Arms Exports (Iraq)

§ Madam Speaker

We now come to our debate on the conduct of Ministers on arms exports to Iraq. First, I must tell the House that I have selected the amendment standing in the name of the Prime Minister. Secondly, I must tell the House that, because of the demand to speak in the debate, I have had to limit speeches between the hours of 7 and 9 to 10 minutes. Would hon. Members speaking outside that period exercise considerable voluntary restraint?

§ Mr. Robin Cook (Livingston)

I beg to move, That this House notes the evidence that up to July 1990 Her Majesty's Government was granting export licences for the supply to Iraq of defence equipment and munitions machines in clear breach of the Howe Guidelines of 1985 preventing the export of equipment that would significantly enhance military capability; is concerned that as a result of Her Majesty's Government's private change of policy British servicemen may have been exposed to fire from shells and rockets made in munitions factories equipped by Britain; regrets that no statement was made in Parliament or in public about the covert change in policy and that honourable Members were persistently misled by assurances that the Guidelines were being observed and that Britain had not helped arm Saddam; deplores the willingness of Her Majesty's Government to see citizens put on trial for exports at which Ministers had connived and to put their liberty at risk by attempting to prevent the disclosure of documents crucial to their defence; and believes that the conduct of Ministers in this matter has been inconsistent with the security of British troops, with open government, and with the just administration of legal process. Two years ago, British troops were assembling in the Gulf in order that in the new year they might drive Saddam out of Kuwait. Because the Royal Scots recruit in my region, I, like many hon. Members, had many constituents on that expedition. On the eve of the offensive, I met on a number of occasions the support group of the wives and mothers of those men. I remember those meetings clearly, because they were so heavily charged with the emotions of those families, who knew that their men were going to face one of the largest standing armies in the world, lavishly equipped with some of the most sophisticated weaponry in the world.

The first charge against the Government is that, in the two years before the Gulf war, they had helped to equip that war machine, and in two years provided hundreds of millions of pounds' worth of machine tools straight to the factories that made the weapons.

§ Mr. Jerry Hayes (Harlow)

Will the hon. Gentleman give way? [Interruption.]

§ Mr. Cook

I will give way to the hon. Gentleman on this occasion, but I warn the House that many facts need to be put on the record, and I am sure that it would wish me to make progress with my speech.

§ Mr. Hayes

Does the hon. Gentleman think that it is wise that he should heed the old legal maxim that he who comes to equity should come with clean hands? Does he agree that he is presently serving time on the Opposition Benches for his economies with the actualité some time ago? [Interruption.] Why should the public believe him today, when they are of the view that the debate is nothing more than party political muck-raking? Leave the inquiry to Lord Justice Scott.

§ Mr. Cook

As my hon. Friends have already concluded, I was in error in giving way, but, for the avoidance of doubt, because I had some difficulty in following the hon. Gentleman's reasoning, at no stage have I exported either arms or machine tools to any other foreign power.

Conservative Members armed Saddam when they had ample evidence that he was a brutal tyrant who had already used his war machine to invade one neighbour, and, as that war with Iran would down, intensified his use of his war machine to terrify his own population.

In 1988, when the guidelines on exports to Iraq were relaxed, Lord Howe, the then Foreign Secretary, was telling the world and the House that he had compelling evidence that gas had been used to kill 5,000 Kurds, mostly women and children, in the Halabja massacre. At the time, his Minister of State, now the Minister for open government, was particularly indignant at Question Time on Saddam's gas attacks on his population, but, a year later, he was agreeing to arm Saddam, provided that the Department of Trade and Industry answered any questions about it.

§ Mr. Jeremy Corbyn (Islington, North)

Will my hon. Friend give way?

§ Mr. Cook

I will give way on this occasion to my hon. Friend, but again I make the same observation.

§ Mr. Corbyn

Is my hon. Friend aware that, shortly after the Halabja massacre in 1988, I was part of a delegation, which included Kurdish people, to the Foreign and Commonwealth Office? We met the said Minister, who expressed great disquiet about the gas attacks. However, when asked whether he would forthwith suspend all export credits, arms sales and trade with Iraq, he said that he would not, because trading interests came above considerations of our relationship with that tyrant.

§ Mr. Cook

As my hon. Friend reminds us, not only did the Foreign Office know that the regime was brutal: it knew that the ideology of Saddam's party revolved around his ambition to be the leader of a pan-Arab world. A stepping stone to that ambition, and at the heart of his war machine, was the drive to develop strategic weapons of mass destruction, to destabilise the middle east and to enable him to dominate it. In short, we helped to arm a man we knew to be brutal in his past conduct and megalomaniac in his aspirations.

§ Mr. Gyles Brandreth (City of Chester)

Will the hon. Gentleman give way?

§ Mr. Cook

No.

I have read that people who have seen the documents have accused their authors of cynical conduct. Having read them, it was not Ministers' cynical decisions that impressed me, but their stark naivety in thinking that they could arm a brutal, unstable dictator and that he would not use those arms. Why did Ministers not ask in those 633 documents, "Why does that man want such sophisticated weapons in such vast quantities?" They knew what the machine tools were for—[HON. MEMBERS: "No."] Oh, they knew.

Several Hon. Members

rose—

§ Mr. Cook

I shall not give way.

The machine tools were pre-programmed for use in munitions factories. The Iraqis sent specifications of what they wanted from the tools, which were programmed to make fuses and shell casings. There was no question of their having a dual purpose.

§ Mr. Brandreth

rose—

§ Mr. Cook

I shall not give way—there is quite enough information to embarrass the Government in my speech.

Nor can it be said that the machine tools were put in packing cases and sent to Iraq, where Saddam Hussein diverted them without anyone here knowing about it. Matrix Churchill sent workers to Iraq to set up the machine tools, to train their operators and to repair machines which did not work.

During the past week, I have been approached by Matrix Churchill employees who knew that the company was making machines to make weapons. They cannot believe that anyone could be in any doubt about that. I have here a statement from an employee who was sent to repair a machine which had already been installed. He writes that, when he got there, it was obviously a munitions factory. The main gates were guarded by at least 25 to 30 soldiers, all armed with automatic weapons. The surrounding areas were guarded by surface-to-air missile launchers, manned by a five-strong squad. Everywhere I looked there were large and small rockets, again with missile launchers. The ground was littered with spent shells. It was not a general engineering factory—not even Saddam put a missile launcher to guard a car factory—but a munitions factory, at the heart of his war machine, and Ministers knew that that was where the machine tools were going.

I notice that the amendment refers to the "overriding consideration" of whether the equipment was lethal. The machine tools went into lethal weapon programmes. We know that at least two went into the Scud missile programme and that at least 30 have been found in Saddam Hussein's nuclear warhead factories. We know that many went to a factory that was intended to produce half a million shells per year. Those Scud missiles, nuclear warheads and Howitzer shells were lethal weapons.

To be sure, Saddam Hussein did not intend to stuff the machine tools down the barrel of a supergun and use them to shell his enemies. He had a more lethal purpose: to produce the weapons he needed to wage war on his enemies and critics.

The 1985 guidelines do not confine themselves to barring lethal equipment. They also bar any defence equipment which would significantly enhance military capability.

§ Mr. Richard Page (Hertfordshire, South-West)

The hon. Gentleman makes much of the fact that the machine tools were sent to make weaponry. Will he take it from someone who has operated most types of machine tool, that I know of no tool that' cannot be converted to a 634 military purpose? Can he tell me whether, in 1986 or 1987, he or the Labour party asked for all sales of machine tools to Iraq and Iran to be banned?

§ Mr. Cook

Surely the hon. Gentleman's logic should make him question whether the machine tools should have been exported if they were all capable of being converted. The hon. Gentleman does not seem to have been listening. I have been arguing that there was no need for Saddam Hussein to convert the tools, as they were preprogrammed and specified to produce fuses and shell cases. Before they were sent, the Matrix Churchill factory produced fuses and shells with them to find out whether they worked.

Several Hon. Members

rose—

§ Mr. Cook

I shall not give way.

Several Hon. Members

rose—

§ Madam Speaker

Order. I understand that the hon. Gentleman does not wish to give way. Is that correct?

§ Mr. Cook

Yes.

The 1985 guidelines did not merely ban lethal equipment but also any defence equipment which would significantly enhance military capability. Between 1988 and 1990, we did just that, and Ministers knew it, because in 1989 they received a report from the Ministry of Defence entitled: "British Assistance to the Emerging Iraqi Arms Industry", which listed in its appendix five pages of companies providing defence equipment to Iraq, and which came to the conclusion that assistance from British companies had helped to build a very significant enhancement to the ability of Iraq to manufacture its own arms, thus to resume the war with Iran. The Ministry of Defence concluded that Ministers had broken the guideline not to enhance military capability.

I notice that, in the amendment, the Government accuse us of "sensationalised" disclosures. If we have been sensational, it is only because we have published documents that show what Ministers did in meetings. I would not disagree with their choice of words. The picture that emerges from those documents is of Ministers arming one of the world's most brutal regimes and breaking their guidelines to do it. I agree with those on the Government Front Bench that that is sensational, and the Government knew it. We know that because, when the document was first produced in 1989, it was unclassified. In December 1990, it was marked "Restricted" in handwriting.

Why? Would someone on the Government Front Bench like to tell us? It was not as if the document would have been of any value to our enemy in the Gulf war. Saddam knew what we had provided—he knew rather more than the British Parliament. The document was reclassified because the Government became embarrassed at the major role which Britain had played in rebuilding a war machine that British troops had to fight.

There is another reason why Ministers might well be embarrassed. They not only helped to arm Saddam, but it looks as if Britain will have to pick up most of the bill. The Government agreed a new credit facility to Iraq in 1987, and the then Chief Secretary to the Treasury approved it —he is now the Prime Minister. Before he denies it, I accept that no one told him what he was approving. I am sure that no one showed him the letter of November 1987 from the Export Credits Guarantee Department, which said: 635 A notional 20 per cent. has been set aside for military business"— no nonsense there about dual use or general purpose machinery, only a clear credit facility for military business.

Today, a written answer from the DTI confirms that £830 million is outstanding, on which the ECGD might be invited to honour guarantees, in respect of exports to Iraq. If we assume that a notional 20 per cent. of that sum was for military business, the British taxpayer stands to foot £170 million to pay for the equipment that we provided for Saddam's war machine. We did not just arm his forces —we paid for them into the bargain.

I hope that no one today will claim that it was right to approve those exports on commercial grounds, because, judged as a commercial decision, it was a disaster for which the British taxpayer is still paying.

Mr. Phillip Openheim (Amber Valley)

Will the hon. Gentleman give way?

§ Mr. Cook

I cannot resist the hon. Gentleman, and I shall do so in a moment.

That £830 million is not that much less than the annual budget of the President of the Board of Trade when it is stripped of the swollen redundancy payments for miners. How much better would British industry benefit if that money had gone into supporting investment and training in British industry rather than in arms exports to a foreign power.

§ Mr. Oppenheim

I thank the hon. Gentleman for his courtesy in giving way. Will he answer the question posed by my hon. Friend the Member for Hertfordshire, South-West (Mr. Page)? At any point in the middle or late 1980s, did Her Majesty's Opposition formally urge the Government to cease the export of machine tools to Iraq? Yes or no?

§ Mr. Cook

The answer is that, for once, we were naive enough to trust what we had been told by the hon. Gentleman's colleagues on the Front Bench [Interruption.] There is no point in the hon. Gentleman intervening if he does not listen to the answer. We were told by Ministers that they would not allow the export of lethal equipment or any defence equipment that enhanced the military capability of the Iraqis or the Iranians. We now know from the documents, however, that Ministers knew perfectly well that it was not general purpose machine tools that were being exported, but defence equipment that would produce some of the most sophisticated weapons. That was a clear breach of what the House had been assured.

§ Mr. Winston Churchill (Davyhulme)

Will the hon. Gentleman give way?

§ Mr. Cook

No, I shall not.

Let us consider the defence that the Government have put forward. The commercial defence—the fact that we needed the money—is at least better than the most contemptible defence of all, which is to dump all the blame on Alan Clark. The idea is that the rest of them did not know what he was up to: he sneaked in by the back door at night and took all the decisions after the rest of them had gone home. That will not wash, because Alan Clark left the DTI in July 1989, and the most controversial decisions were taken after that date.

That defence will not wash because the Government are trying to blame the one man who told the truth. That is the 636 real crime of Alan Clark, according to the Government. It is not that he participated in secret meetings to export arms to Saddam, or that he misled Parliament, but that he let the cat out of the bag.

If the President of the Board of Trade wants to point the finger at any colleague, let him point it at those who have yet to own up. Let him point it at Lord Trefgarne, who, in October 1989, said that the case for the guidelines had weakened to the point of extinction Let the finger point at Nicholas Ridley, who, in July 1990, wrote to the Prime Minister pressing for another "thorough review of policy". Let the finger point at the current Foreign Secretary who, on 19 July 1990, chaired a meeting of Ministers to review that policy, which resulted in a decision to release material for Saddam's Asa rocket project in the two weeks in which we now know he was massing his troops for the invasion of Kuwait.

I noticed that, just before the weekend, journalists were briefed that Ministers had really wanted to tell Parliament about the outcome of the meeting on 19 July—it was just that the summer recess came too soon to tell us. I have my doubts about how sorry they are that they did not tell us. First, as Ministers are well aware, anyone who had made such a statement in the last week of July 1990 would have looked a proper ass the next week when Saddam walked into Kuwait.

My second reason for doubt is even more compelling. If Ministers are really sorry that they did not tell us before the summer recess about what they had agreed at that meeting, they could always have told us after the summer recess. After the invasion of Kuwait, they were given many chances to do so by my hon. Friends, who wanted to know the truth about those exports. Not once in the answers that we were given was there even a glimpse that the guidelines had been bent.

On 3 December 1990, the then Minister for Trade, the right hon. Member for Hove (Mr. Sainsbury)—he is still a member of the President of the Board of Trade's team at the DTI—said in the House: The guidelines … were set out … on 29 October 1985, and since then they have been scrupulously and carefully followed"—[Official Report, 3 December 1990; Vol. 182, c. 29.] In August 1991 the right hon. Member for St. Albans (Mr. Lilley), who is still a Cabinet colleague of the President of the Board of Trade, told the Select Committee on Trade and Industry: Our examination of the records shows that the policy announced in Parliament in 1985 was adhered to both in the spirit and in the letter. Not a word there about the fact that, in December 1988, the letter of the guidelines was changed without any announcement in Parliament and that, by November 1989, the spirit of the guidelines had been extinguished.

It is not surprising that we were not told. It is a repeated theme of the minutes and memoranda disclosed to the court that Parliament should not be told and that the public must not be allowed to know. As one official expressed it: There seems to be considerable merit in keeping as quiet as possible about this politically sensitive issue. When Alan Clark proposed that the guidelines be relaxed, he added in his letter: I would not propose an announcement of any decision. When one reads the documents, one becomes persuaded that the problem that Ministers perceived was 637 not that Saddam might use the machines to make weapons; what they were really worried about was that the public might find out what they had decided.

§ Mr. Phil Gallie (Ayr)

Does the hon. Gentleman at least acknowledge that Ministers were under pressure at that time from Opposition Members who were keen to maintain their constituents' jobs and constituency businesses? Is not he aware of the pressure brought to bear on Ministers by Opposition Members?

§ Mr. Cook

No, I am not aware of any such pressure. If the hon. Gentleman has knowledge of any hon. Member who exerted such pressure, he owes it to the House to disclose who he is talking about. In case he gets hold of my reply and misrepresents it, as the hon. Member for Harlow (Mr. Hayes) has sought to do with other information—I note that the hon. Gentleman has already left the Chamber; he is probably out researching this point even as I speak—I should say that I met representatives from the Machine Tool Technologies Association a month ago. I have written to that association to learn what minutes it had written up of our meeting, just so that we are both clear about it.

Those representatives presented me with their demands for the machine tools industry. Those demands did not include any demand that we should sanction exports to dicey regimes that might use them against British troops. However, those demands contained a full list of the added help that is needed to provide investment in small industry and the stimulus for business to buy machine tools, as well as the help it needs for training. It is that pressure that my hon. Friends have constantly applied to the Government, and to which they never received any response.

§ Mr. Churchill

Will the hon. Gentleman give way?

§ Mr. Cook

No, I must get on.

I have recited the replies that we received in the House. Earlier this year, the Prime Minister released the document entitled "Questions of Procedure for Ministers", in which he said that Ministers had a duty to give Parliament and the public as full information as possible about the policies, decisions and actions of the Government. If hon. Members play back the answers that we have received on exports to Iraq and asked themselves whether those questions provided as full information as possible about the policies … of the Government on arms exports to Iraq, the answer must clearly be a resounding no. I doubt if even Conservative Members are convinced about that. No one else in the country is—at any rate, according to the latest opinion poll, 3 per cent. believe that Ministers have told the whole truth, while 83 per cent. do not.

There is, rather remarkably, one person among that 3 per cent.—I presume that he must be counted among that group— who was possibly the most curious victim of all the statements to Parliament. It turns out that the Prime Minister himself was misled by those ministerial statements. Until two weeks ago, he really believed that his Ministers had always observed the guidelines. He was shocked when one of his former Ministers said otherwise in court two weeks ago.

638 The Prime Minister's defence is well known. It is simple, if inelegant: nobody told him. When he was Foreign Secretary, nobody told him that his No. 2 was in dispute with the Department of Trade and Industry over Matrix Churchill exports. Nobody told him that the Foreign Office was in dispute with the Northern Ireland Office over the Iraqi purchase of the Learfan factory. Nobody told him even when he was briefed to meet the Iraqi Foreign Secretary, and nobody told him when he was Chancellor and his private office was warned of Customs' concern over Matrix Churchill. Nobody told him what happened at the meeting of 19 July, to which he was invited but could not make it—no doubt because nobody told him where it was being held.

It would take another John Bunyan to do justice to that Pilgrim's Progress around the key offices of state, preserving such invincible innocence. I am driven to wonder whether he ever asked why nobody told him. Since Alan Clark's appearance in court, has he had in any of his officials and asked them why they did not tell him what was going on? They knew—they told Lord Howe when he was Foreign Secretary about the controversy, and they briefed the present Foreign Secretary about the controversy.

The Prime Minister had the same private secretary as those other two Foreign Secretaries—Mr. Stephen Wall. Mr. Wall knew what was going on, because he briefed those two Foreign Secretaries. Did it never occur to the Prime Minister to ask Mr. Wall why he was allowed to continue to state that the guidelines had been observed, when half of Whitehall knew that they were being broken?

It will not be difficult for the Prime Minister to question Mr. Wall, because, after he moved to 10 Downing street, he appointed Mr. Wall to advise him on foreign policy affairs. I presume that it was Mr. Wall who advised him before he said in the House, two weeks ago, that, from 1985 until the Iraqi invasion of Kuwait, the Government operated under guidelines set out by the Foreign Secretary in 1985.

There is one way to convince me that nobody told the Prime Minister—for him to haul Mr. Wall over the coals for having done such a rotten job of briefing him. If he will not do so, the implication will clearly be that, either at the Foreign Office or at Downing street, Mr. Wall shared all he knew with his boss.

The President of the Board of Trade has a better defence that the Prime Minister. He has an alibi, because, during the key period of 1988–90, he was nowhere near the scene of the crime. He was busy writing books calling for a strategy for industry, a partnership with business and a programme for the steel, aerospace and car industries. Those books provide such embarrassing proof that his private views diverge from his public policy that I daily expect him to slap a public interest immunity certificate on the Library to prevent if from disclosing the fact that it has a copy.

That brings me to the third charge against the Government. First, they armed Saddam; secondly, when he used those arms against a British ally, they covered up the fact that they had provided the arms; and thirdly, as the cover-up unravelled, rather than own up, they were willing to see three executives of Matrix Churchill go to prison.

The President of the Board of Trade is one of four members of the Government who signed certificates seeking to prevent disclosure of documents vital to the 639 defence of the three executives. I have read all three certificates, and admit that the President's certificate was worded carefully and with great attention. I suspect that his was the only one drafted personally rather than by an official. It has the mark of being signed by a man who was troubled by what he had been asked to do.

I cannot say the same about the certificate signed by the Home Secretary. It does not have the same stamp of an agonised conscience. There is one notable difference between the Home Secretary's certificate and those signed by the other three. The other three Ministers all signed that they had read the documents in front of them, whereas the Home Secretary's certificate said that the documents have been shown to me". Such a formula will come in handy the next time he is asked whether he has read the Maastricht treaty.

Let us be clear about the purpose of those certificates. The parent certificate, as acknowledged by the President in his certificate, is the one signed by the Minister of State, Foreign Office. In its opening paragraph, that certificate says: The purpose of this certificate is to explain to the court why, for reasons of public interest, such documents should not be so disclosed. Over the page, the certificate says: The production of such documents would be injurious to the public interest and it is necessary for the proper functioning of the public service that the documents should be withheld from production". The intention behind that certificate is plain: it was to persuade the judge not to disclose the documents. Let there be no pretence about the purpose of the certificates: they were submitted with the purpose and in the hope that those documents would not become public property.

Back in 1956, under another Conservative Government, the then Lord Chancellor, Lord Kilmuir, said that the Government would never claim immunity in a criminal case. The reason for that is easily understood. It is wrong in principle that, when liberty is at risk, evidence that could be vital to the defence of a defandant should be withheld. It was exactly that principle that Ministers endangered when they sought to prevent the defence from getting those documents.

Let us suppose that Judge Smedley had accepted the arguments in the certificates and had decided that disclosure was contrary to public interest. Let us suppose that he had not released those documents to the defence and that the three business men had been convicted. Would the Government be confident that they had done the right thing? Could they persuade themselves that they had behaved honourably when those three executives went to prison?

If they do not answer those questions to the House, they must do so to their own consciences, because the public interest also requires that there should be a fair administration of justice. It is in the public interest that justice be done, and justice would not have been done had those documents not been released.

I fully understand why the Attorney-General was so keen to advise Ministers to keep the documents locked away, and why the Government would not wish to release them for another 30 years. They tell a tale of deceit, of how Ministers agreed in private to arm Saddam, even though they knew how brutal he was. They tell of how they conspired to conceal from Parliament what they were doing; how they desperately tried to cover up what they 640 had done when they found Britain at war with Iraq; arid how they let three business men face prison rather than release the documents that would show what Ministers had done.

Those documents have convinced the nation that it was not the executives of Matrix Churchill who should have been in the dock but the Ministers who approved what they were doing and who deserted them when they were caught. We have given Parliament an opportunity to return a verdict on the conduct of those Ministers. Tonight we shall vote to record our contempt for the Ministers who misled the House, deceived the public and tried to muzzle the courts.

§ The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Michael Heseltine)

I beg to move, to leave out from 'House' to the end of the Question, and to add instead thereof: 'notes that up to August 1990 Her Majesty's Government granted export licences for the supply of goods to Iraq in accordance with guidelines which had as their overriding consideration not to supply any lethal equipment and which also restricted the supply of any defence equipment; recognises that it will be for Lord Justice Scott, under the terms of his inquiry, to consider whether these guidelines were followed; welcomes the Government's decision to give the inquiry wide terms of reference which will enable Lord Justice Scott to examine all of the facts, including the decisions taken by those signing public interest immunity certificates in the Matrix Churchill case; and deplores the sensationalised attempts of Her Majesty's Opposition to anticipate the inquiry's findings.'. It may be for the convenience of the House if I set out at once the order in which I intend to cover the principal issues raised by the debate. First, I intend to explain the procedures within which British export policy was conducted in the context of the changing pattern of events from 1984 onwards. Secondly, I shall refer to how the rules were applied. Thirdly, I shall discuss the trial of the three directors of Matrix Churchill and the role of Ministers in issuing public immunity certificates. Fourthly, I shall cover the establishment of the Scott inquiry, its terms of reference and related matters.

In December 1984, the Government drew up a set of guidelines to govern the export of defence equipment to Iran and Iraq. Those guidelines were formalised in 1985 when Lord Howe, the then Foreign Secretary, announced them to the House of Commons on 29 October 1985.

The then Foreign Secretary said that there were four constraints. He said:

1. "(i) We should maintain our consistent refusal to supply any lethal equipment to either side;
2. (ii) Subject to that overriding consideration, we should attempt to fulfil existing contracts and obligations;
3. (iii) We should not, in future, approve orders for any defence equipment which, in our view, would significantly enhance the capability of either side to prolong or exacerbate the conflict;
4. (iv) In line with this policy, we should continue to scrutinise rigorously all applications for export licences for the supply of defence equipment to Iran and Iraq."—[Official Report, 29 October 1985; Vol. 84, c. 450.]

Scrutiny was to be carried out by the interdepartmental committee on exports to Iran and Iraq, which comprises officials from the Foreign and Commonwealth Office, the Ministry of Defence, the Department of Trade and Industry and other Departments as necessary. Not only would individual licence applications need to be 641 scrutinised, but it was obvious that, in many cases, a judgment would have to be exercised as to whether or not certain potential exports came within the rules. I draw attention only to the words "significantly enhance" or "prolong or exacerbate", so that the House may appreciate the detail of the judgment that was bound to be necessary.

I make two observations. First, by no means all our major competitors were so constrained—[Interruption.] I should have thought that Labour Members would welcome the fact that we gave a lead in the matter. Secondly, it is obvious that any interpretation of those rules required careful consideration of individual export licence applications. The embargo did not prohibit the export of all defence-related equipment.

The substance of that policy remained in place until it was overtaken by the United Nations embargo on all trade with Iraq that came into effect after the invasion of Kuwait in August 1990. A change in the wording of the guidelines was obviously necessary to reflect the fact that there had been a ceasefire in the Iran-Iraq war. Questions have been raised about the nature of the change in the guidelines and why it was not announced to the House. Those matters will need to be explored by Lord Justice Scott on the basis not only of looking at the numerous documents, but of talking to the Ministers and officials involved in making those decisions at the time.

I should like to stress one point. It has been suggested that a change in the wording of the guidelines meant that dual-use goods and industrial equipment, such as machine tools, would no longer be caught because they did not provide direct assistance in the conduct of operations. In fact, during that time, scrutiny continued of dual-use goods, including machine tools.

In June 1990, my predecessor, Lord Ridley, wrote to the then Prime Minister suggesting a consideration at Cabinet Minister level of changes in the guidelines. In July 1990, Ministers discussed the desirability of a continuation of the rules under the chairmanship of the Foreign Secretary against a background where circumstances appeared to have changed beyond those that gave rise to the rules in the first place—

§ Mr. D. N. Campbell-Savours (Workington)

rose—

§ Mr. Heseltine

I shall not give way as I must explain the context of what I am saying. I shall certainly give way later, but it is important that the sequence of this part of my speech should be heard in one piece.

The circumstances had changed beyond those that gave rise to the rules in the first place. Equipment from all over the world was being sold to Iraq. British companies were at risk of losing orders.

I shall remind the House of the background circumstances. In 1990, Iraq was purchasing industrial and dual-use equipment in the world market from a wide range of countries, including the United States, west Germany, Japan, France and Switzerland. The group of Ministers decided to recommend to their colleagues in government that a collective decision be taken to revise policy, but not to permit the export of lethal equipment. That same group of Ministers also concluded that any change should be announced to Parliament.

The hon. Member for Livingston (Mr. Cook) made a number of grave allegations today, one of which was that 642 when the facts were fully revealed it would become clear that Ministers had no intention of announcing the change to Parliament. I merely wish to tell the hon. Gentleman that he is absolutely wrong. [HON. MEMBERS: "Prove it."] I am only making the point that I have read the papers that Lord Justice Scott will read, and I am telling the hon. Member for Livingston that what he has said today is utterly without foundation.

§ Mr. Bruce Grocott (The Wrekin)

Is the strategy of the Secretary of State today to be as follows: when documents of which he is aware appear to support his argument, he will quote them to the House, but when documents of which he is aware do not support his argument, he will say that we must wait for the inquiry?

§ Mr. Heseltine

That is not my strategy. The hon. Member for Livingston gave an impression of what is contained in certain documents—which he cannot have read—that is diametrically wrong. I happen to have read the documents, and can tell him that I am diametrically right.

§ Sir David Steel (Tweeddale, Ettrick and Lauderdale)

On that point, will the Secretary of State explain why the then Minister of State, Foreign and Commonwealth Office, the right hon. Member for Bristol, West (Mr. Waldegrave), said at a meeting with Lord Trefgarne and Alan Clark that he was prepared to anounce publicly then —as he was in January—the form of words adopted and agreed in January?

§ Mr. Heseltine

As the right hon. Gentleman will know, that was not the meeting to which the hon. Member for Livingston was referring. The right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel) is referring to an earlier meeting, but the meeting that is of consequence—and on which the House is rightly focusing —is the meeting at Cabinet level chaired by the then Foreign Secretary. It was at that meeting that it was decided that it was appropriate to change the guidelines and announce them to the House of Commons. That did not happen, because by the time that it would have been possible to do so, the Iraqi invasion of Kuwait had taken place.

§ Mr. Robin Cook

The President is absolutely correct. A fortnight after the meeting that apparently relaxed the guidelines, Saddam Hussein invaded Kuwait. However, the President has not explained why, if the meeting at Cabinet level decided that the House of Commons should be told, when Ministers were repeatedly asked questions during the next two years, not a single reference was made either to the meeting in 1990—which the President now regards as critical—or to the changes in the guidelines in 1988 or the many decisions in between that represented a weakening of those guidelines to the point of extinction. If it was decided in July 1990 to tell Parliament, why was there a failure to do so in the subsequent two years?

§ Mr. Heseltine

Because they never changed the guidelines. That is the point that the hon. Gentleman cannot understand. The meeting decided that it would recommend a change in the guidelines and that if a decision to do so was taken, that would be announced to Parliament. However, the guidelines were not changed, so it was not appropriate to make an announcement to Parliament.

§ Mr. Robin Cook

rose—

§ Mr. Deputy Speaker (Mr. Michael Morris)

Order. Hon. Members cannot just stand up when the Secretary of State is addressing the House. They must wait to see whether he gives way.

§ Mr. Tony Benn (Chesterfield)

On a point of order, Mr. Deputy Speaker. The House will recall that, earlier today, the Speaker said that, when Government documents were quoted, they must be placed on the Table of the House. The Secretary of State has referred to Government documents, Cabinet and other meetings, and told the House that it should wait until Lord Scott replies before commenting on the matter. Those documents should be made available to the House; otherwise the Scott inquiry is just a way of silencing the House in its task of establishing the accountability of Ministers.

§ Mr. Deputy Speaker

Madam Speaker's ruling was clear on state papers and direct quotations therefrom.

§ Mr. Heseltine

In the event, as I said, Iraq—

§ Mr. Benn

Further to my point of order, Mr. Deputy Speaker. With great respect, Cabinet papers are state papers. There is no distinction between one type of state paper and another. The Secretary of State has quoted from a state paper, and that paper should now be made available to the House.

§ Mr. Deputy Speaker

It appears that Cabinet papers are not state papers. I shall take further advice and report to the House later.

§ Mr. Heseltine

In the event, Iraq invaded Kuwait. These proposals were not considered further and were never implemented. The House will be aware—

§ Mr. Gerald Kaufman (Manchester, Gorton)

The President of the Board of Trade has stated that, when the Overseas and Defence Committee of the Cabinet, on 19 July 1990, considered the possibility of changing the guidelines on the embargo—I quote the words which he has offered this afternoon—"circumstances had changed." Did the Committee take into account the fact that among the circumstances that had changed was the fact that it was known that Iraq was seeking to acquire nuclear triggers to manufacture nuclear weapons? Did the changed circumstances include the knowledge that it had become public that Iraq was trying to manufacture a supergun with British parts? Did the Committee consider the fact that, three days before it met, The Sunday Times had published a story about British-manufactured titanium parts for the manufacture of Iraqi missiles? In the circumstances, was it appropriate for the Committee to recommend relaxation of the guidelines?

§ Mr. Heseltine

The right hon. Gentleman is as aware as I am that that is precisely why we are having an inquiry. We are having one precisely to establish who knew and who should have known and whether these matters should properly have been taken into account. That is the purpose of the inquiry.

The House will be aware that publicly available memoranda were submitted to the Select Committee on Trade and Industry for its inquiry into supergun and exports to Iraq in general. The memoranda listed details of the exports from January 1987 to August 1990.

§ Mr. Corbyn

Will the President of the Board of Trade give way?

§ Mr. Heseltine

No.

The House will be interested to know that during that period—January 1987 to August 1990—Iraq concluded contracts for the import of defence equipment worth an estimated $11.3 billion. Contracts placed with United Kingdom companies during that period were worth only $200 million, less than 2 per cent. of Iraqi procurement.

Even today, there have been references to export credit guarantees supporting sales of defence goods to Iraq, and suggestions that the taxpayer will be paying £200 million for the sales. The facts are as follows. The Export Credits Guarantee Department provided support for United Kingdom exports from 1984 onwards under a series of intergovernmental protocols. These covered both short-term and medium-term credits. From 1985 onwards, however, a limit was applied to medium-term credit for defence-related goods. As the hon. Member for Livingston said, at the end of 1985 the limit was 20 per cent.

The total of medium-term export credits taken up between 1983 and 1989 for defence-related goods came to just £54.3 million, or 6 per cent. of medium-term credit taken up for all goods by Iraq. That is entirely different from the figure produced by the hon. Gentleman a few minutes ago. When he quoted the amounts that are outstanding—that have not been repaid by Iraq—he was talking in the main, with the exception of the £54.3 million to which I have referred, about goods for peaceful purposes—industrial contracts in British factories for British jobs.

All exports, whether benefiting from short-term or medium-term credits, were subject to export licensing regulations and any claim against export credit would normally be invalid if such a licence had not been obtained. The defence-related equipment supplied under medium-term credit did not include armaments of any sort. It ranged from radio communications equipment to power supplies, video recording systems and diesel test equipment.

That brings me to the allegation that, while rules were in place, they were flouted with ministerial connivance, if not positive encouragement. The seriousness of such allegations cannot be overstated, but nor can they be examined with the care that is appropriate without a full and independent inquiry. Certainly, they cannot be examined with only partial discovery of the evidence or selective quotations. That is why the Government immediately set up an inquiry under Lord Justice Scott.

Of course there was a continuing debate in Whitehall about the desirability of individual export contracts. Some were turned down—for example, Hawk aircraft, civilian helicopters and small boats. That is clearly established. Clearly, Ministers and officials had to weigh what were often conflicting interests in changing circumstances. In interpreting policy guidelines, judgments had to be made about British contracts for British factories offering British jobs in circumstances where others in other nations were queuing up to fill the orders if we did not. No Government can escape, or should try to do so, from their legitimate consideration of our national interest in these circumstances.

I shall return to the Scott inquiry.

§ Mr. Tam Dalyell (Linlithgow)

Will the President of the Board of Trade allow me to intervene?

§ Mr. Heseltine

No.

I make the point at this stage—

§ Mr. Dalyell

Will the right hon. Gentleman give way?

§ Mr. Heseltine

No.

I make the point at this stage. The Opposition demanded an inquiry under the Tribunal of Inquiries (Evidence) Act 1921. That was the request of the Leader of the Opposition. If we had agreed to it, the debate would not be taking place today. Little of the press coverage would have been permitted. The first consequence of a 1921 Act inquiry is that the matter becomes sub judice. Secondly, the time scale is likely to be of a different order. It is fair to say, however, that one advantage of such an inquiry is that the country might have been spared the activities of the hon. Member for Livingston.

§ Mr. Dalyell

Will the right hon. Gentleman give way?

§ Mr. Heseltine

No.

The hon. Member for Livingston applied all his energies to blaming my right hon. Friend the Prime Minister. The hon. Gentleman was the impresario who so debased the general election campaign with the cynical exploitation of a five-year-old girl. He has been up to his old tricks again. The headline screamed, "Cook Reveals All". You and I, Mr. Deputy Speaker, might have faced so daunting a prospect with less than our usual equanimity. The hon. Gentleman is not exactly what one might call a Chippendale.

Behind the gory headline, it was obvious—

§ Mr. Dalyell

Will the right hon. Gentleman give way?

§ Mr. Heseltine

No.

It was obvious that this matter was being played for every piece of applause that the hon. Member for Livingston could find. He had no intention that—

§ Mr. Dalyell

Will the right hon. Gentleman allow me—

§ Mr. Deputy Speaker

Order. I shall be most grateful if the hon. Member for Linlithgow (Mr. Dalyell) will resume his seat. It is clear that the Secretary of State will not give way at this stage.

§ Mr. Heseltine

The hon. Member for Livingston had no intention that all the evidence should be produced at once for a full appreciation of the matter. Not a bit of it. It was to be a selected quotation here and an inaccuracy there for day after day. It was to be another revelation and another gathering of pencil-sucking journalists, with row after row of discarded raincoats. It was not to be done with the flourish of a sort of Soho stripper. This was not a striptease, it was a Cooktease.

I shall give the House two examples of the hon. Gentleman's techniques. In his letter to the Prime Minister on 13 November, he quoted Lord Trefgarne, then a Minister at the Department of Trade and Industry, as saying that the operation of the ministerial guidelines had weakened to the point of extinction. I shall give the House the full quotation.

§ Mr. Stuart Bell (Middlesbrough)

Another state document?

§ Mr. Heseltine

It is a document from which the hon. Gentleman's hon. Friend quoted. However, I shall not quote it selectively; I shall quote the whole passage, which states: The continuing ceasefire has necessitated reconsideration of the operation of the ministerial guidelines and weakened to the point of extinction any case for prohibiting exports of general purpose industrial equipment for fear that it might be put to military use. That is a very different letter. If the hon. Gentleman cannot even quote accurately from Government documents, what credence can we place on his preposterous allegations about the extent of my right hon. Friend the Prime Minister's knowledge of the affair?

§ Mr. Benn

On a point of order, Mr. Deputy Speaker. The Secretary of State has now said that he is quoting from a state document—[Interruption.] Yes, he said that. I am asking you to protect the House, Mr. Deputy Speaker; I am not engaging in argument. The House has responsibilities in this matter and the Secretary of State is quoting from a state document. Every Cabinet paper states, "This paper is the property of Her Britannic Majesty's Government." A state paper has been quoted, but the House is being allowed the opportunity to hear only certain passages that the Secretary of State wishes to reveal.

§ Mr. Deputy Speaker

I am quite sure that the Secretary of State is an honourable man, as is every hon. Gentleman and hon. Lady in the House. If he is quoting from a state document, it will have been tabled. If he is not, he has every right to quote from it.

§ Mr. Dalyell

Further to that point of order, Mr. Deputy Speaker. Do you intend to protect the House against what has become an unworthy rant? Can we be told why, if all that the Secretary of State said is true, three men were prosecuted? If all the documents were debated by Ministers, why were those three Matrix Churchill directors prosecuted?

§ Mr. Deputy Speaker

The House knows that the Chair is not responsible for the quality of speeches.

§ Mr. Bob Dunn (Dartford)

Further to that point of order, Mr. Deputy Speaker. In view of what my right hon. Friend has said, would it be in order for the hon. Member for Livingston (Mr. Cook) to withdraw his earlier statement?

§ Mr. Deputy Speaker

That is not a matter for the Chair.

§ Mr. Heseltine

The hon. Member for Livingston was not content simply with selective quotations. Grubbing around in the undergrowth, he though that he had hit on another winner. He discovered that a telegram had been sent from the Foreign Office, signed "Howe", to our embassy in Tokyo seeking information about an aspect of the Matrix Churchill affair. Even that argument exploded in his hands. The telegram never went to Lord Howe's office. All telegrams from the Foreign Office go out in the Foreign Secretary's name, no matter who originates them. If it is love and kisses from the cleaning lady in London to the third secretary in Moscow on his birthday, the happy message will go out in the name of the Foreign Secretary.

§ Mr. Benn

On a point of order, Mr. Deputy Speaker.

§ Mr. Deputy Speaker

Is it another point of order?

§ Mr. Benn

It is the same point of order, Mr. Deputy Speaker. Nothing in my previous point of order reflected on the honour of the Secretary of State or any other Minister. I am asking you to apply the rules of "Erskine May". Ambassadorial telegrams are all state documents. We cannot discuss this matter if some people have access to documents. We have to protect the House, not one user.

§ Mr. Deputy Speaker

I have given a clear ruling—[Interruption.] Order. How can I give a ruling if hon. Members interrupt me? It is clear that, if a state document is quoted directly, it must be tabled. That is the ruling, and I expect all hon. Members to abide by it.

§ Mr. Heseltine

It is extraordinary that the whole debate is based upon quotations that the hon. Member for Livingston has taken from documents released to the court by the Government, yet not a word of protest is heard from Opposition Front-Bench spokesmen about their ability to quote selectively from those documents. All that I am doing, without quoting from those documents, is to set the record in a full context. That is the inevitable consequence of a debate that has been originated by the Opposition, not the Government.

Many hundreds of telegrams a day, from every Tom, Dick and Harry in the Foreign Office building, are sent out in the name of the Foreign Secretary. All that the debate reveals is that Labour has been out of office for a very long time. It no longer knows how government works, so Labour Members make it up and trust to luck. The hon. Gentleman got it wrong. The headlines faded—the six-inch banner on the front page subsided to an inside column headed, "Cook fails to convince"—[Interruption] Oh yes, it was there.

The hon. Gentleman held about three press conferences, with more disclosures, and even the journalists began to lose faith in him. Indeed, even better than that, the hon. Gentleman is now beginning to realise that he has made a mess of it. I heard him on the radio on Saturday morning. I understand that he is about to carpet some hapless research assistant. He said: I could not have done it all myself. My assistant worked all night. That was the basis of three weeks of allegations by the hon. Gentleman. It is a terrible warning to the research assistant about where the blame will lie.

I want to deal with the suggestion that my right hon. Friends and I sought to cover up the evidence available to us in our Departments. The suggestion, which has been widely reported in the national press, is that we were prepared to allow innocent men to be convicted rather than expose the Government to the risk of criticism. If for no other reason, the Scott inquiry is essential to establish the facts.

My three colleagues and I were each approached with a request to sign a public interest immunity certificate. It was not a collective decision; we were each signing in respect of papers within our own Departments. It was for each of us to read the papers in our Departments and to satisfy ourselves that they came within the categories either of security or of advice to Ministers—and if we were so satisfied, we had to sign.

Lord Justice Scott will satisfy himself on whether we acted properly. He will consider what we said and did and he will have before him the advice that we have received from the Attorney-General, which my right hon. and learned Friend explained to the House on 10 November. I 648 shall add only one thing—that I want to express my gratitude to Mr. James Hunt QC, who appeared for the defence in the Matrix Churchill trial. In a letter to The Times on 13 November—

§ Ms. Clare Short (Birmingham, Ladywood)

He is not a QC.

§ Mr. Heseltine

Mr. Hunt is a QC. It is intolerable that the Opposition should seek to denigrate those who are responsible for the conduct of justice.

I shall quote from the letter written by the QC who appeared for the defence in the Matrix Churchill case. The letter says: We feel bound to state that much of the reporting elsewhere in the media of the government documents issued has caused us to think we must have been present in an altogether different court. The plain fact of the matter is that counsel for the Crown said at the outset, when placing the public interest immunity certificates before the court, that the question of disclosure was a matter for the trial judge and not for the Ministers concerned. Public interest immunity cannot be waived by either the prosecution or the Ministers. It was for the judge to decide whether the interests of justice in ensuring a fair trial for the defendants outweighed those considerations of public interests referred to in the certificates. There was no question of anyone attempting to suppress evidence. In the event, the judge decided in favour of disclosure and the documents were immediately produced. Although views may differ as to the importance of the documents, the approach of counsel for the Crown to the question of public interest immunity was entirely in accordance with our understanding of the decided cases. I could not have put the matter more clearly. That is the position as I understood it. I would not have acted in the way that I did unless I had been absolutely satisfied that the judge would make available those documents or those parts of a document which he considered necessary for the proper course of justice. Therefore, I totally and absolutely reject the accusations of the hon. Member for Livingston. Mr. Robin Cook: I repeat the question that I asked in my speech. If Judge Smedley had accepted the advice in the certificates that disclosure would be contrary to the public interest and the documents had not been revealed, and if the three executives had been convicted, does the President of the Board of Trade believe that in those circumstances justice would have been done?

§ Mr. Heseltine

That is simply another grave accusation about the judge in charge of the trial. The judge was in a position to exercise a judgment. I knew that he would exercise that judgment, because I had established beyond question that he would consider the documents. If the judge had considered the documents necessary for the conduct of justice, he would have released them. If I must rely on the Attorney-General or the hon. Member for Livingston, it is the simplest decision that I have ever had to make in my life.

§ Mr. Richard Shepherd (Aldridge-Brownhills)

I have read my right hon. Friend's certificate. I think that it is an artful and true document. If it was a duty, why was the duty not invoked in the Ponting case when the prosecution made available, without Crown immunity or the claim for Crown immunity, the Crown jewels?

§ Mr. Heseltine

It is about eight years since I stood here to deal with the Ponting case. If I remember correctly, I agreed at that time to make available the documents known as the Crown jewels to a Select Committee of the 649 House. I did that so that the House could have an opportunity through its Select Committee to consider deeply sensitive, secure information. Having done that, I was grateful that the Select Committee supported the Government's judgment at the time. The House was as fully briefed as possible, compatible with the immensely secure information that those documents contained.

§ Mr. Menzies Campbell (Fife, North-East)

As the Secretary of State is telling the House about the state of his knowledge, will he tell us whether he knew when he signed the certificate that the three accused had been acting in accordance with Government policy, and that one of them had been giving valuable information to the security services?

§ Mr. Heseltine

The certificate that I was asked to sign did not ask me to become involved in investigating or even understanding the nature of the prosecution. However, it asked me to look at documents in my Department and determine the technical issue of whether they were within one of two categories. That is the issue which I was asked to determine. That is the nature of the certificate, and I signed it on that understanding.

§ Mr. Campbell

It is a simple question, yes or no. Did the right hon. Gentleman know the information that I put to him earlier?

§ Mr. Heseltine

It is clear from what I said that I was not involved, and I was not expected to be involved, in the conduct of the trial. I had not sought to involve myself in the issues that the trial raised. In no way was that my responsibility.

We are dealing simply with whether Ministers should have signed the public interest immunity certificates. I was advised that it was my duty to sign them, and I did so on that basis.

§ Mr. Neil Kinnock (Islwyn)

I shall ask the Secretary of State two questions, one of which he has already been asked but to which he has not comprehensively responded. Did he know—yes or no—that the people who were to go on trial and who were the subjects of information contained in the certificates had been of assistance to the Government? When he signed the certificates, was he aware that they were relevant to criminal proceedings that would affect the liberty of the subjects?

§ Mr. Heseltine

Of course I was aware of the significance of the trial and the charges upon which the outcome of the trial depended. That is why, as Lord Justice Scott will want to establish, I asked the questions and discussed the matter in the way that I did. It is essential that Lord Justice Scott looks at the matters. It is the only way in which the allegations made—I believe irresponsibly—by the Opposition can be adequately dealt with. What I knew, what I should have known, the questions that I asked and the questions that I should have asked are matters which will be properly examined.

I repeat what I said earlier: I had to decide whether the legal position gave me any discretion in signing the documents. If counsel acting for the defence believed that Ministers had no discretion, why should I be persuaded that Opposition Members had a greater insight into 650 ministerial duties than counsel who were responsible for defending the very people that Opposition Members were concerned about?

§ Mr. Kinnock

I recognise that, in responding to a question with another question, the Secretary of State is engaging in a fair parliamentary debating technique. However, he still has not answered two basic questions. I shall concentrate on the first one.

When the right hon. Gentleman signed the certificate, did he know that the people to which the material related had been of assistance to the Government in collecting intelligence information which was of use to the Government?

§ Mr. Heseltine

The right hon. Gentlleman must be aware that I, as Secretary of State, am not in a position to involve myself in prosecuting proceedures. That is not a ministerial responsibility. The right hon. Gentleman knows as well as I do that the moment one is drawn into discussions on that subject, a vast range of sub-questions arise which can be dealt with only by a proper and full inquiry.

The charge against Ministers is that they tried to conceal the facts from the court. I did not try to conceal the facts from the court. That is the responsibility that I bear. I have no doubt whatever that the matter will be fully—

§