BMARC

Madam Speaker

I have selected the amendment standing in the name of the Prime Minister. Given the number of hon. Members who are seeking to speak, I must limit speeches from Back Benchers to 10 minutes.

Dr. John Cunningham (Copeland)

I beg to move, That this House calls for an independent inquiry into the BMARC affair. Once more the nation has been rocked by disclosures of incompetence, negligence and perhaps worse at the heart of this decrepit Government. Again we learn that, after years of denials, stated Government policy on arms sales to Iran was covertly undermined and widely breached. Again we learn that, in a wide variety of answers to parliamentary questions—as my hon. Friend the Member for Leyton (Mr. Cohen) has highlighted—Ministers have held to the fiction that the policy was being rigorously observed when it was being easily and regularly breached.

Finally, and most astonishingly, we learned this weekend that more potentially crucial documents had been lost, overlooked or forgotten, and that evidence germane to investigations, prosecutions and inquiries had been mislaid—by accident, of course—by the Ministry of Defence police, the very people responsible for their care. Like the last chapter of "Huckleberry Finn", no doubt they were locked in an attic somewhere. It is no wonder that in respect of this Government's stewardship—a period that has seen Government officials coin phrases such as "being economical with the truth" and "the truth is a difficult concept"—Mark Twain's words still apply: Rumour is half way around the world before truth has got its boots on". The Government seem to have removed the laces from the boots of truth in these matters.

The issues go to the heart of the credibility, competence and integrity of government in our country. They raise fundamental questions that demand rigorous investigation, especially as we need to be convinced that Ministers were not conniving all along in a covert policy of providing arms to Iran while pretending publicly to prevent weapons sales.

There is an astonishing parallel with the arms to Iraq scandal, which has been under investigation by the Scott inquiry since November 1992. The Government's stated policy on arms sales to Iran and Iraq was set out by Lord Howe in October 1985 when he was Foreign Secretary. He informed the House of the following set of guidelines to all deliveries of defence equipment to Iran and Iraq: (i) We should maintain our consistent refusal to supply lethal equipment to either side; (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; (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.] 40 After years in which three different Foreign Secretaries, six different Trade and Industry Secretaries and four different Defence Secretaries told the nation that those policies were being implemented effectively, we now know that their statements were false. Their statements are worth recording, although time limits me to only a few quotations. In December 1990, the then Minister of Trade, the right hon. Member for Hove (Sir T. Sainsbury), said: 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) 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". That statement is hardly justified in the light of the announcement by the President of the Board of Trade last week; nor does it fit with the Prime Minister's guidance to Ministers which 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". The right hon. Member for St. Albans told my hon. Friend the Member for Rhondda (Mr. Rogers)—

Sir Timothy Sainsbury (Hove)

Will the hon. Gentleman give way?

Dr. Cunningham

I will give way in a moment.

The right hon. Member for St. Albans told my hon. Friend: Each application for a licence is considered on its merits in consultation with other Departments taking into account the type of equipment, its end use and end user".—[Official Report, 17 December 1990; Vol. 183, c. 66.] The right hon. Member for Witney (Mr. Hurd) told the House: Arms embargoes are in place with regard to Iran and Iraq".—[Official Report, 28 November 1990; Vol. 181, c. 884.] The right hon. Member for Thanet, South (Mr. Aitken) was very active in answering questions on the subject in his role as Minister of State for Defence Procurement. In a written answer, he told my hon. Friend the Member for Kirkcaldy (Dr. Moonie) that the Government's policy was to permit exports to Iran only within the policy announced by the then Foreign Secretary on 29 October 1985".—[Official Report, 24 November 1992; Vol. 214, c. 645.] The right hon. Member for Thanet, South told my hon. Friend the Member for Clackmannan (Mr. O'Neill): There has been a substantial sea change in Whitehall under the leadership of my right hon. Friend the Prime Minister, away from the old habits of unnecessary secrecy … Now there is greater emphasis on a new era of more responsible openness in all matters."—[Official Report, 30 June 1992; Vol. 210, c. 706.]

Sir Timothy Sainsbury

Will the hon. Gentleman give way?

Dr. Cunningham

I shall give way when I have finished my quotations.

41 On 13 May 1992, the right hon. Member for Thanet, South said in a written reply to my hon. Friend the Member for Clackmannan: I would add, however, that since 1984, the United Kingdom has refused to supply any equipment which could prolong or exacerbate the Iran-Iraq conflict"—[Official Report, 13 May 1992; Vol. 207, c. 156.] We now know that none of those statements were true.

Sir Timothy Sainsbury

The hon. Gentleman started his speech with a number of sweeping allegations. He went on to read a lengthy list of quotations from Ministers. He is now saying that every one of those ministerial statements was not only untrue but, by implication, that the Minister who made it at the time knew it to he untrue. Is not his whole case based on the idea that, when somebody sets out to break the law or avoid regulations, those whose law or regulations they are seeking to break or breach are aware of that person's intentions?

Dr. Cunningham

Is not the right hon. Gentleman making the case for an independent inquiry? We need to know the answer to his question. The House and the country need to know exactly what was going on in government at the time.

Sir Timothy Sainsbury

Will the hon. Gentleman give way?

Dr. Cunningham

No. I am not giving way again.

Similar assurances were given about the return of documents withheld by the Ministry of Defence. On 30 March this year, I wrote to the Prime Minister about the withholding of documents, asking him three specific questions. In his reply of 5 April, he said of the papers: These were in the temporary possession of the Ministry of Defence Police after they had been taken from Astra and BMARC during an investigation into corruption. These were sent to the receivers in mid-1993 when the investigations were completed. As we now know, that statement is completely false, as has again been revealed apparently by accident and not through any desire for openness.

Similarly, on 4 April this year, my hon. Friend the Member for Wallsend (Mr. Byers) was given the same answer by the Leader of the House. We now know that those answers were untrue.

We have established that the right hon. Members for Huntingdon (Mr. Major), for Witney, for Thanet, South for St. Albans and for Braintree (Mr. Newton) have all given answers that now cannot withstand examination because they are untrue. I am sure that, given time, many more untrue answers to questions and interventions will emerge from the records of the past few years.

The matters have come to light only because of the persistence of my hon. Friends the Members for Rhondda, for Newcastle upon Tyne, Central (Mr. Cousins), for Wallsend, for Cunninghame, North (Mr. Wilson) for Clackmannan, for Kirkcaldy and others, and not because the Government have been open.

The President of the Board of Trade was obliged to lift the veil on the real state of affairs in his statement to the House last week because he could not answer the questions from my hon. Friend the Member for Cunninghame, North, although a plethora of his predecessors had willy-nilly answered similar questions—wrongly, as it turns out.

42 Many questions, however, remain unanswered. In the circumstances, how can anyone accept that we know all there is to know? We have learnt by experience that the Government cannot be trusted on such issues, any more than they can be trusted on their promises on taxation.

Mr. Winston Churchill (Davyhulme)

Before the hon. Gentleman waxes holier than thou, is he aware that the Labour Government under the late Lord Wilson supplied counter-insurgence Puma helicopters to South Africa in contravention of mandatory United Nations sanctions, without giving the facts to the House?

Dr. Cunningham

I am aware that the Wilson Government stopped selling arms to South Africa.

Last week, in his wish to help his Cabinet colleagues, the President of the Board of Trade made a statement blaming officials. He blamed the failure to circulate intelligence reports properly. He blamed almost everyone but Ministers. He said that so many things had to be checked that' his Department was swamped and, as a consequence, 36 per cent. of BMARC applications were not properly supported by documentation.

Apparently, by a remarkable coincidence, the very things that Ministers were trying to block—guns and ammunition—got through. There were a lot of guns—naval cannon. If all the guns exported to Singapore had been used by the Navy there, the Malacca straits would probably be blocked by capsized warships. No one in the Government noticed; or did they notice but not want to know? The Conservative Government ensured that the combatants did not have lap-top computers in the trenches on the battlefield, but they made sure that they had guns.

In a debate on arms to Iraq in November 1992, the President of the Board of Trade said: 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 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. The right hon. Gentleman told the House that the detail of all the judgments had to be scrutinised, not just the superficiality. That is what he said was happening, but we know from his statement last week that it could not possibly have been true.

In the same speech, the right hon. Gentleman continued: Secondly, it is obvious that any interpretation of those rules require careful consideration of individual export licence applications."—[Official Report, 23 November 1992; Vol. 214, c. 640–41.] If what the right hon. Gentleman told the House in that debate was happening, how did those weapons escape the net? That could have occurred only because what he claimed was happening was not actually happening, so on that occasion the right hon. Gentleman was not being particularly accurate or candid with the House, of which his statement to the House last week was absolute confirmation.

In his statement to the House on 13 June, the President of the Board of Trade painted a picture of the treatment of intelligence in Whitehall that frankly defies belief. 43 Are we to believe that the 1986 intelligence, which he says was not distributed to DTI, simply sank without trace in the rest of Whitehall? He acknowledges that it went to other Departments. What did they do with it? Did they ignore it? Did not one Sir Humphrey pick up the phone and say, "Bill, I think you should know about this. It affects your Department"? Did not one person in the FCO, the MOD or the Cabinet Office, which presumably received the intelligence, consider that there was something to act upon, perhaps even to check with the Department of Trade and Industry and ensure that it was informed about what was happening? It is just not credible.

Are we to believe that, in the period before 1988, when, we are told, two intelligence reports were distributed to the DTI, no assessment was made of intelligence for distribution around Whitehall and to Ministers who took it into account? I find it difficult to accept that, because an intelligence report was not distributed to the DTI, the Department can be assumed to have been in complete ignorance of its contents for several years. The point just does not bear scrutiny.

In his statement to the House, the President painted this picture in a very odd way, completely unconvincing on subsequent analysis. In any case, even when intelligence reports were distributed to the DTI, as in the two 1988 cases, much good did it do. When there were not very difficult links between Oerlikon and BMARC to be made, the Department simply failed to make them. The President says that arrangements for the distribution and handling of intelligence, both generally and in the DTI, have been "substantially improved" since 1988, but I put it to him that it is not the distribution and handling of intelligence that needs improving: it is the reading and using of the reports by Ministers and their officials where the improvement is long overdue.

Did officials, on the other hand, know from Ministers that they did not want to hear? It is an unusual experience for me to find myself in agreement with Baroness Thatcher, yet I cannot help feeling that she was correct when she told the Scott inquiry, commenting on the handling of intelligence reports, that one would expect Ministers, when dealing with such an issue, to ascertain whether there was any intelligence to be considered, or to ask someone to put an inquiry through to see if there was any.

As with Iraq, so apparently with Iran. No one, including Ministers, seems to have asked—perhaps because they did not want to know the reply.

Last week, in a series of media interviews, the President described all these failures as "a cock-up". Apparently the lost papers this weekend were another cock-up. Government by cock-up is what this country has under the President of the Board of Trade and his right hon. Friends. We have non-executive directors who do not read minutes or agendas. We have Ministers who do not read intelligence reports, or even ask intelligent questions about them. It can all be summed up by saying: negligence, incompetence and a lack of integrity, too.

The guidelines were issued in 1985; project LISI began in 1986, 12 months later. Directors at BMARC say that Whitehall knew the guns were going to Iran via Singapore from the very beginning. Intelligence reports said that a UK company was avoiding export controls by shipping 44 weapons via a subsidiary in Singapore—but no one in the Government apparently made the connection. The right hon. Member for Thanet, South, who was recruited by BMARC exactly because of his knowledge of the middle east, knew nothing about one of the company's largest orders; when at least three former directors of BMARC have stated publicly that, as all directors were regularly briefed on all aspects of project LISI, the right hon. Gentleman must have known who the end user was.

Are we to believe that a man who says he took his non-executive duties seriously did not see fit to press his fellow directors as to the real nature of project LISI—a project under which naval cannon were ordered by Singapore, despite the fact that its navy did not have enough boats capable of mounting a fraction of the weapons provided?

It is a basic principle of company law that a non-executive director has the same obligations and is subject to the same liabilities as any other director. He has a duty to keep himself informed about the business activities of the company. The fact that the Chief Secretary may not have bothered to find out the basic facts of one of his companies' largest orders does not excuse him. The right hon. Gentleman failed in his duties as a non-executive director; and the same is true of Ministers and their Departments. Ministers have a responsibility to keep themselves informed about the workings of their own Departments.

This is not just a question of one person's guilt or otherwise. This is a matter that encompasses many Government Departments and many Ministers—for instance, the Department of the President. Not only did his Department fail to make a connection between BMARC's export licence applications and the intelligence reports distributed, but during the period of project LISI, 1986 to 1989, full supporting documentation concerning end users was not supplied—was apparently never asked for by the Department—yet the licences were granted. How on earth does this statement fit in with Lord Howe's assertion, repeated so often by so many Ministers to the House, that the Government would continue to scrutinise rigorously all applications for export licences"?—[Official Report, 29 October 1985; Vol. 84, c. 450] Anyone genuinely concerned for the right hon. Member for Thanet, South should support the call for an independent inquiry. After all, even his own publicity adviser's faxes seem to support the need to clear up the matter once and for all. The Chief Secretary said publicly last week that he would welcome a fuller inquiry.

The concern of the President of the Board of Trade for his right hon. Friend shone through his extraordinary performances last week, in the House and in media interviews. As the book of Samuel puts it: I am distressed for thee, my brother Jonathan. The President is, as we all know—and his colleagues know only too well—in the clear. He has nothing to fear from an independent judicial inquiry; he was out of government for most of the time. Indeed, he might positively benefit because, as has been noticed—as much by his right hon. and hon. Friends as by us and the media—he increasingly resembles a man who hopes to keep his head while all around are losing theirs.

The Scott inquiry is dealing with arms to Iraq. We do not want to delay it any longer. The Trade and Industry Select Committee has already held one inquiry into these 45 issues. We now know that it was denied papers and evidence. Not surprisingly, the report was inconclusive. I know that my hon. Friend the Member for Sheffield, Central (Mr. Caborn) is trying to clarify the position, not just of the President but of the whole Government, on these issues.

The House is facing new revelations in what are, by any test, extraordinary circumstances. That is why we believe that the BMARC affair should be the subject of a fully independent judicial inquiry, quite separate from the Scott inquiry. This new inquiry should have access to all documents and reports relevant to the BMARC affair. It should be headed by a judge; the person appointed should satisfy him or herself that the terms of reference are effectively drawn up. The issues raised in the BMARC affair go to the heart of the integrity and competence of government in our country. They should be independently and rigorously investigated.

Most of all, I am surprised that the President of the Board of Trade is not supporting our motion, which reflects the seriousness of the allegations and issues under debate—negligence, honesty, ministerial competence and integrity. The right hon. Gentleman certainly supported such an approach in the past, for in 1992 he had this to say about very similar accusations: 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…That is the only way in which the matter will be seriously investigated to the satisfaction of the House and a wider public…Conservative Members want an independent inquiry to be carried out by a distinguished judge, with all the evidence, and that is what our amendment seeks."—[Official Report, 23 November 1992; Vol.214, c. 644–53.] The Conservatives' amendment does not seek that today—but then, as so often before, the right hon. Gentleman has shifted his ground. I nevertheless urge the House to support our motion tonight.

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: recognises the independence of the all-party Select Committee for Trade and Industry; welcomes the Government's assurance that if that Committee decides to examine the issues raised by the allegation that Singapore was used as a conduit for arms to Iran then it will co-operate fully; and recognises that as far as intelligence is concerned the Government will establish procedures with the Select Committee in the light of the Intelligence Services Act 1994.". In the ordinary course of events, Mr. Deputy Speaker, I would begin with your characteristic title, but the whole House will want to recognise that in one material way your title has changed since I was last able to address you. I do not in any way seek to change your title, but the spirit of my congratulations is deep and heartfelt.

It was not until the 27th minute of the speech of the right hon. Member for Copeland (Dr. Cunningham) that it appeared that there was a substantial difference between the thrust of what he was saying and the reasons why I made an oral statement a week ago. I accept at once that my statement arose directly from the fact that my hon. Friend the Under-Secretary of State and I had three written questions to address from the hon. Member for 46 Cunninghame, North (Mr. Wilson). As a result of those questions, we did what the House would expect Ministers to do, which was to ask the basic questions and to seek the basic information so as to give a full answer to the House.

My hon. Friend and I were not satisfied with the answers which were in front of us, and therefore asked for further information. As a result of the further information which was brought to our attention, it became apparent that there was a serious issue which Ministers in my Department first had to address. The right hon. Member for Copeland was correct when he said that there is a range of quotations, letters and parliamentary answers which needs to be revisited in the light of my statement.

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

May I take the President of the Board of Trade back a few sentences to clarify his position? He said that the first drafts which were placed before him were unsatisfactory. Does that mean that civil servants put drafts before him which they knew to be misleading?

Mr. Heseltine

No. I realise that the Labour party has not been in government for a long time. It is common—

Dr. John Cunningham

Patronising.

Mr. Heseltine

I am not patronising the hon. Member for Workington (Mr. Campbell-Savours): I am commenting on a merciful release for the country, which has been spared the phenomenon of a Labour Government.

It is common for Ministers to change the drafts of parliamentary answers. That is what Ministers are supposed to be in a position to do. The thrust of the questions of the right hon. Member for Copeland is that we should have done that earlier, as opposed to not doing it at all. Perhaps the Labour party will try to understand the normal workings of government. It is—[Interruption.] I never said that they were dishonest. I merely said that my hon. Friend the Under-Secretary of State and I were not satisfied that the responses answered the questions to our full satisfaction. Looking back, without the drafts in front of me—this is if I remember correctly—I thought that we could give fuller answers. I thought that, in giving fuller answers—[Interruption.] There is no surprise in any of this. The House will appreciate that it is precisely for those reasons that I came before it with an oral statement.

Mr. Allan Rogers (Rhondda)

Will the President of the Board of Trade give way on that point?

Mr. Heseltine

No.

I am sure that the House will appreciate the enormity of the fact that the Labour party wants an independent judicial inquiry, which would take a long time. It is now trying to press an inquiry into a few moments across the Dispatch Boxes. I must be allowed to try to explain as fully as I reasonably can the circumstances and the decisions that the House will have to face this evening.

I have made it clear that my hon. Friend the Under-Secretary and I asked for further details lying behind the original answers which were presented to us. As a result of further details, we became convinced that there was a need to bring to the House, in one form or another—I shall discuss that in a moment—fuller information, which would mean that earlier information would have to be modified, adjusted or even changed in all the circumstances.

Mr. Rogers

Questions were tabled on issues similar to the one that we are discussing for over five years. Even last year, the particular issue had been brought to the attention of the right hon. Gentleman's Department. Why did he realise that the answers were unsatisfactory? Were abilities and perceptions peculiar, or did he know that there was a gap in the information? If so, how did he find out that there was a gap?

Mr. Heseltine

The hon. Gentleman has asked a specific question. I happen to remember one of the reasons that influenced me at the time. With my hon. Friend the Under-Secretary, I had asked for certain information in a form which had not been asked for before. It so happened that that was one of the questions that I had asked.

The precise question tabled by the hon. Member for Cunninghame, North happened—I have no criticism of this—to focus upon the particular inquiry that I had made within a matter of weeks, or days probably. He asked for information which I had just commissioned. The information was in my possession and that of the Department, and I could see no reason for not providing it. That information, however, revealed information which was new to the House and new to Ministers.

That was one of the reasons why I had information available to me which had not been available previously to Ministers. That is one of the reasons why my hon. Friend and I were in a position to give a different answer from that which Ministers had been able to give earlier.

Given that we had decided that there was a need to answer fully, fairly and frankly the questions which had been put to us, how did we deal with the issue? We could have done what would have been perfectly proper in the circumstances—I have been criticised for not following the route—and answered a written question with a written answer. That would have been a defensible response. I would not have been prepared to do it, but technically I could have used a device which all Governments have employed from time to time in different circumstances. I could have sought a bland form of words which would have skated over the issues. I did not try to do that.

If the House wants to discuss these matters seriously, it should be acknowledged that we all know that there are, and have been throughout time, answers to questions which do not reveal the whole story. I could have sought a form of words which would have had that effect. I was not prepared to do that.

The next option was a written answer. I knew perfectly well that a serious matter was before me. I thought that the House would wish to ask questions about it immediately it became aware of the issue. I knew that if the House did not want to, although I knew that it would, there would be an immediate inquiry by the media over 24 hours until, by means of a private notice question, I was back at the Dispatch Box the next day going through precisely what seemed to be the right thing to do, which was to make a statement in the first place.

That was the precise position that we decided to adopt.

Mr. Brian Wilson (Cunninghame, North)

Will the right hon. Gentleman give way?

Mr. Heseltine

No.

That led to the next inevitable question—

Mr. Wilson

rose—

Mr. Heseltine

I give way to the hon. Gentleman.

Mr. Wilson

I am obviously grateful that my questions brought the right hon. Gentleman to the House. We shall discuss the problems in the wider context of what he says later. It is interesting that the right hon. Gentleman has revealed that he had already set parallel inquiries in train. What prompted him to do so?

Mr. Heseltine

There was a range of other questions, and I had been looking at them. The House must realise that it was not an isolated event. There was a series of questions, and I was looking at answers to them. We had been able to answer some of them quickly. We could not answer the right hon. Gentleman's questions quickly, as we did not have the information. It took us some six weeks, if I remember correctly. In the course of answering other questions, I undoubtedly would have pursued lines of inquiry, which, when the precise question came from the right hon. Gentleman, would have been relevant to it.

Dr. John Cunningham

I am grateful to the President for giving way again. He just told the House, Sir Geoffrey, and I take this opportunity to congratulate you—[Interruption.] I say that, because Sir Geoffrey was not in the Chair when I began my speech. The President just told the House that he could not answer the questions of my hon. Friend the Member for Cunninghame, North (Mr. Wilson). Why, then, over a number of years, did his Ministerial colleagues go on giving answers to similar questions with such apparent authority and ease?

Mr. Heseltine

The right hon. Gentleman will understand that the evidence available to my ministerial colleagues in the answers that they gave had appeared satisfactory. On the evidence that was available to them at the time, the answers appeared to be accurate. It was because of the precise investigations that we had begun, as I have explained to the House, that we became aware that there was cause for concern. That is why I took time to answer the questions, and, when I had the answers, came to the House with a full explanation, as I believed it to be then, and still do, in a way in which I thought appropriate.

Mr. Rogers

rose—

Mr. Heseltine

No. I am not giving way. I am trying to take the House through difficult issues. [Interruption.]

Mr. Deputy Speaker (Sir Geoffrey Lofthouse)

Order. The President of the Board of Trade has been asked questions, and he has a right to be able to answer them without interference.

Mr. Heseltine

The next question which, inevitably would have been asked, would have been: "Given that the President of the Board of Trade has answered a question in a way which changes evidence before the House, in the form of answers, should there be an inquiry?"

It was evident that that question would be asked, and I felt therefore that, with my ministerial colleagues, we should address it. Therefore, far from covering up, my statement categorically suggested that, if the Select Committee on Trade and Industry wished to conduct an inquiry, we would give it the fullest possible co-operation.

Mr. Campbell-Savours

Will the President of the Board of Trade give way?

Mr. Heseltine

No.

49 That seemed to me an absolutely clear indication that the Government recognised that this was a proper subject for an independent inquiry. There was no issue between myself and the right hon. Gentleman on this matter.

Dr. John Cunningham

The difference between us is that we are calling, as the right hon. Gentleman did in the question of arms to Iraq, for an independent judicial inquiry. To revert to the right hon. Gentleman's course of argument, does he not think it a remarkable coincidence that, over five years, in the face of sustained questioning, every one of his Cabinet and ministerial colleagues had come to the same conclusion: there were no questions to answer in this matter? What was so remarkably different about the evidence and information available to him?

Mr. Heseltine

The right hon. Gentleman simply does not seem to have grasped the whole significance of the debate: to answer these questions, we have suggested an independent inquiry. That was what I said a week ago. The only issue that the right hon. Gentleman should have addressed in his speech, and which he hardly mentioned, was not the substance of the debate but the means of pursuing an independent inquiry. That is the only difference between us.

Mr. Campbell-Savours

rose—

Mr. Rogers

rose—

Mr. Heseltine

The two hon. Members have had a fair crack of the whip—[Interruption.]

Mr. Deputy Speaker

Order. The President of the Board of Trade has made it very clear that he is not giving way.

Mr. Heseltine

The issue is not whether there should be an inquiry but the form of the inquiry.

The right hon. Gentleman has tried to suggest that I blamed officials. I did not blame officials. There is nothing at all in the amendment tabled by my right hon. Friend and myself to restrict the inquiry to civil servants. There was nothing in my statement that said that civil servants got it wrong. I came to the House. I am answerable. I provided the answers to the questions.

It is because the right hon. Gentleman, throughout the entire matter, has been trying to find a way of putting the blame on Ministers before there has been any sort of inquiry that I reject his allegations. I did not blame officials. With the agreement of my colleagues, I said that I thought that there should be an inquiry into these matters.

The right hon. Gentleman suggested that this was all about a cover-up exercise, that, by suggesting a Select Committee rather than a judicial inquiry, we were somehow trying to get around the matter via the back door. The whole House is fully aware that the Labour party, which, to quote words that I jotted down peradventure, is interested in more responsible openness, is currently conducting eight inquiries into the practices of Labour local authorities: Birmingham, Leicester, Manchester, Nottingham, Paisley, South Tyneside, Tower Hamlets, Bradford—

Mr. Deputy Speaker

Order. The President of the Board of Trade is straying a little. The debate is not about local authorities. [Interruption.] Order. The Chair will decide.

Mr. Heseltine

The Chair will indeed decide, but the House, in witnessing the decision, will not lose sight of the fact that all those eight inquiries are being conducted in private—[Interruption.]

Mr. Deputy Speaker

Order. The House must now settle down. The Opposition spokesman was given a reasonable hearing, and the President of the Board of Trade must have the same.

Mr. Heseltine

I was settling down, but apparently without any cause, Mr. Deputy Speaker, because you were not on your feet.

If one is to have a Select Committee inquiry, it is entirely a matter for the Select Committee to decide whether it should make such a decision.

Mr. Barry Porter (Wirral, South)

Does my right hon. Friend agree with the implication in the right hon. Gentleman's speech: that the Trade and Industry Select Committee, which is chaired very ably by the hon. Member for Sheffield, Central (Mr. Caborn), first, is not capable, secondly, would not be independent, and thirdly, would not be objective? If that was the implication, it is quite wrong. Provided that the Committee has all the information, which perhaps we did not have on the Iraq investigation, it seems to be an entirely appropriate way, but I disapprove strongly of the suggestions made by the right hon. Gentleman.

Mr. Heseltine

I will now be able to abbreviate my speech, because of the excellent intervention of my hon. Friend. I was going to come to the very point that he has so eloquently made.

The issue that arises once one has decided that there is a case for an inquiry—there is no difference between the two sides of the House on this matter—is what the inquiry should investigate. Again, it is entirely a matter for the Select Committee to determine, within the discretions that it has and the motions that we are discussing, how it should go about its task.

The right hon. Gentleman has spelt out clearly that he wants a full judicial inquiry into the matter. He made the point that I was in favour of it, and suggested it over Iraq, but he does not seem to have appreciated that any such inquiry that started from scratch with a clean sheet of paper would have to examine the licensing and intelligence dissemination arrangements, and that it would have to look at a range of other issues, but all from a starting point where it was not part of any existing inquiry.

As the whole House is aware, Sir Richard Scott has exhaustively examined the licensing arrangements in my Department as they apply to Iraq. No one is trying to suggest—no one could suggest—that things were done in a way that one would want to defend today; but what on earth is the point of setting up another judicial independent inquiry to go over all that ground all over again? We broadly know the facts.

A similar argument applies to the dissemination of intelligence. Those matters—again, in the context of Iraq—have been examined, and are being examined, by Sir Richard, whose conclusion we do not yet know. I do not think that a case can be made for the need to start from the very beginning, discounting all the work that has been done over nearly three years.

Mr. George Walden (Buckingham)

It strikes me as both insulting and absurd of the right hon. Member for 51 Copeland (Dr. Cunningham) to accuse Ministers of covert connivance in the supply of weapons to revolutionary Iran. On the other hand, does my right hon. Friend agree that a question does arise about British defence exports as a whole? I suspect that the issues involved in the Pergau dam affair, the Scott inquiry and the little problems that we are having here today spring not from ministerial malfeasance of any kind, but from the fact that this country has become a little too dependent on arms exports.

When the Select Committee has completed its present job, perhaps it could look into the whole question of our over-reliance on arms exports, the opportunity cost in terms of research, technology and manpower and the long-term effect on the country—

Mr. Deputy Speaker

Order. Long interventions of that nature do not help in short debates.

Mr. Heseltine

My hon. Friend has raised an important point, but I consider his approach ill conceived. The research and national resources that go into the production of defence equipment are not there to sell arms overseas; they are there to equip our armed forces with the equipment that they consider necessary to the performance of their job. That is what the defence budget is designed to achieve.

Once our military planners and equipment manufacturers have achieved it to the best of their ability, we must ask ourselves whether we should take advantage of the information, professionalism and quality of equipment available to us by selling overseas, under the regulations and regimes that we have put in place. I can find no argument that suggests that, if Britain has the equipment and the right relationship with the country concerned, we should stand back and allow the French, rather than our own people, to make the sales and create the jobs.

Sir Timothy Sainsbury

In emphasising the advantages of building on a corpus of knowledge that is already there rather than starting with a blank sheet, does my right hon. Friend bear in mind—I suspect that he does—that the Select Committee has already examined, exhaustively and rather effectively, the very licensing arrangements to which he has referred? It did so in 1992.

Mr. Heseltine

My right hon. Friend is right to draw attention to that.

The option of a new judicial inquiry of the sort that the right hon. Member for Copeland wants has serious disadvantages. First, it would repeat a considerable amount of the work on matters that Sir Richard Scott has already explored exhaustively and is continuing to explore, and would take the same amount of time.

Dr. John Cunningham

The President is making much of this point. The Select Committee on Trade and Industry, however, will not have Sir Richard's conclusions, or the conclusions that he has drawn about the very matter to which the right hon. Gentleman refers. It, too, will have to start with a blank sheet of paper, will it not?

Mr. Heseltine

I shall come to the precise point that the right hon. Gentleman has made. There is, however, an 52 alternative, and I am surprised that he did not raise it: Sir Richard could have been asked to continue his inquiry. [Laughter.] I am sure that Sir Richard will gather any impressions that he wishes from the amusement that that has engendered among Labour Members.

Let me say at once that I am not in favour of that solution, because I think that it is in the public interest for Sir Richard to finish his report. By the time it is concluded, it will probably have taken virtually three years to complete, and cost the best part of £2 million. That is a matter of concern, and the House and a wider public would like the matter to be concluded.

I am not convinced, however, that the House now wants another inquiry of that sort, any more than I am persuaded that the House wants Sir Richard, having finished with the Iraq inquiry, to be invited to extend his inquiry to deal with the wider issues involved in the Iran process.

Mr. Donald Anderson (Swansea, East)

rose—

Mr. Heseltine

It becomes apparent to me—adopting a step-by-step approach—that, by acclaim, the House has reached the very judgment that the Government reached a week ago. It does not want Sir Richard to go on; I do not think that it wants to start another Scott inquiry costing another £2 million, taking another three years and stretching into the next Parliament—which is what the right hon. Member for Copeland has asked it to do.

I am not persuaded that the right hon. Gentleman has made a case of any sort. All he has done is reveal, first, that the Government behaved properly in making an oral statement; secondly, that we were right to recognise the need for an independent inquiry; and thirdly, that we were right to suggest that the independent inquiry should be carried out by the Select Committee on Trade and Industry, if it was so minded.

Immediately after my statement, the Committee's Chairman said that most of his colleagues would like to see a sharp inquiry into it quickly and not for it to drag on. To all that I say amen. That is precisely the point that the right hon. Gentleman has not taken on board.

Mr. Donald Anderson

rose—

Mr. Heseltine

What I find most questionable and doubtful about the right hon. Gentleman's position is the assumption that an inquiry carried out by a Select Committee of the House is not independent.

Mr. Anderson

rose—

Mr. Heseltine

No, the hon. Gentleman cannot intervene on that point. He has been trying to intervene for some minutes, and he now wants to try to link his question to the point with which I am now dealing, but he will not have the chance.

I happen to agree with my right hon. Friend the Member for Hove (Sir T. Sainsbury), who has now left the Chamber, that the Select Committee—under the chairmanship of the hon. Member for Sheffield, Central (Mr. Caborn)—does an impressive job. When I have appeared before it, it has never occurred to me that there is any escape from the rigorous questioning to which I am subjected. I have never for a minute believed that Labour or Liberal Members are in some way minded to make it easier for Ministers to escape the questions by giving the wrong answers.

53 I believe that—in terms both of the desirability of moving the process forward and dealing with the questions as rapidly as possible, and of achieving a degree of independence that I personally believe members of the Committee to be uniquely charged with achieving, and to have proved themselves capable of achieving—the Government amendment is correct.

The Chairman of the Select Committee has now written several letters to me on the subject of the mechanisms and procedures within which his Committee will work. I have tried to answer them; I did not answer the one that arrived at 3.25 pm today, but I shall do so at the earliest opportunity.

My intentions in suggesting this route for the House were to enable it to deal with the matter with dispatch, to co-operate with the Select Committee within the proper rules of the House and to answer questions that the House is entitled to ask and have answered. I commend the amendment to my right hon. and hon. Friends.

Mr. Richard Caborn (Sheffield, Central)

In the light of what has been said, I had better clarify the position. The hon. Member for Buckingham (Mr. Walden) spoke about the United Kingdom's reliance on arms exports. The Select Committee on Defence and the Select Committee on the Treasury and Civil Service are jointly meeting on that very issue and will, one hopes, report before the recess.

It is important for me to update the House on the current situation and on the response of the Select Committee on Trade and Industry to the request by the President of the Board of Trade for an inquiry into BMARC and exports to Singapore and Iran. The Committee discussed those matters on Wednesday and, as is right, we take the President of the Board of Trade's request seriously. What will happen after tonight's vote is a matter for the House and not for the Select Committee.

To the best of my knowledge and that of my officials, this is only the second time that a Secretary of State or, in this case, the President of the Board of Trade, has requested a Select Committee to hold an inquiry. It is usually the other way round. For the record, the only other request related to the closure of 31 pits.

When the members of the Committee discussed the matter last week, we were mindful of the inquiry by the previous Select Committee on Trade and Industry into exports to Iraq, Project Babylon and the long-range gun. Anyone who revisits that inquiry will see that its report was inconclusive because the Committee did not have access to a number of Departments outside the Department of Trade and Industry.

The President will probably recall that my first action on becoming Chairman of the Select Committee on Trade and Industry was to write to his Department asking for clarification of that issue. Perhaps he would like to check the record on that. I said that it was unfortunate that the Select Committee could not reach a conclusion because it was denied access to people and papers.

The other area in question relates to Customs and Excise. On Wednesday, the Select Committee wanted to make sure that it would be able to get access to all the information that has been available to the Department of Trade and Industry—the information that was referred to in the President's statement.

Mr. William Cash (Stafford)

The hon. Gentleman speaks about information, which he could obtain from civil servants. Does that include advice tendered to Ministers? What was the attitude of the Department in that respect?

Mr. Deputy Speaker

Order. I remind the House that there is a 10-minute limit on speeches.

Mr. Caborn

When all the information in the letters is revealed—and I do not intend to do that in this debate—the House will see that, as the President said, a number of letters passed between the Department and the Select Committee. The answer to the hon. Gentleman's question is that the matter has been raised and that we are still awaiting answers.

As has been said, we are dealing with a subject that is nearly a decade old and many of the civil servants who were in place then may no longer be there. That was another area of concern when the Select Committee was scrutinising the issue of the Iraqi super-gun.

A number of key areas make the inquiry unique and dispensation may be required from some Ministers. I shall not go into detail but I can tell the House that the Select Committee is corresponding with the Department to resolve that. I hope that the Committee will have resolved those questions by Wednesday and will decide, first, whether to proceed with the inquiry and, secondly, on the terms of reference. The Committee operates under Standing Order No. 130, but that will need to be expanded if we are to carry out a thorough inquiry. As the President said, it may be short. I hope that it will be and that we shall be able to focus on clear terms of reference and to present a report to the House.

Select Committees are responsible to the House, and we must balance the President's request, which we take seriously, and the information, people and papers that the Government will allow for scrutiny against the credibility of the Select Committee system. As Chairman of the Select Committee on Trade and Industry I am the custodian of its credibility. The DTI and the President must allow the Committee access to information which it believes is necessary for a thorough inquiry.

Sir Cranley Onslow (Woking)

The Committee has not yet had an opportunity to discuss the exchanges that the hon. Gentleman has had. I hope that he will not presume to anticipate the Committee's collective decision.

Mr. Caborn

The right hon. Gentleman is a member of that Committee and knows that I do not anticipate anything, because things can go badly wrong. I assure him that all the information that has passed between the DTI and me over the past seven days will be presented for objective analysis. I hope that all members of the Committee will ensure its credibility by making sure that we have access to all the information because if we do not do that, our report will be inconclusive. That will depend on the House's decision, but if the Select Committee is asked to conduct an inquiry it will do a thorough job.

Sir Nicholas Bonsor (Upminster)

I agree with my right hon. Friend the President of the Board of Trade. Plainly, we do not wish to have another long inquiry. We must dispose of this matter briskly and ensure a swift conclusion that the House can consider. The best way to 55 do that would undoubtedly be for the Select Committee to look into the issue. As Chairman of the Select Committee on Defence, I can endorse all that the President said about the impartiality of Committees. I assure him that Conservative and Opposition Members rigorously scrutinise what Ministers tell them.

I should like to put the debate into its wider context. In one year, 1993, we exported £7 billion-worth of arms. I totally disagree with my hon. Friend the Member for Buckingham (Mr. Walden) who, unfortunately, is not in the Chamber. More than 500,000 people are involved in arms production. Our armed services need to be able to use British equipment where possible. We need the best equipment, and we can afford to produce it only if we succeed in exporting arms because that supports the logistics and the necessary research and development. The idea that we should cut our arms supplies is absurd, and would cause deep and lasting damage to our country.

We should compare the £7 billion-worth of arms exports in 1993 with exports to Iran and Iraq in the 1980s. During that entire period, exports to Iran totalled £35 million, while those to Iraq amounted to some £569 million. That was over 10 years, and when it is contrasted with the exports in 1993 one sees the relative insignificance in terms of money and equipment that the House is debating.

In 1987, there were some 98,000 applications to obtain the necessary licences under the then rules, and only a handful succeeded. It is not surprising that the Department of Trade and Industry was inundated with such work and that its officials occasionally allowed something to slip through.

Project LISI is the title of the BMARC export that we are debating. No one has yet mentioned that when the contract for that was signed the project was being handled by, and BMARC belonged to, Oerlikon, which is a Swiss company. It was not until nearly two years after that contract was entered into that the new management of Astra, headed by Mr. James, bought BMARC and continued with that contract.

As I understand it, in 1988 the intelligence community realised that Oerlikon—not a British company—was exporting arms via Singapore to Iran but it did not specifically mention BMARC. It is again, therefore, not surprising that, in this very complicated net of applications and other matters which were being examined by the intelligence community, the DTI and the MOD, a comparatively small contract might have slipped through.

I should like to move on from that as I appreciate that I have only a minute or two to deal with two specific issues that have been raised this afternoon. The first relates to my right hon. Friend the Chief Secretary to the Treasury. He has come under attack on three bases.

First, The Independent newspaper, which normally I think is reliable and accurate, has today published one of the most appalling and inaccurate headlines that I have read in the media, saying that papers showed that "Aitken knew" about the arms deal. Nothing in the text of that article or what anybody has said—there is no evidence from any source whatsoever—suggests that that is an accurate statement. My right hon. Friend has categorically denied it. For a national newspaper to use such a headline is irresponsible, and journalism of the worst kind.

56 The second attack on my right hon. Friend, which was made by the Opposition Front Bench, can be summed up in the words, "If he did not know, he certainly should have known." I am sorry that the right hon. Member for Copeland (Dr. Cunningham) is not here, but I have no doubt that he will read the report. If he were here, I would ask him to tread very carefully when lecturing the House about the duties of non-executive directors. I happen to know that the right hon. Gentleman is a non-executive director of two chemical companies. I know nothing against the activities of those chemical companies, but I will wager that some of the contracts undertaken by those companies have been made without the express knowledge of any of the non-executive directors.

Mr. David Shaw (Dover)

The right hon. Gentleman is an adviser to those companies.

Sir Nicholas Bonsor

I have been corrected. He is an adviser, not a non-executive director. None the less, I am sure that, if the right hon. Gentleman is doing his job in advising those companies, he should know what is going on in them. It is precisely that sort of relationship that Lord Nolan, in my view perfectly properly, attacks.

Nothing said in this debate or in the press justifies the sort of behaviour which has been shown from those quarters towards my right hon. Friend. I hope that the House will accept the word that he has given that he did not know what happened and allow him to get back to the excellent job that he is doing as Chief Secretary to the Treasury.

In the few minutes that I have left—

Mr. Richard Ottaway (Croydon, South)

Two minutes.

Sir Nicholas Bonsor

In the two minutes that I am told I have left, I shall move on to the issue of Mr. Gerald James. Unlike most hon. Members, I have met Mr. James. He provided a lot of papers to me about the Iraqi gun affair when I was appointed Chairman of the Select Committee on Defence, and asked me to instigate the inquiry into it. I told the House that I was deeply disturbed by some of the things that I saw. I did not feel that the Defence Committee had the proper resources to look into that matter. After discussion with the other members, I passed all those papers on to Sir Richard Scott.

I believe that Mr. James has been treated very badly. His misfortune was that his very successful company, Astra, made two unfortunate purchases—BMARC and the other company that supplied the Iraqi gun, PRB. Those purchases led him to disasters with which he was not equipped to deal. He was treated badly by certain members of the Administration, with or without the Government's knowledge. That is something Sir Richard Scott is going to look at, not something for the House to comment on today.

I hope that we will follow the advice of my right hon. Friend the President of the Board of Trade to refer the matter to the Select Committee on Trade and Industry, and that the Committee will look into the matter.

Mr. Nigel Jones (Cheltenham)

We are debating a very serious matter. The President of the Board of Trade told us in his statement on Tuesday 13 June: 57 it does appear that there may be grounds for believing that the final destination of naval cannon made by BMARC could well have been Iran."—[Official Report, 13 June 1995; Vol. 261, c. 596.] That must be one of the biggest confessions ever made in the Chamber that was not followed by a resignation, the establishment of a full independent inquiry or even the slightest acknowledgment of ministerial responsibility.

The arms embargo during the Iran-Iraq war was there for a purpose. I was working in Baghdad at that time on legitimate civilian business, with the full backing of the DTI. Now we are told that, during that time, the DTI was approving the export of arms to fuel the already devastating war in that region. Examples like that, combined with allegations of British troops facing British weapons in the Gulf war shortly afterwards, contribute to the accusations of disgraceful hypocrisy and illegality in British foreign policy. If the Government believe those allegations to be false, an independent inquiry is surely the best way to prove it.

The question of illegal arms sales from Britain to Iran in the mid to late 1980s has, so far, been too narrow in its focus. Of course, the Chief Secretary to the Treasury has still to convince anyone of his innocence in this affair, but to concentrate purely on his role as a non-executive director is to miss the point. The real investigation goes far beyond that. The roles of the DTI, the Ministry of Defence, the Foreign Office and the intelligence services must all be probed in the fullest possible detail if the truth is to be discovered.

A vast array of evidence suggesting serious wrongdoing has been put together, mainly by the media, whom I congratulate on their digging. The denials of the accused have varied from the unsatisfactory to panic. The result is a general air of suspicion that will not go away simply because one Minister cannot remember and another was not even there at the time. If we are to avoid the sort of trial by media that the Chief Secretary so abhors, the plethora of unanswered questions that surrounds the affair must be answered in the appropriate forum.

What are the unanswered questions? Why has it taken the Government so long to put two and two together, considering that the vital clues that prompted the President of the Board of Trade's suspicions were both available in the 1980s? Why have we had to wait seven, eight or nine years for the issue to be addressed? Should not the DTI, with advice from the Ministry of Defence and the Foreign Office as well as the intelligence services and Customs and Excise, have been able to smell a rat at the time? Did the Government really think that the amount of munitions—140 naval guns exported in project LISI—could all be wanted or needed by the navy of Singapore? I represent GCHQ and it is inconceivable that the high standard of intelligence gathering in this country could have missed something as important as the breaching of an arms embargo to Iran.

To what degree should Ministers accept responsibility for the failings of the export control procedures and the breach of the arms embargo? Given reports that Mr. Stephan Kock, one of the co-directors, gave representatives of MI6—with which he had close contacts—a tour of BMARC's factory showing part of the project LISI exports, what exactly was the role of the intelligence services and why did Ministers apparently ignore the advice that they were given? Were the errors made in granting export licences the result of a conspiracy or a cock-up? If those and countless other questions are 58 to be answered, an inquiry with the necessary resources and the right of access to all relevant information must be established.

If the role of the Chief Secretary is to be ascertained, it is only right that he be given the opportunity to give evidence to such an inquiry. There appears to be some uncertainty and possible contradiction in his account of events in BMARC between 1986 and 1988.

For example, how is it that, according to the minutes of BMARC's board meeting on 2 November 1988, it appears that the Chief Secretary made a contribution to discussions at a point after he claimed to have left the meeting? How is it that he failed to read the company's progress report circulated to the board meeting on 28 February, a meeting that he personally attended? This sits very oddly with the Chief Secretary's claim that he took all steps to become well briefed on the company's activities. The Chief Secretary chose to be a director of the company. He shares the corporate responsibilities of all directors and, as a director, he must be presumed to know of the very important contract in question.

It may be that the Chief Secretary is right and his boardroom colleagues are mistaken, but, until the investigation is taken away from the media and given to an official inquiry, the Chief Secretary cannot hope to use his simple sword of truth or his shield of fair play. In the light of this weekend's developments, the onus is still very much on the Chief Secretary to prove that he was unaware of what BMARC was up to. There have been contradictory statements.

Establishing the appropriate means of investigation is something that the Government have so far done everything possible to avoid. In view of the complexity and importance of the countless questions that must be answered, why did the President of the Board of Trade suggest that the Select Committee on Trade and Industry would be able to reach satisfactory conclusions with its limited resources if his own Department, with all its personnel and access to information, had failed to do so?

The suggestion that the Select Committee should investigate the affairs of BMARC is as unrealistic as the Chief Secretary's request that Lord Justice Scott should look into the allegations levelled against him. The Select Committee and Lord Justice Scott have expressed the view that they are not equipped satisfactorily to investigate the affair. To expect them to take on the job, therefore, will be regarded as a whitewash and a sham.

The questions that I have asked deserve investigation and answers. It is not good enough for Ministers to say, "Sorry, I can't remember anything," or "It wasn't me. I wasn't even there at the time." That is all we have been offered so far, but it does not wash. If that evidence was submitted to a court of law, I cannot help but feel that it would be dismissed on the grounds that the witnesses were unreliable.

The idea that Ministers will not take responsibility for the failings of their own Departments is unacceptable to the British people and to the House. We now need a full, independent, judicial inquiry to look into the matter properly. I trust that the Government will not shy away from their responsibility to establish such an inquiry.

Mr. Edward Leigh (Gainsborough and Horncastle)

I am the Member of Parliament whose constituency 59 includes the former BMARC factory at Faldingworth in Lincolnshire. The site is still operational under the new ownership of Royal Ordnance. It assembles shells and fills them with explosives, as it did under BMARC's ownership.

My purpose in speaking today is to establish the fact that, in my view, none of my constituents or anyone involved in BMARC can be accused of wrongdoing. Certainly, there was no question of anyone knowing at the factory that the end user was Iran—shipping freight was simply marked with a code. However, nor do I believe that anyone higher up in BMARC management knew—certainly, a non-executive director could not have known.

The contract for project LISI—the sale of 20 mm guns to Chartered Industries of Singapore—was very clear. BMARC sold the guns to Oerlikon, and not to Singapore, as it was required to do under their licence. Oerlikon shipped the goods to Singapore. Oerlikon in Switzerland, or possibly someone working in Chartered Industries in Singapore, passed them on to Iran without the knowledge of BMARC's staff or management. BMARC was prohibited from trading not only with Iran but with Singapore under the terms of its licence with Oerlikon.

Mr. Jim Cousins (Newcastle upon Tyne, Central)

rose—

Mr. Leigh

No, I shall not give way as I have only 10 minutes.

I have documentary proof. I have obtained from within the factory copies of the licence put together for the receiver of the company on 28 February 1992. They are, as far as I know, hitherto unpublished—perhaps they are some of the missing documents, but I do not know. They are marked "Private and Confidential". Exhibit 1B states: The following manufacturing and selling rights are granted by Oerlikon to BMARC under the terms and conditions of the Licence Agreement for the below listed material:— —Exclusive manufacturing rights in the UK. —Exclusive sales' rights to the Government of, as well as other end-users in, the UK. —Exclusive sales' rights for worldwide naval applications, except for the countries listed in Exhibit 2". Exhibit 2 states: In the following countries Oerlikon will be the sole distributor for all the Material listed in Exhibit 1B. Therefore BMARC is not entitled to sell any of the Material either directly or indirectly in the below listed countries.:

• —Cyprus
• —India
• —Malaysia
• —Singapore
• —Sri Lanka
• —South Korea
• —Taiwan
• —Iran
• —Saudi Arabia
• —all Latin American countries".

The licence is quite clear, but I have today double-checked at some length with Dr. John Pike, the former armaments director in the relevant period and the former managing director of BMARC, as well as with trade union representatives of the work force in my constituency.

60 As far as anyone in the company was concerned, Singapore was the end user of the goods. That was a perfectly legitimate assumption, given that BMARC did not have any direct contract with Singapore. The Singapore navy already possessed these guns and was expanding.

Chartered Industries of Singapore to which the guns were sent by Oerlikon—not by BMARC—was Government-owned and was a proper and legitimate, and likely, recipient of them. However, because the guns were not being sold directly to the Singapore navy, Major-General Donald Isles, a highly respected, responsible and competent former Ministry of Defence employee, and the other full-time directors checked carefully.

There was no reason for them to indulge in shady deals. Why should they risk acquiring a possible criminal record for a deal? In addition, BMARC was a highly respected and successful British company and did not need to break DTI guidelines. Having checked carefully with the DTI, whose officials apparently had the full information at their fingertips, there was no doubt in the minds of the directors that the end user was Singapore, not Iran.

My point is that, if the DTI, with all its specialised resources, did not manage to second-guess the deal, how could a non-executive director such as my right hon. Friend the Chief Secretary?

What about Gerald James? He may indeed have a legitimate grievance—he brought down Astra and BMARC through his misjudgment in buying PRB, and was no doubt sold a con by the Belgian Government—but, as a result of that grievance, he is undoubtedly pursuing a campaign—some might say, a vendetta—against the British Government. Because my right hon. Friend happens to be a member of the Government, he is the target of that campaign.

When Mr. James was asked by Mr. Peter Snow on the BBC's "Newsnight": Did you … at any time brief him"— my right hon. Friend— personally about the nature of the Singapore contract?", he said: No I did not brief him personally at all. I have, from my own sources within the company, obtained more information. After he took over the company, Mr. James apparently took the opportunity when the remaining Swiss employees were out of the company offices for their national holiday to check their papers. He could find no evidence that the guns were going anywhere other than Singapore. I submit that, at the relevant time, no one in BMARC—certainly not the staff or my constituents, or the non-executive directors—had any clue that the goods were going anywhere but Iran—[Interruption]—Singapore. I apologise, that was a slip of the tongue. They were clear that the goods could have gone only to Singapore, not Iran.

In any event, my right hon. Friend joined the company only in 1988 when the contract was already well advanced. It was signed in 1986 and, by 1990, my right hon. Friend had resigned. According to Dr. Pike, to whom I spoke today, it would have been dealt with only in the most cursory fashion, if at all, at any board meetings that my right hon. Friend attended—for example, to check that the goods had been delivered to Oerlikon.

61 There may or may not have been some incompetence on the part of DTI officials—we shall no doubt find out about this—in not making the connection between the Singapore deal and the known fact that Oerlikon was selling to Iran. However, if full-time experienced DTI and intelligence service officials could not make such a connection, I cannot see how my right hon. Friend could have done so.

In any event, he has given his word to the House. He is a much-admired and competent Minister. We should accept it, but the evidence that I have found and that others have alluded to is overwhelming. It shows that he did not know and could not have known. On the contrary, we should back my right hon. Friend and what was an excellent British company, run by extremely responsible and respectable people such as Major-General Donald Isles.

My right hon. Friend is a victim of a discreditable witch hunt by the Opposition and media. He should and must stand his ground, so that truth and honour will be the touchstone by which we conduct our affairs, and not personal vindictiveness and innuendo.

Mr. Allan Rogers (Rhondda)

I must admit that I have not heard in this House a more flimsy defence of any situation than the one that we have just heard from the hon. Member for Gainsborough and Horncastle (Mr. Leigh). He accuses us of pursuing a vendetta, but may I put just one point to him? The statement to the House of the Secretary of State for Trade and Industry has brought about today's debate; it was not the Opposition chasing the issue. For what reason did the President of the Board of Trade want to bring it back to the House?

I say this not with any particular hindsight, but because I might have been the first person in the House to raise this issue. I did so back in 1989 when I was shadowing, as I had been for a number of years, the defence procurement portfolio when it was held by the right hon. Member for Hove (Sir T. Sainsbury) and, later, Alan Clark. At that time, it was fairly obvious that something was wrong. If I had time, it would be easy to catalogue the responses I had, but I want to pick up one issue in the limited time available: the lost documents that seem to have become available this weekend.

I find today's response by President of the Board of Trade as remarkable as the fact that those documents are suddenly available, that he suddenly finds a reason for bringing this matter forward, and that he suddenly finds the questions of my right hon. Friend the Member for Copeland (Dr. Cunningham) so stimulating that he finds that there is a gap in the intelligence.

Let me just remind the House that an investigation into Astra/BMARC had been going on for three years. The response to a question that I tabled last year revealed that the cost of that investigation was £2,170,000—more than £2 million had been spent on acquiring the information, and suddenly we are told that it was not available until last week.

In response to a question that I tabled on 19 April last year, the hon. Member for Tatton (Mr. Hamilton) said: The inspectors commenced work on appointment on 16 August 1990 and their report was signed on 7 April 1993 So all the information that is presently available was available all the time that these obfuscations were going on. The then Minister went on to say: 62 the inspectors considered substantial representations received during the course of fairness procedures."—[Official Report, 20 April 1993; Vol. 223, c. 74.] Mr. John Anderson has again been heavily featured in the media this weekend. In relation to the lost papers, when he was Minister of State for Defence Procurement, the right hon. Member for Thanet, South told me: Mr. Anderson was arrested by the Ministry of Defence police … in April 1990. He was detained in connection with a possible case of corruption, interviewed and released without charge. Subsequently, he made a number of complaints concerning the circumstances of his arrest. These have been investigated in accordance with the Police and Criminal Evidence Act 1984 and the report currently rests with the Police Complaints Authority whose decision is awaited."—[Official Report, 26 April 1993; Vol. 223, c. 298.] Those papers relate to BMARC and Astra, the company run by Mr. John Anderson, who was a director at the same time as the right hon. Member for Thanet, South. I find it incredible, therefore, that the information is seemingly suddenly available, as it was supplied to me more than a year ago, and after nearly £2 million had been spent on that report.

The issue of arms exports to the middle east and elsewhere has come about because of a change of culture in our political life during the 1980s. An hon. Member asked for an investigation into arms exports. He probably was not aware, although it was pointed out to him later, that the Select Committee on Trade and Industry had considered the issue—specifically in relation to Iraq, I warrant that, but also in relation to other issues, such as the uses and applications of licences.

If we put it into context, in 1984 in this country there was a tremendous charge for arms exports. I am not questioning the morality or otherwise of arms exports, but that charge for more and more exports generally existed throughout the Department of Trade and Industry, the Ministry of Defence, the Defence Export Sales Organisation, International Military Supplies, and even with the Prime Minister at the time. She accompanied her son, who took a rather lucrative part in these events, and batted for Britain—I cannot think of a better bat—in both Saudi Arabia and Malaysia to get these huge contracts.

A general culture, going through Whitehall and the relevant Departments, allowed such instances to happen. All it requires is a greedy man or men to latch on to that culture or the lack of morality in relation to where arms were going.

We should not forget that the guidelines controlling the export of arms were laid down by this Government—by Sir Geoffrey Howe—in 1984. One of the cardinal criteria was that arms should not go into regions with bad human rights records, and that they should not lead to warfare between countries. On many occasions, the then Secretary of State for Trade and Industry, the right hon. Member for St. Albans (Mr. Lilley), said that arms should not go into regions where they could be used in a way that cut across the Government's guidelines.

The whole issue revolves around that change in culture. It is about arms going not only via Singapore into Iran but into many other areas. The then Foreign Secretary, Sir Geoffrey Howe, said: We should maintain our consistent refusal to supply lethal equipment to either side in the Iraq-Iran war that was going on at that time. That was flagrantly broken by members of his own Government. He also said: 63 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".— [Official Report, 29 Oct 1985; Vol. 84, c. 450.] That guideline was again broken by the Government.

On reflection, probably the only honest man in the whole affair was the then Minister for Defence Procurement, Alan Clark, who has left this House. At least he always made it clear what he was about, and made no apologies for the fact that he knew that arms embargoes were being broken. He said that that was because it was bringing jobs to this country.

I am amazed that the Chairman of the Select Committee should support that view this afternoon. If there are jobs out of people being killed or murdered in other parts of the world, we should not have such jobs in this country. If there is to be an inquiry into arms exports, the first thing we should consider is the morality of it.

People are trying to suggest to us that there are only two options; either it was a cock-up or it was a conspiracy. I believe that it was both. The general climate in the Government Departments I have named, and the inefficiency and incompetence of the Department of Trade and Industry, allowed those who were conspiring to break the arms embargo to carry out that dirty, sordid business, as I pointed out to the then Prime Minister, Baroness Thatcher, in 1989 and to the present Prime Minister in 1992—

Mr. Deputy Speaker

Order. Time's up.

Sir David Mitchell (Hampshire, North-West)

The motion refers to the BMARC affair, which is concerned with arms for Iran. The reality is that the motion is a malicious attempt by the Opposition to destroy the reputation and career of my right hon. Friend the Chief Secretary to the Treasury.

There are certain facts that should be brought to the attention of the country and the House. In 1986, BMARC was a Swiss-owned company, and it was at that time that it signed the offending Singapore contract. In 1988, the company was bought by Astra, a British company. In the same year, my right hon. Friend the Chief Secretary was made a non-executive director, a post in which he remained for only 19 months. In practice, non-executive directors are not much more than advisers to the board; they have no powers to interfere in the management of a business.

I now turn to Mr. Gerald James, the chairman and the source of the suggestions that my right hon. Friend knew about the contract. I draw the House's attention to an article on page 25 of The Economist this week, which says: Mr. James says that a group of senior figures at BMARC knew all about these fishy contracts yet thwarted his efforts to find out what was going on. If the chairman did not know what was going on and if the chairman was thwarted in his efforts to find out, how on earth could a temporary, non-executive director be expected to find out and