Aitken firm broke arms rules

Minister was director of company that broke arms embargo with sale to Iran

Jonathan Aitken, Chief Secretary to the Treasury, was a director of a company that broke the Government's arms embargo by supplying naval guns to Iran.

Documents, obtained by the Independent, reveal that Mr Aitken, who denies knowing anything about the order, was given confidential board reports containing monthly updates on the £15m order.

News of Mr Aitken's involvement with a company which breached restrictions on arms sales to the Middle East will severely embarrass the Government as it awaits publication of the Scott Inquiry report, due in June, into the sale of arms to Iraq.

Full details of the Iran naval gun order have been made available to Sir Richard and his inquiry team.

Codenamed Project Lisi, the contract, which ran from 1986 to 1989, involved the supply of 140 light naval guns and mounts to Iran by BMARC, an arms company based in Grantham, Lincolnshire.

Mr Aitken was a non-executive director of the company from September 1988 to June 1990 and was paid £10,000 a year. He ceased to be a director in June 1990, along with most of the board, when the company hit financial trouble and subsequently went into receivership.

Monthly reports prepared for board members during Mr Aitken's period with the company disclose that while he was a director guns worth £3.8m were ordered and the company had started discussing a follow-on contract, Lisi II, worth an estimated £5.9m.

Under the terms of the original deal, BMARC supplied the guns in component form, to Charter Industries in Singapore, for assembly. They were then shipped onward to Iran.

The guns were put on to Iranian ships which were constantly monitored by Royal Navy patrols policing the Gulf shipping lanes.

Captain Richard Sharp, of Jane's Fighting Ships, has identified the guns from photographs of Iranian fast-patrol boats. Only BMARC made the guns, under licence from Oerlikon, a Swiss company. The photographs taken in 1991.

A report prepared by Stoy Hayward, BMARC's accountants, shows that the company had exclusive design rights and the guns could only be ordered from it.

To avoid export controls, not all the parts were sent from Britain. Thirty- seven components were manufactured and added by Charter in Singapore - from machinery provided by BMARC free of charge.

As the guns were shipped in bits and were not complete, they did not require end-user certificates.

The monthly board report for September 1988, given to BMARC directors for their regular meeting in November, said: "Turnover for September amounted to £6.945m." It went on: "Major deliveries included in this month's total were:

Jordan, 20mm KAA/30mm KCB AM, £1.596m;

Lisi, 20mm GAM-B Material, £1.404m;

Singapore, 35mm KDB Components, £0.641m;

GB, 25mm KBA ADEN AM, £0.463m."

Mr Aitken's name is on the distribution list as a BMARC main board director.

A month later, the board received the report for October. This contains an update on all the company's "existing major contracts". Lisi is the first on the list. "Production backlog on cannon kits versus original order has become a problem but we are agreeing an amended programme with Oerlikon to protect both customer deliveries and turnover."

In December 1988, directors received some better news. "Mounting work is on schedule and deliveries of cannon kits are to Oerlikon's latest requirments."

In February 1989, directors were told: "Mount, cannon and cannon kit delivery to target."

As a director, Mr Aitken should have received the board reports in advance of the monthly meetings.

Ray Smith, former BMARC company secretary, said: "Anyone who was a director at the time would have received the board reports."

Major-General Donald Isles, a former BMARC director, said he was sure Mr Aitken would have received the reports. "I'm sure he did, the board meetings were all proper."

On 2 November 1989, the board meeting, attended by Mr Aitken, discussed the board report for September 1988, which mentions Lisi. Minutes of the meeting refer to orders being discussed in detail.

Last night, Mr Aitken said he had been at the November board meeting but only between 9am and lunchtime. He said he left before the board report was discussed. "If I had been told BMARC was exporting naval guns to Iran via Singapore in violation of the Howe guidelines I would certainly not have countenanced such exports."

The Iran connection, page 3