Memorandum from Michael Bilton
BACKGROUND
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.
ISSUES FOR
THE COMMITTEE
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
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