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Scott Report

The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Ian Lang): Madam Speaker, with permission, I should like to make a statement about the report published today of the inquiry by Sir Richard Scott, which my right hon. Friend the Prime Minister commissioned in November 1992, following the end of the Matrix Churchill trial.

The Government have arranged for the report to be debated in both Houses of Parliament on 26 February. During the past three and a quarter years the inquiry, with the full co-operation of the Government, has received many tens of thousands of pages of documentation from Government files and has taken written or oral evidence from 268 witnesses. All Ministers, former Ministers and civil servants who were asked to give evidence did so conscientiously and thoroughly. The detailed procedures of the inquiry were left to the discretion of Sir Richard Scott himself.

The House will realise the diligence with whichSir Richard Scott and his team have scrutinised the events covered by their remit, and for which the Government are most grateful. The report is wide-ranging and detailed, extending to five volumes and some 2,000 pages. In addition, the inquiry will be making available as soon as possible several thousand copy documents. The House will recall that the essence of the inquiry, as reflected in its terms of reference, was to establish whether the relevant Government Departments, agencies and Ministers operated in accordance with the Government's policies, and to report on decisions by the prosecuting authority in the Matrix Churchill case and by those signing public interest immunity certificates.

Let me turn first to the question of whether arms were supplied to Iraq. The report confirms, and I quote,

Sir Richard Scott goes on to say in his report, and again I quote:

The inquiry also considered whether defence equipment supplied to countries other than Iraq might have been diverted to Iraq's armed forces. During the 1980s some evidence existed that certain other countries might have diverted goods to Iraq. As far as British goods were concerned, steps were taken to counter this. No British arms or ammunition were found in Iraq at the end of the Gulf war. Sir Richard Scott investigated a number of allegations to the contrary and found no evidence for them.

On more general non-lethal defence equipment,Sir Richard Scott recognises that the Government strove to balance the interests of employment in this country with the objectives of our foreign policy. He makes no criticism of the Government's policy. He does, however, make strong criticisms of what he sees as a lack of openness on that, to which I shall return later. Nevertheless, the Government's restrictive policy on exports is in sharp contrast to many of

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our international competitors which, during the eight-year conflict between Iran and Iraq, in addition to non-lethal defence equipment, were also content to sell fighter aircraft, guided missiles, munitions and other lethal equipment. This country did not.

I turn now to the most important reason why my right hon. Friend the Prime Minister set up the inquiry in the first place. This is the grave allegation that Ministers, by signing public interest immunity certificates, conspired in a way that could have sent innocent men to prison.Sir Richard Scott's report demonstrates that that allegation is false and without foundation.

I quote from Sir Richard's words--

Mr. Barry Sheerman (Huddersfield): What page?

Madam Speaker: Order. The Minister is making a statement. If the hon. Gentleman has questions to ask, he may seek to catch my eye later. Meanwhile, we shall hear the Minister out.

Mr. Lang: I quote from Sir Richard's words:

Sir Richard Scott concludes, after more than three years of painstaking investigation, that all Ministers who signed PII certificates did so without any impropriety. There is no criticism of them for so doing. There was no attempt to gag. There was no conspiracy to gaol innocent men. Ministers who signed PII certificates did so in the knowledge that the judge was the final arbiter of what should be disclosed to the defence. There is no case for them to answer. As Sir Richard says:

That conclusion gives the lie to the many scurrilous comments by Opposition Members and by many in the media.

For three years, several of my right hon. Friends have had to endure repeated abuse and attacks on their honour and integrity of the most offensive and unpleasant nature, over their signing of public interest immunity certificates. They now stand wholly vindicated by the report.

As one example, I remind the hon. Member for Livingston (Mr. Cook) that he said on 7 November 1995 in respect of PII certificates:

The same criticisms were made by other Opposition Members. As recently as last week, the deputy Leader of the Opposition said:

There could hardly be a more serious set of charges levelled against Ministers of the Crown, and they are now shown to be utterly unfounded. There was no conspiracy. There was no cover-up. Such charges are reckless and

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malicious and they should never have been made. The House will now expect to hear them withdrawn without reservation.

Sir Richard Scott has cast his net widely and examined a whole range of issues. He has made recommendations in a number of areas, and he has also made some criticisms. I should like to comment now on the subjects of those recommendations and criticisms, including in particular export control legislation, the law on public interest immunity, the ministerial guidelines on exports, the Matrix Churchill trial and ministerial accountability.

The report deals with the legislation that has governed the control of imports and exports since 1939. Since the second world war, that legislation has served its purpose effectively in allowing controls to be imposed on the import and export of certain categories of goods.

Sir Richard criticises the continued use of wartime emergency legislation by both Labour and Conservative Administrations over the past 50 years.

The appellants in the Ordtech appeal in early 1995 challenged the Import, Export and Customs Powers (Defence) Act 1939, praying in aid Sir Richard Scott's views, which he had first expressed a year earlier. However, in the Court of Appeal hearing on 22 May, before the Lord Chief Justice, the orders made under the 1939 Act were declared lawful. We shall, however, wish to consider further the future arrangements in that area in the light of Sir Richard Scott's comments.

I turn now to the interpretation of the common law as it relates to public interest immunity. The inquiry has suggested that in the period of the Matrix Churchill and Ordtech trials, the law did not support the concept that Ministers had a duty to sign public interest immunity certificates, nor the idea that those certificates could be used in criminal prosecutions.

The Government followed well-established case law, backed up by independent legal advice, in holding both that Ministers had a duty to sign PII certificates and that such certificates were applicable in criminal cases. It was then for the judge to decide which documents to release. The Attorney-General took advice on that from independent and eminent counsel--and incidentally, the Government's handling of PII was endorsed by three defence counsel in the Matrix Churchill trial.

The proposition that PII claims were a matter of duty was supported by authoritative judgments by such distinguished judges as Lord Scarman, Lord Donaldson of Lymington and Lord Justice Bingham. The applicability of PII to criminal cases has been established by a decision by Lord Justice Mann. It has since been confirmed by a series of decisions of the Court of Appeal presided over by the Lord Chief Justice, Lord Taylor of Gosforth.

In his report, Sir Richard Scott does not in any way question the personal integrity of the Attorney-General. He does, however, express criticism of the adequacy of the instructions to prosecuting counsel conveying the views of the then President of the Board of Trade, and said in particular that the Attorney-General should personally have supervised them. It must be a matter of opinion whether that was something that the Attorney-General could reasonably have been expected to do. Sir Richard does, however, accept the genuineness of the Attorney-General's belief that it was not. In the event, it made no difference. The judge exercised his discretion,

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as the Attorney-General had said that he would, and ordered the release of the relevant papers to the defence counsel.

The Government remain firmly of the view that the advice given at the time to Ministers by my right hon. and learned Friend the Attorney-General was correct. There is no doubt that he acted throughout with complete propriety and integrity.

The inquiry has found failings to have arisen in the 1980s in the distribution of intelligence material within and between Government Departments. We accept that there is substance in that criticism. The report makes it clear, for example, that the junior Ministers who approved the Matrix Churchill licences for which the directors were later prosecuted did so without the benefit of intelligence reports that would have shown the intended military use of the items covered. Sir Richard concludes that the Ministers took their decisions on a false footing, which he makes clear was not their fault. Substantial revisions of procedures have already been made to prevent, as far as possible, a repetition of such failings. Sir Richard's report recognises that improvements in that area have been made.

I turn to the Government's policy from the outset of the Iran-Iraq war in 1980. Our policy was to remain neutral in the conflict and not to sell lethal weapons to either side. Further, the Government took steps to ensure that non-lethal defence goods that could have had an impact on the way in which the war was prosecuted were controlled. In support of that policy, and to assist in its application as events unfolded, a set of guidelines was established in 1984 by my right hon. and noble Friend Lord Howe, then Foreign Secretary.

The guidelines established that export orders that would

would not be approved. Following the ceasefire in August 1988, those guidelines had to be applied in changed circumstances. Opportunities for expansion of legitimate trade began to emerge. At the same time, relations with Iran and Iraq were affected by concern over the hostages in Lebanon, human rights in Iraq, the fatwa against Salman Rushdie, the execution of Farzad Bazoft, and the safety of British nationals held in both Iraq and Iran. Ministers and officials were obliged to react to circumstances that were continually changing.

Sir Richard Scott concludes that, following the ceasefire in 1988, but not before--

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