Draft Report (Sierra Leone), proposed by the Chairman, brought up and read.

Ordered, That the draft Report be read a second time, paragraph by paragraph.

Paragraph 1 read and agreed to.

Paragraph 2 read, amended and agreed to.

Paragraph 3 read and agreed to.

Paragraph 4 read, amended and agreed to.

Paragraph 5 read and agreed to.

Paragraph 6 read and postponed.

Paragraph 7 read, amended and agreed to.

Paragraphs 8 and 9 read and agreed to.

Paragraphs 10 and 11 read, amended and agreed to.

Paragraph 12 read, as follows:

Formal British policy in favour of peaceful resolution of the crisis did not change. However, there was certainly a debate within the FCO as to whether force might need to be used if other means did not succeed in restoring President Kabbah. British officials, including Mr Penfold, accepted that the use of force would require a new UN resolution. The possibility of a second resolution was being canvassed by them on the very day—5 February—ECOMOG moved against the Junta. Indeed, a second resolution was passed on 5 June after President Kabbah was restored. Officials also accepted that the use of force would have required ministerial authority. Mr Lloyd told us that his officials kept him well informed about the possibility that ECOMOG would take military action whether the Government wanted them to do so or not, and he was well aware that ECOWAS's policy included the use of force. However, Ministers were not asked to alter British policy towards force until after President Kabbah was restored. This was a debate among officials. The Foreign Secretary was relaxed about his officials "kite flying and brainstorming" about alternatives to the announced policy. Similarly, we have no difficulty with the idea that officials were discussing realistic policy options in a scenario where they could have only a limited direct influence on events. The fact that the United Kingdom had not ruled out the possibility that force might in the future be used also helped put pressure on the Junta. Where the kite-flying may have gone too far was in countenancing any use of mercenaries since, as Mr Lloyd told us, there was "never any possibility of the Government sanctioning" that. We return to this issue in more detail later.

Amendments made.

Another amendment proposed, in line 13, after the word "force" to insert the words "but he never asked the obvious question whether any British company was supplying arms."—(Sir Peter Emery.)

Question, That the Amendment be made, put and negatived.

Another Amendment made.

Paragraph, as amended, agreed to.

Paragraphs 13 and 14 read, amended and agreed to.

Paragraph 15 read and agreed to.

Paragraph 16 read, amended and agreed to.

Paragraph 17 read and agreed to.

Paragraph 18 read, as follows:

Despite the way information was presented, Ms Grant and Sir John Kerr told us that there was no confusion among FCO personnel about policy, and Sir John Kerr referred to a number of documents, available to the Committee, which made the geographical scope of the embargo "absolutely clear." Nevertheless, there is evidence that there was confusion in the FCO. For example, an early draft of a letter to send to Lord Avebury (who had written to the Department with evidence that Sandline was involved in breaching the embargo) was corrected by legal advisers in the FCO to remove sentences which implied that Sandline's activities were not contrary to Resolution 1132. Nor was Mr Penfold told that his disclosures that Sandline had negotiated on arms contract with President Kabbah (for example, in his minute of 2 February) revealed that an offence might have been committed.

Amendment proposed, in line 4, to leave out the words "which made the geographical scope of the embargo "absolutely clear." Nevertheless," and to insert the words-

"which he claimed made the geographical scope of the embargo "absolutely clear". This is not the case. There was in fact just one document, and only one, which made it absolutely clear that the arms embargo applied to all parties in the Sierra Leone conflict. That was the Sierra Leone Sanctions Order itself which, as we shall see, received a minimal circulation in the Foreign Office. Moreover,"—(Sir John Stanley.)

Question put, That the Amendment be made.

The Committee divided.

Another Amendment proposed, in line 12, after the word "committed" to insert the words "which one certainly would have expected if all officials had fully understood the policy and the law."—(Sir John Stanley.)

Question put, That the Amendment be made.

The Committee divided.

Paragraph as amended, agreed to.

Paragraph 19 read, amended and agreed to.

Paragraph 20 read and agreed to.

Paragraphs 21 and 22 read, amended and agreed to.

Paragraph 23 read and agreed to.

Paragraph 24 read and postponed.

Paragraph 25 read and agreed to.

Paragraph 26 read, as follows:

Mr Spicer described Sandline as a "private military company." The FCO defines private military companies as "private sector companies which provide operational combat support, military training and assistance, procurement services, military analysis and logistical support." Sandline's business in Sierra Leone included the provision of arms, equipment and manpower. It was in essence, a company of mercenaries. As far as its arms supplies to Sierra Leone were concerned, as Mr Murray told us, "the last thing that the region needs is more arms. The region is awash with arms." Some of the characters involved in Sandline's dealings were particularly unsavoury: for example, Mr Rakesh Saxena, the financier who originally intended to bankroll the Sandline operation in Sierra Leone, and who was doing so in return for diamond concessions there, was described memorably by the Foreign Secretary as "an Indian businessman, travelling on the passport of a dead Serb, awaiting extradition from Canada for alleged embezzlement from a bank in Thailand." Our attempts to uncover the structure, ownership and business connections of Sandline were met with extraordinarily evasive answers by Mr Spicer. A follow-up memorandum from Mr Spicer was thin and opaque—and failed to provide a number of promised answers. Nevertheless, Mr Spicer's business is not unlawful, and he is a British citizen with a record of service in the armed forces (for which he was appointed OBE).

Amendment proposed, in line 6, to leave out the words "It was in essence, a company of mercenaries"—(Sir Peter Emery.)

Question put, That the Amendment be made.

The Committee divided.

Other Amendments made.

Paragraph, as amended, agreed to.

Paragraphs 27 and 28 read, amended and agreed to.

Paragraph 29 read, as follows:

Mr Spicer told us that he made Mr Penfold aware over lunch on 23 December 1997 that he had concluded an agreement with President Kabbah which involved the supply of military equipment, and that he had handed a copy of the agreement to Mr Penfold, who had taken it away with him. Mr Penfold had already been shown a draft of the relevant contract by President Kabbah on 19 December. According to Legg, "although the contract did not expressly mention arms or weapons, Mr Penfold says that he immediately assumed that it included them, because of the size of the sum involved." He confirmed this to us. Mr Penfold, however, told us that he was "convinced" that he did not come away from the lunch on 23 December with a copy of the contract, though he was shown it and the discussion followed the lines Mr Spicer suggested. According to Mr Spicer, a letter he had written to President Kabbah on 4 December was also shown to Mr Penfold. Mr Penfold told us that he had never seen the 4 December letter. He also believed that he had neither encouraged nor discouraged Sandline from the course they intended to follow, though Mr Spicer implied he had been rather more enthusiastic.

Amendment proposed, in line 16, to leave out the words "been rather more enthusiastic"—(Mr David Wilshire.)

Question, That the Amendment be made, put and negatived.

Paragraph agreed to.

Paragraph 30 read and agreed to.

Paragraph 31 read, amended and agreed to.

Paragraph 32 read and agreed to.

Paragraph 33 read, as follows:

Mr Spicer told us that his version of the 19 January meeting should be believed because there was no record in the minute of the meeting to any warning being given to him; that the UN Resolution, not the Order in Council, was referred to in the meeting; that he would not have subsequently met the High Commissioner or briefed him on the operation if he had known it to be illegal; and that he would hardly have contacted Mr Murray to ask him to intercede on his behalf with Customs and Excise (the prosecuting authority) once they had begun their investigation if Mr Murray's version of events was correct. He also attempts to expose a number of illogicalities, errors and inconsistencies in Mr Murray's account of events. We note, too, that Mr Spicer rang Mr Andrews of the FCO on 10 March after a story implicating Sandline had appeared in The Observer two days before. The tenor of this conversation, as reported by Legg, tends to support Mr Spicer's view that officials were aware of what he was doing. We also note that Mr Andrews at least was aware that a contract had been signed with Sandline as a result of a minute written by Mr Everard on 5 January. That should have made him suspicious of the reference to a prospective contract on 19 January.

Amendment proposed, in line 13, to leave out the words "tends to support" and to insert the word "supports."—(Mr David Wilshire.)

Question, That the Amendment be made, put and negatived.

Paragraph agreed to.

Paragraph 34 read, as follows:

The principal difficulty in arriving at any definite conclusion about what transpired at the 19 January meeting arises because of the gross inadequacy of the official record. In our view, Sir John Kerr seriously understated the position when he described the written account of the meeting as "not a very satisfactory account." The detail of the note of a meeting lasting about 40 minutes is contained in less than 200 words. Mr Murray described the note as "accurate but not full," and explained why he had not required his junior colleague to write a fuller version. However, the momentous consequences of the meeting for Mr Murray himself—his conclusions that Mr Spicer was "shifty" and "not trustworthy" and therefore someone to be blacklisted by Mr Murray's sections—warranted a much fuller note. We note that part of the guidance for future dealings with private military companies requires a full record to be taken and to be shown to the company concerned so that they may have the opportunity to dissent if they wish. For his part, Mr Spicer told us that in future he would seek written confirmation of his dealings with the FCO.

Amendment proposed, in line 1, after the word "what" to insert the word "exactly."—(Mr David Wilshire.)

Question put, That the Amendment be made.

The Committee divided.

Another Amendment made.

Another Amendment proposed, in line 11, after first "note" to insert the words "The absence of such a note puts Mr Murray's evidence somewhat in doubt."—(Sir Peter Emery.)

Question, That the Amendment be made, put and negatived.

Paragraph, as amended, agreed to.

Paragraph 35 read, as follows:

In the absence of any record to the contrary, we cannot conclude with absolute certainty that Mr Spicer was clearly informed on 19 January that arms supplies to President Kabbah were illegal. Mr Spicer told us that there was "absolutely no question....at all" that he had deliberately attempted to implicate FCO officials in a course of action which he knew to be illegal so that he would have what could be described as the Matrix-Churchill defence if things turned nasty, and he specifically denied that he had tried to cloud or obscure the nature of his operation at the meeting on 19 January. Nevertheless, we do not think that we can rule out the possibility that Mr Spicer was disingenuous in his dealings with Mr Murray and Mr Andrews and exploited a certain naiveté which they probably displayed. After all, if he sensed any difficulty with them, he knew that his back was already covered by his dealings with Mr Penfold. Mr Murray certainly agreed with the Foreign Secretary's assessment that advantage had been taken of officials. We do not, however, believe that Mr Murray had any interest in positively facilitating Sandline's arms supplies—there is enough evidence from other sources that Mr Murray did not approve of the military solution which he was concerned that Mr Penfold appeared to be advocating.

Amendment proposed, in line 2, to leave out the word "absolute" and to insert the word "any."—(Mr David Wilshire.)

Question, That the Amendment be made, put and negatived.

Another Amendment proposed, in line 2, to leave out the word "clearly."—(Mr David Wilshire.)

Question put, That the Amendment be made.

The Committee divided.

Another Amendment made.

Another Amendment proposed, in line 9, to leave out the words "Nevertheless, we do not think that we can rule out the possibility" and to insert the words "Similarly, in the absence of any record to the contrary, we cannot conclude with any certainty."—(Mr David Wilshire.)

Question put, That the Amendment be made.

The Committee divided.

Another Amendment proposed, in line 11, to leave out from the word "displayed" to the words "Mr Murray" in line 13.—(Mr David Wilshire.)

   Question put, That the Amendment be made.

The Committee divided.

Whereupon the Chairman declared himself with the Noes.

Another Amendment proposed, in line 13, after the word "Penfold" to insert the words "Not surprisingly."—(Sir Peter Emery.)

   Question put, That the Amendment be made.

The Committee divided.

Another Amendment made.

Another Amendment proposed, in line 16, to leave out from the word "supplies" to the end of the paragraph.—(Sir Peter Emery.)

   Question put, That the Amendment be made.

The Committee divided.

Paragraph 35, as amended, agreed to.

Paragraphs 36 and 37 read, amended and agreed to.

Paragraph 38 read and agreed to.

Paragraph 39 read, as follows:

Mr Penfold's evacuation to Conakry and the establishment of a High Commission in exile was the only example since World War II of a British diplomatic mission following a government into exile. It was made particularly difficult by the fact that Conakry was a capital with no resident British mission. Mr Penfold (who was not accredited to Guinea) therefore had to operate out of a hotel bedroom. Mr Penfold rightly stressed the difficulties he had in operating in conditions such as these. Though, as the Foreign Secretary told us, the High Commissioner was away from Conakry for about two-thirds of the period between the start of September and the beginning of February, the conditions applied equally to his deputy. Communications were particularly poor, with Mr Penfold having to rely on the hotel fax machine or the German Embassy. However we note that it would have been possible for him to be supplied earlier with the secure communications equipment which the military liaison officer was able to use—and to share with Mr Penfold—when he arrived in Conakry later. We do not understand why the FCO did not provide this equipment to Mr Penfold earlier.

Amendment proposed, in line 12, to leave out the word "note" and to insert the words "were told."—(Mr David Wilshire.)

Question put, That the Amendment be made.

The Committee divided.

Whereupon the Chairman declared himself with the Ayes.

Another Amendment made.

Paragraph, as amended, agreed to.

Paragraph 40 read, amended and agreed to.

Ordered, That further consideration of the Chairman's draft Report be now adjourned.—(The Chairman.)

Report to be further considered this day.

  [Adjourned till this day at Five o'clock.