Aitken alters arms meeting story

Aitken's new testimony on links with BMARC arms firm

Jonathan Aitken has changed his story about a board meeting of an arms company - of which he was a director - at which a contract involving the sale of naval guns to Iran was discussed.

When the Independent revealed last March that Mr Aitken, then Chief Secretary to the Treasury, had been a director of BMARC, an arms company based in Grantham, he issued a robust response, claiming he knew nothing about the order, which breached government arms embargos

But now, in a submission to MPs investigating the company's business with Iran, Mr Aitken admits he was at the crucial meeting when the order was discussed but, as a newcomer, he was adopting "a listen and learn posture".

Last year he was adamant that he had no record of ever having seen, or having been sent, board papers mentioning the contract - codenamed Project Lisi - and had left the board meeting before it was discussed.

Now, in written testimony to the Commons Trade and Industry Select Committee inquiry into BMARC, leaked to the Independent, Mr Aitken reverses that response.

In the submission, he says he was "someone coming new to defence business". The meeting took place on 2 November 1988, at the company's offices in Grantham, Lincolnshire. It was Mr Aitken's first board meeting since becoming a director two months previously.

He says he attended only part of the meeting, leaving early to attend a memorial service in London. This is consistent with his statement issued last March.

Where his account now differs, is that last year he claimed he had left before the board reached a discussion of a report on work in progress, including Project Lisi. The contract was for 140 naval guns which were being shipped to Singapore, but ended up in Iran, in breach of British and UN arms embargos in place at the time. Mr Aitken also maintained last March that he had not seen the board report containing references to Lisi

He now says he was still at the meeting when the report was reached and that he did receive the board report. Bill McNaught, the managing director, produced a paper consisting of several pages which formed a monthly resume of the company's activities and orders. "I had not seen this paper until the moment it was distributed," he says in the confidential submission.

"As a new non-executive director attending my first board meeting I felt it appropriate to spend most of the time in 'a listen and learn posture'," he says.

Despite Project Lisi being listed in the report, Mr Aitken still maintains he has no recollection of the contract being discussed or of Iran being specified as the final end-user. "If my recollection is mistaken, as is possible at this distance of time, any mention was unmemorable and indistinguishable to me from other discussions of the details of the company's affairs at my first board meeting."

Mr Aitken's former colleagues on the BMARC board have said it was widespread gossip around the Grantham factory that the guns, although being shipped to Singapore, were destined for Iran. Singapore has only a small navy, and defence experts have argued that it could not possibly have required the140 naval cannons shipped by BMARC.

Mr Aitken, who says he visited the Grantham factory, "saw the products being manufactured and discussed them with members of the management team and workforce," but was apparently unaware of the rumours about their final destination.

He attended other board meetings, but again, contrary to assertions from Mr James and another director that Project Lisi and Iran were discussed, Mr Aitken says he heard nothing.

He stresses: "It should be remembered that in those days I had no previous knowledge of the technical terminology of defence equipment or ammunition types whose acronyms and shorthand descriptions can be bewildering at first hearing, particularly to someone coming new to defence business, as I was."

Mr Aitken says in his submission:"The destination of Singapore did not cause me to have any suspicions . . . I was if anything reassured to know that BMARC was shipping its products to a company owned by a friendly Commonwealth Government whose record for strict probity and compliance with UN resolutions and general international regulations was well known," Mr Aitken writes.

The committee investigation was set up after Michael Heseltine, the then President of the Board of Trade, confirmed the Independent's articles when he reported last June that there was evidence that BMARC guns had gone to Iran.

Mr Aitken is due to appear before the committee next month to answer questions on his version of events. He resigned from his ministerial post last year in order to devote more time to fighting libel actions against the Guardian and Granada TV's World in Action, which made a series of allegations about a health farm with which he was connected.

He says in the submission to the committee that he first became involved with BMARC through its Astra Holdings parent, which was based in his South Thanet constituency. As part of what he describes as "routine constituency work" he wrote to ministers on the company's behalf, "on matters such as ECGD cover, an export licence for distress flares to Iran . . ."

In June 1987, Gerald James, the Astra chairman, offered him a paid consultancy. Mr Aitken refused but he continued to assist the company. When it looked as though Astra might suffer in the fall-out from the privatisation of Royal Ordnance, Mr Aitken fought its corner.

In July 1988, Mr James repeated his offer. Mr Aitken declined again but this time consulted a fellow director of his bank, Aitken Hume, who persuaded him Astra was a go-ahead company that should be courted.

"So I reversed my previous stance and telephoned Gerald James to say that while I would not be interested in a Parliamentary consultancy I would be willing to become a non- executive director." Mr James suggested he join the board of BMARC, for pounds 10,000 a year.

Before his first board meeting, in November 1988, Mr Aitken held meetings with Mr James and acquainted himself with BMARC's business. They discussed export possibilities for the firm, especially in Saudi Arabia. "My own business experience in the Middle East had been in the fields of financial services and civil engineering, and had not been in defence," Mr Aitken writes. "My business activities had been conducted on the Arabian side of the Gulf. I had no knowledge or business experience of Iran."

Mr Aitken did, however, make one intervention. Despite his lack of defence industry knowledge, he suggested the company should hire as an agent in Saudi Arabia someone who had previously secured a contract for Vosper Thorneycroft, the warship builder.