Ministers obstructed DTI inquiry into illicit arms sales

Defence ministers have blocked requests from officials at the Department of Trade and Industry investigating the sanctions-busting export of naval guns to Iran via Singapore by BMARC, the company which once counted Jonathan Aitken among its directors.

Opening the Commons Trade and Industry Select Committee inquiry into the illicit trade by BMARC, revealed in the Independent earlier this year, DTI officials told MPs they had been denied access to papers seized by Ministry of Defence police when Astra Holdings, its parent company, collapsed in 1992.

The official heading the DTI investigation ordered by the then President of the Board of Trade, Michael Heseltine, last July, told MPs there were "some constraints" on the release of papers by the MoD police.

"The question of whether they could be available to us or not was raised," said John Meadway, head of export controls at the DTI. "There was discussion about the role of the papers between departments at quite a senior level." Pressed by MPs visibly outraged at the MoD's apparent lack of cooperation, Mr Meadway replied: "Ministerial level." Later, DTI officials disclosed that Mr Heseltine himself was involved in the approaches to the MoD.

Mr Meadway said he did not believe the papers would have "fundamentally altered" the findings of his inquiry, which was asked to look into possible failings by the DTI's export licensing unit. This did not go down well with MPs. Roger Berry, Labour MP for Kingswood, said he did not see how it was possible for Mr Meadway to claim the lack of the papers had not hindered his inquiry when he had not even seen them. "They may illuminate the story, in the broad sense," acknowledged Mr Meadway.

The DTI officials said their department had received an intelligence report in 1988 warning that BMARC's Swiss parent Oerlikon appeared to be using Singapore as a way of evading sanctions preventing arms sales to Iran. But the report did not name BMARC and the DTI inquiry concluded it would have been "extremely difficult" for officials to have connected the warning to the Lincolnshire-based company.

Only two people in the DTI had seen the 1988 intelligence report, Mr Meadway told the committee. "I think the likelihood is that it didn't ring any alarm bells because it didn't appear to refer to exports that originated from the UK," he said.

Between 1985 and 1991, BMARC submitted 88 export applications listing Singapore as the final customer and a further six with Singapore as an intermediate destination.

The committee's chairman, Martin O'Neill, suggested that Singapore was "well known" in the 1980s as a route for arms companies trying to break embargoes. Mr Meadway replied: "We have no documentary evidence to suggest that that was taken on board in the DTI."

He admitted however that in 1985 Sweden had changed its policy relating to Singapore because of such concerns.

Mr O'Neill said "general knowledge" suggested Singapore had no need for the 140 naval guns from BMARC. "One would have thought some bells would be ringing somewhere, even if it was at a junior level," he said.

Mr Meadway said because the guns were sent in component form it was difficult to assess the number of weapons involved.

Pressure of work meant staff had to rely on the honesty of exporters when making applications. Mr Berry said: "It is the easiest thing in the world - a five-year-old could do it - to get round any restrictions on arms exports in the UK."

Mr Meadway replied: "Obviously the system can be evaded but reputable British companies don't spend their time doing that."