Select Committee on Foreign Affairs Minutes of Evidence

Memorandum from Michael Bilton


  1.  I am a freelance writer and documentary film-maker of some thirty years standing. I am an honours graduate in Political Science from the University of York. I spent two years undertaking post-graduate research on policy formation at Trinity College and then Nuffield College, Oxford. I was a staff writer for The Sunday Times from 1979-83 which included 18 months on INSIGHT. I then joined the documentaries department of Yorkshire Television working for the "First Tuesday" programme, where I stayed until 1995, when I became a freelance.

  2.  I am the author of two books about military conflict—one about the Falklands War, the second about the My Lai massacre during the Vietnam War. Documentary films I produced about both these subjects have won a number of prestigious awards, including an International Emmy and a BAFTA. I write major pieces of investigative journalism for The Sunday Times Magazine which in July, 2000, published a 10,000 word account by me about Sandline International's involvement in Papua New Guinea.

  3.  Research for the article began in May, 1998, following reports about Sandline's involvement in the Arms for Africa scandal. This company, run from London by a former British Army officer had within the space of 12 months, been heavily implicated in two major international incidents which had had serious repercussions for British foreign policy. The research was a case study of how one private military company conducted a particular piece of corporate enterprise—the end result of which could have been the certain deaths of many people in a tiny community of jungle dwellers on the other side of the world from Britain. The article focused on Sandline's efforts to secure a $36 million contract from the Government of Papua New Guinea to resolve an eight-year-old military conflict involving a secessionist movement on the South Pacific Island of Bougainville. A considerable amount of background information came from the transcripts of evidence and documents submitted to two judicial Commissions of Inquiry held in Papua New Guinea—the first sitting for 19 days, at which Lt Col Spicer gave evidence; the second sitting for 77 days.

  4.  Sandline International has made great play in its promotion material that it would never do anything to harm the interests of Britain—and, by extension, Western interests. Yet the political and diplomatic fall-out in the South Pacific from Sandline's involvement with Papua New Guinea was massive. Its attempt to use South African mercenaries to quell the armed conflict on Bougainville brought one Commonwealth country, PNG, into direct and open conflict with her neighbours Australia, New Zealand and the Solomon Islands, who are fellow members of the Commonwealth. It caused the Minister of State at the Foreign and Commonwealth Office in London to summon the PNG High Commissioner and issue a démarche deploring his government's hiring of mercenaries to resolve the dispute on Bougainville island. Everyone who understood the Bougainville problem knew it could only be solved by diplomatic means. Sandline—had it not been thrown out of Papua New Guinea after the army mutinied—would have caused a bloodbath.

  5.  Subsequent inquiries by Sir Thomas Legg and the Foreign Affairs Committee into the Arms for Africa scandal threw little light on the true ownership of this very secretive company. It seemed odd, to say the least, that no one seemed to know very much about who really controlled Sandline International, or how the company conducted its business. In both PNG and Sierra Leone Sandline's corporate links with companies owned by Mr Tony Buckingham, meant there were overlapping interests regarding the exploitation of valuable raw materials in both countries—the Panguna copper mine in PNG and the fabulously rich diamond fields of Sierra Leone.

  6.  Among the documents shown to the commissions of inquiry in PNG was an itemised bank statement for Sandline Holdings' account in Hong Kong. This had been obtained by the PNG Attorney General from the Independent Commission Against Corruption before the British relinquished control. The Government of Papua New Guinea had paid $18 million dollars into Sandline's account as an advance payment. For the first time it was possible to follow a money trail and study how a mercenary company operated by examining closely how it ran its finances. The second commission of inquiry made allegations of corruption against two Ministers in the Papua New Guinea Government with whom Sandline International had been negotiating. One of them actually signed the Sandline contract on behalf of his Government.

  7.  Following an Army mutiny in March, 1997, the new Government of Papua New Guinea cancelled the Sandline contract and claimed back the $18 million it had spent. It said the contract was illegal under the terms of its own constitution. Sandline in turn claimed payment of the ouststanding money due under the contract. A subsequent independent Arbitration Tribunal decided PNG must honour the contract it signed with Sandline, and pay up the outstanding $18 million. It reached this decision on the basis of international law, which holds that if a State negotiates a contract with a third party then the state cannot later rely on its own internal laws as a basis for a plea that a contract concluded by it, is illegal. "It is a clearly established principle of international law that acts of a state will be regarded as such even if they are ultra vires, or unlawful under the internal law of the State."[3]

  8.  What was never considered by the judges at the Arbitration Tribunal was whether or not Sandline International had actually coerced two key Ministers in the Government of Papua New Guinea, representing the defence and finance departments. This crucial information had come too late in the day, and it had not formed part of its Statement of Defence. The tribunal decided the arbitration hearing would be limited to the issue of liability. The Government of Papua New Guinea was unable to produce new evidence presented at the second commission of inquiry, because it was gathered after the arbitration tribunal had conducted a three-day hearing in Cairns, Northern Australia. It is arguable that had evidence been produced at the Arbitration hearing that the Sandline contract had been signed corruptly, the original contract may have been held to be null and void. As it was an already impoverished Third World nation was compelled to pay Sandline the money it owed.


  9.  The tone of the Green Paper leans heavily in favour of regulation, so much so that it appears the Government has already decided to go down that road. Sandline has been among those arguing for a licensing system. The Green Paper sets out many options regarding regulations: the one option that it does not offer is DO NOTHING. Or, DO VERY LITTLE.

  10.  I am hugely ambivalent about regulation. It seems attractive but I can see obvious pitfalls. The nightmare scenario would be one where a company is licensed by the British Government to undertake training of a foreign army, that the trainers become combatants (as was intended with Sandline's South African mercenaries on Bougainville), and that massive overkill leads to heavy loss of innocent life. Where would the finger of blame point: the British Government would surely be in the firing line.

  11.  For 50 years HMG has used its own British Army special forces covertly and overtly to assist foreign governments with whom Britain had close political and/or economic ties. The SAS Regt has had a glorious role in defeating insurgent forces in Borneo, Malaya, Dhofar and Oman. By no definition can these brave men be said to have been mercenaries. They were involved in legitimate military campaigns at the direction of the British Government. They were governed by the codes of the Geneva Convention. Moreover, much of their work was geared to winning the hearts and minds of indigenous peoples to defeat Marxist-led insurgents.

  12.  Until Sandline came along in 1997-98 the system whereby private military companies run by former military personnel undertook commercial security work on behalf of foreign governments, appeared to work satisfactorily. Was that system so bad that there is no alternative to it being replaced by regulation? It was an informal process and there were clearly a network of contacts between the PMCs and various Government agencies as to whether a particular contract was in keeping with HMG's policy and in Britain's interests. Providing requests for private military assistance from foreign governments are channelled through HMG, I am not persuaded that a system of regulation is actually necessary. The real challenge is to winkle out companies like Sandline, hell bent at scooping up a lucrative contract no matter how idiotic its military plans might be. Can this be done only if there is regulation by the licensing of PMCs? It would certainly suit Sandline to be licensed because it would lend the company an official stamp of approval from the British Government. Such a licence would carry a lot of weight. But with the "light touch" regulation proposed in the Green Paper, who would make the crucial decisions about whether a particular contract should be authorised? Sandline's proposed military plan for Bougainville was described by two highly experienced former members of the Special Air Service Regiment, who analysed it closely, as "fundamentally flawed and demonstrated a limited understanding and awareness of counter-insurgency operations in close country".[4]

  13.  The question is worth raising: Would the people behind Sandline have been seen as fit and proper persons, worthy of authorisation with some form of licence from the British Government? How would a government department and its officials make that judgement? Would they use all the resources in the British Government's control to check whether that company had been offering bribes to win contracts from Foreign Governments? Would it look at the overlap of interests between the people carrying out the security work, and the financial backers of the PMC who had an interest in the economic resources of the country where their hired-in military personnel were working?

  14.  How could private military companies be made to reveal who really owned and controlled them? What kind of transparency would there be? How could South African mercenaries operating with massive firepower in deep jungle on the other side of the world be held accountable for their actions? If there were human rights abuses, who would be held accountable—the soldiers themselves, the directors of the company that hired them, or the Government officials who granted such an operation an official licence?

  15.  Given that HMG issued its démarche to PNG in February, 1998, saying that its hiring of mercenaries was not proper—one would expect Sandline to fail the test of being a fit and proper company to hold an official British Government licence. What I do find disturbing is that HNG had this information several months before the contract was signed between Sandline and Papua New Guinea. The information that a contract was in the offing came to the FCO via its High Commissioner in Port Moresby. What I still cannot fathom out is why the British Government did not take adequate steps to warn both Sandline and PNG that what was being proposed was against UK Government policy.

Michael Bilton

June 2002

3   Arbitration between Sandline International and Papua New Guinea, Int Law Reports Vol 117, Cambridge University Press, 1999. Back

4   Confidential Document. Back

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 1 August 2002