discontinued by order of Customs?
§ Mr. Ridley
I cannot answer my hon. Friend's question without notice. I shall give him a full answer, but I understand that the company was paid when the goods left its works.
§ Mr. David Winnick (Walsall, North)
In view of the bloodstained criminal nature of the regime in Iraq, which started the Gulf war and used chemical weapons, is the Secretary of State aware that far more will have to be done by Ministers to answer the question asked by the hon. Member for Bromsgrove (Sir H. Miller)? While Customs officers are certain to be congratulated, Ministers are not. We shall certainly want a further statement, including one from the Secretary of State for Foreign and Commonwealth Affairs.
§ Mr. Tim Smith (Beaconsfield)
Will my right hon. Friend confirm that Sheffield Forgemasters acted in good faith throughout this affair? Was not it a wholly owned subsidiary of British Steel, which was wholly owned by the Department of Trade and Industry when the order was placed?
§ Mr. Ridley
Those facts could be verified, but I cannot myself verify them. It does not seem to be relevant to the fact that, on this occasion, the export of a piece of an armament that could have been of grave disadvantage was successfully apprehended and prevented from being used.
§ Mr. Jimmy Hood (Clydesdale)
Why has it taken the Secretary of State's Department a full week to respond to information that was given to the country by Customs and Excise? In an earlier statement, the right hon. Gentleman informed the House that he had to have information before he could act. Will he confirm or deny that that information came from the Israeli secret service?
§ Mr. Ridley
The goods were distrained by Customs officers, who then waited for the Ministry of Defence to inspect and verify the purpose of the goods. There was no role for my Department to play during that period, because the goods had been distrained. There was no 1431 question of the goods being exported so long as they remained with Customs officers. If the MOD experts had reached a different conclusion, the goods would and could have been exported. The fact that the goods were prevented from being exported is a great success. I cannot of course answer the hon. Gentleman's second point, and I do not believe that he expected me to do so.
§ Mr. Richard Page (Hertfordshire, South-West)
Would my right hon. Friend please remind the Opposition, in the middle of their hysteria, that Iraq has just finished a long and bloody war in which hundreds and thousands of its people were killed, that peace has not yet been signed, borders have not yet been agreed and prisoners have not yet been exchanged? Should we be surprised that a country whose next-door neighbour is larger and gripped by destabilising fundamentalism should use every form of extreme subterfuge to try to bypass an arms embargo?
As that is the case in this incident, and as we are not the totalitarian regime that the Opposition would have us become, but a free market economy, is it not understandable that it will take time to pick up such exotic undertakings in which state Governments try deliberately to bamboozle other nations? Therefore, should not companies in Britain that have acted in good faith be free from any form of prosecution and the Customs department be congratulated on its good work in picking up this particular incident?
§ Mr. Ridley
There is a lot in what my hon. Friend said at the beginning of his remarks with which I agree. However, it is absolutely essential that we recognise that this has been a successful operation which has prevented the export of goods which could have had an immense potential for damage.
§ Mr. Bob Cryer (Bradford, South)
Will the Secretary of State accept congratulations on behalf of the Customs and Excise for standing up to his Department's efforts to undermine the Customs and Excise department's activities in that case? Will he confirm that the British Overseas Trade Board's export intelligence promoted the project in consultation with the British embassy in Baghdad? Will he confirm that it has Export Credits Guarantee Department cover? Will he also confirm that executives at Sheffield Foregemasters met representatives of the Belgian company, which is not, as the Secretary of State tried to claim, noted for its connection with peaceful activities?
At the end of this sorry affair, does not the Secretary of State think that it has something to do with ministerial responsibility? Have not his Department and his office lamentably failed over years to seek out the military aspects of the contract? If the Secretary of State was a decent, honourable Minister obeying the usual rules, would not he resign?
§ Mr. Ridley
I most strongly rebut any suggestion that the DTI has not co-operated fully with the Ministry of Defence and the Customs. They worked together throughout the period to identify the equipment. A lot of what the hon. Gentleman said in the middle of his remarks was not something that I can comment on with the possibility of a case pending—[HON. MEMBERS: "What case?") I said "the possibility of a case". With regard to the last part of the hon. Gentleman's remarks, I will pass on to my noble Friend, Lord Caithness, who is responsible for the Customs, the congratulations that the hon. Gentleman offered.
§ Mr. John Marshall (Hendon, South)
May I congratulate my right hon. Friend on an action that has helped peace in the middle east and which will be widely welcomed by everyone concerned about the stability of that troubled part of the world? Does my right hon. Friend agree that the contract underlines the danger of trading with Iraq? May we have an assurance that all future contracts will be looked at with particular vigilance by my right hon. Friend's Department?
§ Mr. Ridley
I am grateful to my hon. Friend, and I agree with what he has said. I confirm that we will continue our high state of vigilance in deciding whether export licences should be granted. I can now also tell my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) that no ECGD cover was available for the contract.
§ Mr. George Galloway (Glasgow, Hillhead)
Does the Secretary of State accept that, even by his own standards, this has been a truly extraordinary performance at the Dispatch Box this afternoon? Even if it means leaning across to his colleague from the Foreign Office, will the right hon. Gentleman confirm that the reason that 44 of those pipes are now in Iraq and that only the last batch was stopped is that the information was given to the Government by Mossad, the Israeli secret service, immediately before the goods were exported—the same Mossad that fired five bullets into the back of the head of Dr. Bull in Belgium some weeks before? Will the Secretary of State and the Government support Senator Dole's plea in the middle east last week that all countries of the middle east with a capacity of weapons for mass destruction, including Israel with its nuclear weapons, should abandon such weapons and bring about the stability that the area needs?
§ Mr. Ridley
I do not think that the hon. Gentleman fully estimates the gravity of this incident. Many Opposition Members try to make party politics out of a great success story in getting this export stopped so that the gun cannot be put together. Of course I shall not follow the James Bond musings at the end of the hon. Gentleman's question.