The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Michael Heseltine): I wish to make a statement about the defence manufacturer BMARC and the export of naval guns and ammunition to Iran, via Singapore, during the late 1980s. My statement is prompted by three questions asked by the hon. Member for Cunninghame, North (Mr. Wilson). The questions asked my Department when my Department was informed about allegations that Singapore was a conduit for arms exported by BMARC to Iran; which BMARC contracts were notified as being potentially in breach of export controls; and what assessment I had made of any breaches of export control by BMARC. In April, my hon. Friend the Under-Secretary of State for Trade and Technology and I were not satisfied that we had sufficient information to answer those questions properly. I therefore asked officials in my Department to do further research. I am now in a position to report to the House.
It may help hon. Members if I start by setting out the role of different Government Departments in export control matters. My Department is the licensing authority for export control. The Ministry of Defence and the Foreign Office advise the Department of Trade and Industry on military applications. However, the investigation of export control offences is a matter for the independent investigator and prosecutor, Customs and Excise. The responsibility of my Department is to pass to it any relevant information that may assist its decision whether an investigation is warranted. The DTI has already made available to Customs and Excise all the information that has emerged as a result of my inquiries. It may also be helpful if I set out briefly the relevant corporate history of BMARC. BMARC was owned by the Swiss defence contractor Oerlikon until May 1988, when it was acquired by the United Kingdom firm, Astra. After Astra bought BMARC in May 1988, BMARC continued to manufacture equipment to meet orders from Oerlikon.
In order to answer the parliamentary questions,I commissioned detailed research into two aspects: first, the intelligence information available to the Government; and secondly, the export licensing history.
I shall now answer the question as to the intelligence available to the Government. In 1986, intelligence was obtained that Iran had concluded a contract with Oerlikon for the supply of weaponry and ammunition. The intelligence picture developed in 1987, when it was revealed that naval guns made by Oerlikon had been offered to Iran by a company in Singapore. In July and September 1988, two intelligence reports rounded out the picture by referring to naval guns and ammunition being supplied by Oerlikon through Singapore to Iran. Important detail in one of the 1988 reports was identical to some of that mentioned in the 1986 intelligence. I must emphasise that none of the intelligence reports mentioned BMARC.
As to the export licensing history, during the period 1986-88 BMARC, in relation to orders from Oerlikon that were enclosed with the licence forms, sought and obtained United Kingdom export licences for the export of similar naval guns and ammunition to Singapore. Two of those export licence applications by BMARC to Singapore, for naval guns in 1986, which were subsequently approved, referred to a project that had also been mentioned in the 1986 intelligence.
Column 596It is for customs to investigate breaches of export control. However, 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, given that intelligence reports during the period mentioned equipment similar to that for which BMARC secured export licences for Singapore.
The events that I have outlined occurred six to nine years ago. I have concluded, however, that connections should have been made between the intelligence reports naming Oerlikon and the BMARC licence applications made in support of orders from Oerlikon. It would not have been possible for officials in my Department to take account of the 1986 intelligence, as it had not been distributed to the Department of Trade and Industry. However, the DTI failed to make a connection between any export licence applications by BMARC and Oerlikon's trade with Iran mentioned in the 1988 intelligence, which was distributed to the DTI. I understand that the relevant intelligence has now been passed to customs, as the investigating authority. Arrangements for the distribution and handling of intelligence, both generally and in the DTI, have been substantially improved since 1988.
I now refer to allegations made by the former chairman of Astra, Mr. Gerald James. He made allegations about the involvement of BMARC in a project called Lisi. According to Mr. James's evidence to the Trade and Industry Select Committee, which was looking into exports to Iraq, that was to supply
"medium calibre armaments--ammunition, weapons and tooling to Singapore for onward transmission to Iran".
Those allegations were first drawn to my Department's attention in March 1991, when the company inspectors looking into the affairs of Astra informed the DTI of the allegations made by Mr. James. Those same allegations were repeated by Mr. James in his written evidence to the Trade and Industry Select Committee, and were then passed by my Department to Customs and Excise in November 1991. At that time, customs came to the view that the allegations, which were made in association with a number of other allegations by Mr. James and which it believed to be unsupported, did not justify initiating a full investigation.
Earlier this year there were allegations that my right hon. Friend the Chief Secretary to the Treasury was aware of those contracts during his period as a non-executive director of BMARC between September 1988 and March 1990. My right hon. Friend has already made his position clear in a statement to the House during Treasury questions on 30 March, when he said that he was never given any indication or information that could suggest that BMARC's contract with Singapore might subsequently result in components being shipped to Iran.
Let me refer to two additional matters raised by the results of the detailed inquiries that my Department has undertaken.
First, my right hon. Friend the Minister of State for Defence Procurement answered two related questions on 25 April 1995 from the hon. Member for Cunninghame, North about the export of arms to Iran by BMARC. In the light of the further research that has now been carried out, my right hon. Friend has today written to the hon. Member for Cunninghame, North providing supplementary information on the handling within the Ministry of Defence of the available intelligence and BMARC's export licences for Singapore.
Column 597Secondly, an official in my Department wrote on 5 April to the private secretary to my right hon. Friend the Chief Secretary about the information available in my Department in the late 1980s about the destination of those exports. The letter was based on information believed then to be accurate. But the detailed inquiries which I subsequently set in hand, and which I have described to the House today, now show a different picture.
In preparing an answer to a recent parliamentary question from the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins), I asked my officials to look at the state of export licences in general over this period. I have had a check done on the number of applications by BMARC in the period 1986 to 1989 that enclosed the full supporting documentation, by which I mean end-user certificates, end-use statements or international import certificates. That showed that 36 per cent. of BMARC applications did not enclose the full supporting documentation, although I should add that the application form itself requires exporters to state the end user of the goods.
I have commissioned a sample survey of military list licence applications over a similar period, which suggests that, on average, 74 per cent. of all applications during the same period did not include the full supporting documentation. I must emphasise that that is supporting documentation. It would be entirely wrong to assume from the figures that I have given that a large proportion of exporters misled the Department. The survey has been passed to Customs and Excise.
The difficulties faced by the Export Licensing Unit in the late 1980s had already been made plain to the Trade and Industry Select Committee in 1991. They also featured in Sir Richard Scott's inquiry with regard to exports to Iraq. The failure of the Export Licensing Unit to insist in the past that full documentation was provided can, in part, be put down to the increase in licence applications, which doubled between the start of 1984 and the end of 1985, and reached a peak of 97,842 in 1987, placing a severe strain on the Export Licensing Unit.
My Department has already set out in answer to the Trade and Industry Select Committee the improvements made in export licensing practice. Action has been taken to ensure proper oversight of current licence applications by licensing staff, including a requirement in all cases for a full and unambiguous statement of the intended end use and end user.
As I explained to the House, the information relating to the licence applications by BMARC has been passed to Customs and Excise, to consider whether any export control offences may have been committed. It would not be appropriate for me to comment further. On the more general issues relating to export licensing and the use of intelligence material, the Government will, of course, wish to consider carefully the recommendations from Sir Richard Scott's inquiry. In the meantime, and in the light of parliamentary interest in this particular matter, my Department would be very ready to co-operate if the Trade and Industry Select Committee wished to examine the issues raised by the allegation that Singapore was used as a conduit for arms exported by BMARC to Iran.
Column 598(Mr. Cousins) that this statement has been made today because, without their persistence in questioning the President of the Board of Trade, this latest fiasco of negligence and incompetence on the part of Ministers, and not just officials--I emphasise that--would never have come to light.
Is the right hon. Gentleman aware that the background to the astonishing story that he has revealed today is the guidelines announced to the House on the sale of arms by the then Foreign Secretary, Lord Howe? Is the right hon. Gentleman aware that Lord Howe said:
"We should maintain our consistent refusal to supply . . . lethal equipment to either side"
in the Iran-Iraq war, that:
"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" and finally, and most devastatingly, that the Government would, in line with this policy,
"continue to scrutinise rigorously all applications for export licences"?-- [ Official Report , 29 October 1985; Vol. 84, c. 450. ] Of course, we know that, far from upholding any of those guidelines, Ministers and officials covertly ignored them all--that is the reality revealed by the right hon. Gentleman's statement. Is not it also odd that the right hon. Gentleman said that on some occasions intelligence about those deals was given to his Department but that, on other occasions, intelligence was withheld? The House is entitled to ask what really was going on in the Government at this time when, publicly, we were said to be denying weapons of war to Iran and Iraq but, privately, Ministers were conniving in their supply?
How is it that the right hon. Gentleman's Department apparently did not know about such things while Mr. Alan Clark, then Minister of State for Defence Procurement, told my hon. Friend the Member for Rhondda (Mr. Rogers) in December 1990:
"Shortly after acquiring PRB, Astra Holdings plc consulted the MOD about certain contracts which the company had inherited through its acquisition." --[ Official Report , 18 December 1990;Vol. 183, c. 133. ]
Was that information, too, withheld by his colleagues in the Ministry of Defence from the Department of Trade and Industry? Would the right hon. Gentleman like to explain that to the House? How is it that one Government Department knew of the sensitivity and implications of those contracts while apparently another one did not?
How is it that Mr. Gerald James, the former chairman, was able to say, and substantiate the fact with documents, that anyone would have to be blind and deaf not to know that arms were going to Iran from BMARC? Are our intelligence services all blind and deaf? Are our officials all blind and deaf? Of course, Mr. James was referring specifically to a non-executive director of his company who subsequently became Minister of State for Defence Procurement. That says something about prime ministerial judgment, does it not? Of course, the reference is to the Chief Secretary to the Treasury. Why was it that apparently throughout this time, the Ministers responsible were not asking any searching questions of their officials about the course of events?
Once again, not because of any honesty on the part of the Government, or because of any desire for openness, and certainly not because of any competence on their part,
Column 599the House and the country have learnt of yet another
scandal--another piece of unvarnished Government duplicity. And the credit for these revelations goes to my hon. Friends, not the President.
Mr. Heseltine: The right hon. Gentleman is entitled to recognise the seriousness of the matter. That is why I have taken the extremely unusual step of making an oral statement in reply to written parliamentary questions. But he has overstated the case and in many ways misrepresented what I have put to the House.
The right hon. Gentleman referred to the guidelines which, as he rightly says, it was the Government's clear intention to implement. It is because that was the Government's intention that there were at one time 97,000 licence applications. Nothing is clearer than the fact that the Government had put in place a system designed to implement the guidelines.
It is also beyond question--this is not news to the House--that the arrangements did not prove to be watertight, but that fact is being explored and examined by Sir Richard Scott. This issue overlaps with his inquiry--hence the number of licences is as relevant to this case as it is to the Scott inquiry, which is dealing with matters relating to Iraq.
I do not believe that Ministers "connived". I have seen no evidence to support that view. There is a world of difference between saying that people deliberately connived or covertly ignored and the other apparent interpretation of the evidence that I have put to the House: which is that the system was on such a scale that a limited number of issues escaped the net and connections were not made in every case as a result of intelligence that might have been differently interpreted.
I must tell the right hon. Gentleman, however, that his interpretation, and the extreme language that he used, will not, on mature reflection, prove to have been justified.
Mr. Tom King (Bridgwater): Is my right hon. Friend aware that the House will recognise that he was absolutely right to come and make the full statement that he has made today? Some of the events to which he refers took place nine years ago, and at one time about 90, 000 export licence applications were involved; and certain companies--some of them foreign with British subsidiaries--were trying to avoid the export licence requirements.
My right hon. Friend is nevertheless correct to suggest that the Select Committee on Trade and Industry investigate the matter further. The new Intelligence and Security Committee has already been examining the use made of our intelligence, and whether the Government Departments that are its customers are fully apprised of any information that intelligence may have. Is my right hon. Friend therefore aware that I think it right--without prejudice to the views of my colleagues on the Committee--that although the Trade and Industry Select Committee, with its responsibilities for DTI export licensing, should look further into the matter, the Intelligence and Security Committee will be interested in doing so as well?
Mr. Heseltine: I am extremely grateful to my right hon. Friend. I say at once that my Department would co-operate with any inquiry that he saw fit to establish in the name of his Committee. He will, I hope, find that we have done a great deal to tackle the dissemination of intelligence since these events took place; but this is an important matter and I am grateful for my right hon. Friend's views.
Column 600Mr. Nick Harvey (North Devon): Did it really need expensively gathered intelligence to make clear to Ministers the fairly obvious point that Singapore was hardly a credible end destination for any of these items? Who in the Government is prepared to take responsibility for that obvious oversight? As the Department has responsibility for company directors, will the right hon. Gentleman authorise an independent inquiry into the amount of knowledge held by all the directors of the board of the company, and into why they thought that the end destination was Singapore?
Mr. Heseltine: The hon. Gentleman will have heard me say that I have referred all matters of which I am currently aware to the enforcement authority, Customs and Excise. It is its responsibility now to make such decisions.
Sir Cranley Onslow (Woking): Whatever the rights and wrongs of the matter might turn out to be--I do not believe that my right hon. Friend is wrong in telling people not to leap to the kind of conclusions that the right hon. Member for Copeland (Dr. Cunningham) is so anxious to draw--my right hon. Friend clearly deserves to be commended for the way in which he has handled this very difficult matter.
In response to my right hon. Friend's comments about the Trade and Industry Select Committee, may I say, as a member of that Committee, that I hope very much that it will agree to resume its previous inquiries and that it will do so as soon as possible?
Mr. Jim Cousins (Newcastle upon Tyne, Central): Does the President of the Board of Trade agree that if 36 per cent. of BMARC's military export licences were not properly filled in, it was in breach of the export control order system, and that his own Department has conspired and colluded in that breach of the export control orders? Will the right hon. Gentleman ask himself these questions: who knew; and who benefited? How is the right hon. Member for Thanet, South (Mr. Aitken) ever to clear his name in the face of this disgrace, this dishonour and these deceits? Is it not time for Scott II?
Mr. Heseltine: I think that the hon. Gentleman will wish to reflect carefully on what he said, because, if I remember correctly, the figures that I gave the House for the number of BMARC applications, and for the other applications, were for the period that included times when my right hon. Friend the Member for Thanet, South (Mr. Aitken) was not a member of the board of the company concerned, so what the House is considering is an extension of the evidence that is already before Sir Richard Scott.
We understand--it has been clearly discussed and ventilated--the fact that, under the strain of the pressures of scale, the licensing system was not as effectively administered as one would have liked with hindsight. It is important to recognise that the forms may have contained the information, but the supporting documents were not, in the cases to which I referred, available in every case. That is the issue, but it was quite clear from the survey that I carried out--it was a sample; I can say no more
Column 601than that--that there was no special treatment for BMARC. Indeed, from the survey, it appears that the position for the average company was a great deal less satisfactory than it was for BMARC.
Mr. Edward Leigh (Gainsborough and Horncastle): The former BMARC factory at Faldingworth is in my constituency. May I congratulate my right hon. Friend on a very candid and comprehensive statement today? Is he aware, however, that trade union officials, in conversations that I have had with them at that site, have made it absolutely clear to me that no member of the staff there, or in their view a non-executive director, such as my right hon. Friend the Chief Secretary, would have had or could have had any knowledge of the end destination of the goods?
Mr. Heseltine: I am grateful to my hon. Friend for what he has had to say. He will know that what he has said is consistent with what my right hon. Friend the Chief Secretary has already told the House.
Mr. Allan Rogers (Rhondda): The President of the Board of Trade will be aware that, between 1989 and 1992, I tabled a series of written questions to his Department and to the Secretaries of State for Defence and for Foreign and Commonwealth Affairs. Indeed, I wrote to the Prime Minister on this issue. Every one of the answers denied that there were exports of arms into Iran and Iraq, through Jordan, Saudi Arabia, Malaysia or anywhere else--even South Africa. In view of the statement that the President of the Board of Trade made today, will he look back on the answers to those questions and perhaps rectify them? He has stated that the Department responsible for prosecutions or for investigating breaches of export control is Customs and Excise. Following the couple of referrals that he has made, has any action been taken by Customs and Excise? And who is the Minister responsible for Customs and Excise? Is it the Chief Secretary to the Treasury?
Mr. Heseltine: The hon. Gentleman will himself wish to look at any parliamentary questions that have, in his view, been answered potentially inaccurately. If he wishes to table them again, we shall of course consider them fully.
Mr. Heseltine: The hon. Gentleman makes the very point. We are dealing with a long period of time and a large number of licences. It is, I hope, for the Select Committee to investigate the issues that might arise. The cost of asking officials to check through all those licences, over all that time, would have to be weighed against the public interest in the likely evidence that might emerge. I have made it as clear as I can that my Department will co-operate in any way that is possible; but, as the House knows, Customs and Excise is an independent prosecuting authority.
Mr. Stephen Byers (Wallsend): In the light of today's statement, will the President of the Board of Trade urge his right hon. Friend the Chief Secretary to the Treasury to disclose the evidence that he has given the Scott inquiry concerning his role as a director of BMARC? Will he confirm that the details that he has disclosed to us this afternoon concerning BMARC are contained in
Column 602documents that were subject to a public interest immunity certificate signed by the Chief Secretary to the Treasury on 2 or 3 September 1992, when he was Minister of State for Defence Procurement?
Does the President of the Board of Trade accept that there will be widespread concern about the fact that the Chief Secretary to the Treasury was prepared to see the innocent directors of Matrix Churchill go to gaol rather than disclose documents that would have been politically damaging to him?
Mr. Heseltine: The hon. Gentleman raises serious points, but in raising them now he ought to have referred to the fact that those matters have been exhaustively considered by the Scott inquiry, and that my right hon. and learned Friend the Secretary of State for Defence has dealt specifically with them. It will now be for Sir Richard Scott to publish, as he sees fit, any comments that he considers appropriate.
Mr. Alex Salmond (Banff and Buchan): The President of the Board of Trade has told the House twice that, in his opinion, connections should have been made with the earlier intelligence information. Will he now specify who should have made the connections, why they did not do so and what, in his opinion, should happen to them now? Does he consider that the line of responsibility for this failure of policy stops with officials or with Ministers?
Mr. Heseltine: The hon. Gentleman has raised the very question that I think a Select Committee would explore. The House is fully aware, however, that Ministers do not make decisions about the disciplining of civil servants; that is a matter that the permanent secretaries of the individual Departments would have to address. As for ministerial responsibility, the issue that would be explored is whether Ministers knew that these events were taking place. How Ministers could have known that the situation was developing, in the circumstances, is for subsequent examination. I have given the House the information that is currently available to me, but it was clear from what I had to say that until very recently the facts that I have revealed today were not widely understood.
Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury): Will my right hon. Friend confirm that some of the accusations and innuendos that Opposition Members have delivered today in regard to my right hon. Friend the Chief Secretary to the Treasury are a disgrace? Is it not a fact that my right hon. Friend the Chief Secretary has already said, in a public statement to the House and outside, that he will co-operate fully with the Scott inquiry, and that Lord Justice Scott is the correct person to investigate those matters?
Mr. Heseltine: My right hon. Friend the Chief Secretary to the Treasury has made a statement to the House about this matter, and I think that that is the most substantial evidence that he could be expected to produce.
Mr. Andrew Faulds (Warley, East): Is it not now requisite upon the Prime Minister, in view of the sleaze-stained record of his Government, that he establish yet another public inquiry--this time into the extraordinary obtuseness of his Ministers?
Column 603Mr. Peter Hain (Neath): May I seek clarification from the President of the Board of Trade? Is he really saying that this crucial matter of national security involving the export of arms to an illegitimate destination is all a matter for civil servants and is nothing to do with him, that he should not have known and that ministerial responsibility is out of the window?
Mr. Heseltine: I did not say that. I merely said that if there were an inquiry by the Select Committee on Trade and Industry into this specific matter, which I have said I would welcome, these things would become clearer. At that stage, we could have the debate that the hon. Gentleman has suggested.
Mr. D. N. Campbell-Savours (Workington): In the light of today's statement by the President of the Board of Trade, will my constituent Mr. Gerald James now be offered an apology for all the leaking by Government Departments, Ministers and civil servants against him, and for the assassination of his character in the past three years as he insisted that he was right in his allegations? As it was he who stated in 1990 that, when Astra took over BMARC in 1988, he found that it was running a secret order book that was being managed by three other directors of the company, and as everything that has been said today points to the fact that his allegations at that time were true, does he not deserve an apology and should he not receive one?
Mr. Heseltine: The hon. Gentleman is fully aware that, as I said in my statement, those matters are being considered by the investigating authorities. It is not for me to try to double-guess or to influence those authorities in any way.
Mr. Dennis Skinner (Bolsover): The President of the Board of Trade said earlier that it was not for Ministers to discipline civil servants. Was it not the President of the Board of Trade who, in another guise--that of the Secretary of State for Defence--hounded Clive Ponting out of a job?
Mr. Skinner: Yes. In this seedy affair, is it not time that some ministerial heads rolled? Why is it that the arrogant Government we have now seem to think that they are not responsible for anything? When will someone have the guts to resign?
Mr. Heseltine: As on so many other occasions, the hon. Gentleman's memory has failed him. I came to the House with a full explanation of what happened at that time and the House supported me in what I had to say.
Mr. Tam Dalyell (Linlithgow): Pursuant to the question of my hon. Friend the Member for Workington (Mr. Campbell-Savours), I have in my hand a letter of 12 June from his constituent Gerald James, who has recently been in ill health. Does it do the House of Commons or the Government any credit to say, "Wait until Scott"? May we have an answer here and now to the question whether Gerald James did tell the truth and persons in government--I am being very cautious; it would be wrong to express an opinion as to who--suppressed the truth? In fairness to that individual, who has been in contact with many Members of Parliament on both sides of the House, should there not be a statement about his
Column 604position before Sir Richard Scott reports? Indeed, it is astonishing to some of us that Sir Richard Scott is supposed to be the vehicle that considers such complicated matters, which some of us would have thought were outside his original remit.
Mr. Heseltine: I am sure that the hon. Gentleman will appreciate that, having set up an independent inquiry and having independent enforcement agencies, it would be wrong for a Minister to anticipate conclusions that they have not yet reached.
Mr. Brian Sedgemore (Hackney, South and Shoreditch): In respect of the allegations being made against the Chief Secretary to the Treasury, the President of the Board of Trade says that we must await Sir Richard Scott's report. Does he not recognise that there is a problem, in that the Scott inquiry was set up to look into arms to Iraq, whereas BMARC concerns arms to Iran and Sir Richard Scott has said that there is a problem about that?
Mr. Heseltine: The hon. Gentleman is perfectly right, but I was referring to a wide range of issues, including the dissemination of intelligence and the licensing system, both of which are being considered by Sir Richard Scott. In addition to my reference to the Scott inquiry, I referred to the responsibilities of Customs and Excise and the possibility that the Select Committee on Trade and Industry and now, as we heard, the Intelligence and Security Committee, might take an interest in the matter.
Sir David Steel (Tweeddale, Ettrick and Lauderdale): Does not the President of the Board of Trade accept that the matter goes much wider than form filling, or the lack of it, in the Department of Trade and Industry? At the time, the House was given assurances--to me and to other hon. Members--about the guidelines being rigorously enforced. Ministers presided over a period when war was raging between Iran and Iraq and there was a sudden increase in demands for export licences made to Government Departments in this country for innocent places such as Singapore. Did no one in the Government put two and two together?
Mr. Heseltine: Again, those are matters that would be explored by the Trade and Industry Select Committee.I have asked such questions myself. There are complications. The House will be as surprised as I was to hear about one of the reasons why the licences increased on such a scale. It was not the result of the issues that we are discussing today, but because of the technological advances that took place in such things as laptop computers, which meant a huge increase in the number of pieces of equipment for which business people had to apply for licences. That was one reason for the large increase in the number of applications-- [Interruption.] I must say that it is intolerable that when one comes to the House to explain a matter of this importance, all one gets from the Opposition is sniggering indifference to the real subject under debate.
Mr. Andrew Miller (Ellesmere Port and Neston): I presume that the President of the Board of Trade presides over the Board of Trade. It seems odd that, in defending the figure of 36 per cent. of BMARC applications, he referred to an even worse figure--74 per cent., I think, of all applications. Is it reasonable to assume that those included applications for other countries for which there
Column 605should be arms embargoes--or, at least, the Government state that there are embargoes? As part of his review, will the right hon. Gentleman ensure that he researches recent parliamentary questions about other countries for which there are arms embargoes and that the House gets the truth about the situation affecting other countries involved, in particular Burma and Iraq?
Mr. Heseltine: It is because I was so concerned that the House should have the whole story that I made this oral statement. If the hon. Gentleman has further specific questions for me, I shall do my best to give him accurate answers.
Mr. Mike O'Brien (Warwickshire, North): The House will note that, when given the opportunity to do so by the hon. Member for Cirencester and Tewkesbury (Mr. Clifton-Brown), the right hon. Gentleman declined to defend the role of the Chief Secretary to the Treasury in all this. Does the President of the Board of trade accept that the added evidence that he has presented to the House today of the fiasco surrounding the guidelines for the export of arms to Iran and Iraq adds great weight to the claims of my constituents and others in the Coventry area, who were deprived of their jobs as a result of intervention in Matrix Churchill, for proper compensation for them and for the directors who lost their jobs as a result of the failure of Government policy in that whole area?
Mr. Brian Wilson (Cunninghame, North): Before the Secretary of State cloaks himself in too much virtue for coming here, will he confirm that this morning, before we were informed that there was to be a statement, I tabled a further written parliamentary question asking why I had not received the letter that was promised to me on 28 April and when the Secretary of State intended to write to me? Does he accept that if we were to believe everything in this statement, the Government would seem to be the classic Government of wise monkeys who see no evil and hear no evil to a quite remarkable extent? Does he accept that, as far back as 1990, the Ministry of Defence seized files from Astra, the owner of BMARC, as part of a fraud investigation? Those files referred to Astra and BMARC trade with Iraq and Iran. Were the files handed to the DTI then? If not, why not? If they were, why have we had to wait five years for this statement?
The Secretary of State referred to the fact that the ship of state was not watertight in respect of these issues. Does he accept that that is something of an understatement? It is a distinguishing feature that, until a few minutes ago,
Column 606the captain of the ship was sitting next to one of the chief saboteurs. Does he also accept that this is not so much a matter for Select Committees, but one of old-fashioned integrity, which requires resignations? Is not the truth that BMARC knew that lethal equipment was being sold illegally to Iran via Singapore, that the DTI knew that arms were being sold illegally to Iran via Singapore and that Ministers knew that the right hon. Member for Thanet, South (Mr. Aitken) knew that such arms were being sold illegally to Iran? May we have a far more wide-reaching inquiry than anything that has been suggested today? The Secretary of State should be absolutely clear that this is not a matter for any previous Government. It is a matter for this Government, including every right hon. and hon. Member who sits on the Treasury Bench.
Mr. Heseltine: The hon. Gentleman apparently tabled a parliamentary question today. I had no knowledge of that. If he tabled it today, how could I possibly have knowledge of it? It is a novel idea that the Table Office should telephone me to say that a question has been tabled. I am a bit out of touch with such things because I have not tabled any questions for some time, but I thought that the procedure was that questions were tabled at the Table Office and not in Departments. If the hon. Gentleman were so anxious to convey the urgency of the matter to me, he might have done me the courtesy of writing to me in my Department. Perhaps then I would have known about it.
The hon. Gentleman must decide what he wants. He tabled parliamentary questions, and we have conducted a very detailed examination into a range of very serious matters. I presume that that is what he would have wanted us to do. That is why we have not answered his questions. As soon as I was in a position to answer his questions,I came to the House. It is pure coincidence that he tabled a parliamentary question today.
The question of the files in connection with Astra, as I understand it, was to do with the prosecution of a former BMARC director and arose from the particular issue of the MOD police raids that took place. Again, those matters must be considered in the total context. I have tried to answer as accurately as I can the questions that the hon. Gentleman put to me.
Motion made, and Question put forthwith pursuant to Standing Order No. 101(3) (Standing Committees on Statutory Instruments, &c.),
That the Education (Fees and Awards) (Amendment) Regulations 1995 (S.I., 1995, No.1241) be referred to a Standing Committee on Statutory Instruments, &c.-- [Mr. Conway.]
Question agreed to.
Column 607Electoral Reform
That leave be given to bring in a Bill to control parliamentary election expenses within limits set nationally and in each constituency; to establish a national registration system for political parties; to require companies who donate to parties to establish accountable political funds; and for connected purposes. Our general election system is potentially corrupt. It can be--and almost certainly has been--abused by the rich, the powerful and criminals to buy influence and honours from political parties. The law places strict limits on all election moneys that are spent in local areas on saying, "Vote for Blair" or, "Vote for Major", but there are no controls whatever on moneys spent on saying, "Vote Labour" or, "Vote Conservative".
Vast sums have increasingly been spent on so-called national spending and have been concentrated in the 150 constituencies where elections are won and lost. For every pound spent in constituencies, £8 is spent nationally. The Bill seeks to limit such spending, ban secret overseas donations, make the accounts of political parties transparent, restore some credibility to the honours system and stop attempts by companies such as Imperial Tobacco to subvert Government policy for its own anti-social ends.
Today, I had the pleasure of welcoming to Parliament
representatives of the Latvian Saema. We take great pride in our democracy and claim that it is the mother of democracies, but our system is long overdue for a great deal of care and maintenance. In that area, we are in a foolish position. For more than 100 years, we rigidly controlled local spending by candidates and had severe penalties for overspenders. Having introduced reforms to control bribing and treating, an aberration in the law in 1974 allowed parties to spend unlimited amounts.
While the law frets about the minnows of spending, the fat salmon go by unhindered. The Bill is supported by all Opposition parties and even a progressive group in the Conservative party seeks such reforms.
There is no better example of the abuses that have occurred than of Imperial Tobacco's handing over of 2,000 poster sites to the Conservative party in 1992. In a letter to me, its marketing manager explained why. He said:
"Labour and Liberal Democrats had said they would support a ban on tobacco advertising. Speaking as a tobacco company we'd like to see the Conservative party re-elected because we believe they will continue to oppose the advertising ban."
The Conservatives have delivered on that.
Nothing in the future prevents any person or company, here or abroad, or even any country, however malign their interest might be, from spending unlimited millions--billions, if they want--on campaigning for any party. If not yet corrupted, our system certainly invites corruption. Vote buying has returned to British elections. Scandals have involved many parties, including the Labour party, to which, it has been claimed, people with criminal records or criminal intent, such as Mr. Maxwell and Mr. Costas, have given money. It has been claimed that Hong Kong business men have contributed to the Conservative party--that Sir Yue-Kong Pao gave £1 million and that Li Ka-Shing contributed £100,000. It has been claimed that two fugitives from British justice, Mr. Asil Nadir and Mr. Octav Botnar, contributed £440,000 and £1 million respectively to the Conservative party, and we know of the case of Mr. Mohamed Fayed.