Quadripartite Select Committee Minutes of Evidence

Examination of Witnesses (Questions 80-91


31 JANUARY 2006

  Q80  Sir John Stanley: Is it not the case that precedents already exist so far as UK legislation is concerned, both in the area of terrorism and offences against children committed by UK citizens overseas? In both those areas are there not already clear precedents in UK legislation?

  Mr Isbister: There is more than that as well. Those are two examples, but I seem to recall—it is a long time ago now—that when we were looking at this there were more examples than that. If you want I can go back and look at our old briefings et cetera and see if I can come up with the additional examples.

  Q81  Sir John Stanley: Finally, I think you used the word "compromised" a moment ago; are you saying to us that you are watering down your previous position or not, your previous position being the same as the predecessor committee of this one, namely that we consider that extraterritoriality should apply in relation to UK citizens engaged in trafficking and brokering in relation to all weapons on the military list.

  Mr Isbister: It is still our position that that should be the case; however, if we can at least get small weapons and light weapons, that is a better situation than we have now, but we would still advocate that this should be applied across the board.

  Sir John Stanley: Thank you.

  Q82  Robert Key: As part of their effort to cut manpower, the Department of Trade and Industry two years ago suggested privatising the Export Control Organisation—outsourcing it was the way they put it. They then told us they had decided not to outsource the work of the ECO. Did the Government make the right decision?

  Mr Isbister: Yes, very much so, but I fear that we may not have heard the last of this. If you look at the statement which was in answer to your question, Mr Bruce, the Government did not exactly say that it was a bad idea, they basically said that there were doubts about the level of benefits involved in privatisation. That would suggest to me that somewhere this is still a possibility, and when you put that together with the staff reductions and the potential that has to mean that the ECO is not capable of doing the same job it has been doing for the last few years, then maybe you end up with a situation of the Government saying well actually now there would be substantial benefits in privatising because the ECO is not doing the job that it could. I am very concerned about this and it is a crying shame that you had the JEWEL review which, by all accounts, did a great deal on improving the performance of the Export Control Organisation and increasing efficiencies, and to follow that up with arbitrarily introduced staff cuts coming in from outside would really seem, from speaking to various people involved with this, putting the future good work of the ECO at risk.

  Q83  Robert Key: You said in your memorandum to us that you were concerned that there were still not resources available to police the systems that were adequately tasked. Do you actually have the evidence for that?

  Mr Isbister: It was interesting what Brinley from the Defence Manufacturers' Association said. I would agree basically that it is early days from what I understand and it may be that there are internal stresses in the system or maybe not, it may be that there are internal stresses that are still being managed but may be not forever. The ASE Consulting report which was looking at privatisation as an option spoke of the possibility of meltdown of the system if the staffing cuts went through, so I guess it is possible that we are on borrowed time. There are two possibilities, are there not? One is that processing times extend, which obviously the defence industry would not be happy about, but neither are we. We want the system to work quickly because of the EU information-sharing mechanisms. If you are a purchaser and you come to the UK looking to buy military goods, if the UK refuses the licence application then they circulate that information to EU partners, who are then supposed to take that into account if they get a similar request, and to consult with the UK in that event. If the UK is just sitting on an application and not dealing with it, and the potential buyer moves elsewhere, then there is no denial, there is no need, there is no alert to another state that this could be problematic. The other possibility is that there are shortfalls in the quality of decision-making and that could obviously have significant implications. One thing that we do know that has happened is the change in policy on open licences, for example the extension from two or three years for military list or dual-use goods up to five years or even, currently, beyond. I think that is a very worrying development.

  Q84  Robert Key: Are you or perhaps Mr Thomas aware of internal pressures in government that sometimes lead to strange decisions being taken? For example, a whistle-blower came to me last year about defence exports to a particular country. He was himself a civil servant and he said that because the Foreign Office had decided they wanted to be nice to this country, in fact they had put great pressure on the DTI to allow a particular export to take place, but the Ministry of Defence were fighting hard, a rearguard action, to stop it happening. Have you come across this sort of thing?

  Mr Thomas: Certainly I have come across a whole range of evidence of inter-department conflict on arms licensing, as I am sure the Committee has, ranging from Hawks to Indonesia, to Zimbabwe, to Howitzers to Morocco and Western Sahara, to Tanzanian air traffic control systems. I could go on, but we are running out of time. So certainly I have come across that before and people I have spoken to who have had some understanding of those activities have intimated that it is the DTI and the MoD that have been the primary forces that have exerted pressure for the licence to go ahead in some of those instances.

  Q85  Malcolm Bruce: Mr Isbister, you said you did not think we may have heard the end of the potential privatisation of the Export Control Organisation. Given that you do not want it privatised and the defence manufacturers do not want it privatised, and it is essentially the delivery of public policy, what on earth would be the case for privatising it now?

  Mr Isbister: The only pressure that I am aware of has been a pressure of economics.

  Q86  Malcolm Bruce: Is there a danger that the staff levels could be cut to the point where it cannot do the job and we have to say because we cannot control licences in the public sector we have to ask the private sector to do it for us?

  Mr Isbister: That is my fear, that is a possibility.

  Q87  Malcolm Bruce: Which would be a preposterous piece of policy really, would it not?

  Mr Isbister: If that happened, yes.

  Q88  Mr Hamilton: You raised earlier, Mr Isbister, the question of open licences. This Committee has raised that matter with government, and we were told that the government carries out risk assessments relating to Open General Export Licences which are "essentially undertaken in the same way as that for individual licences, i.e. ECO and relevant advisers from the rest of the licensing community will undertake a risk assessment of the proposed licence, considering the countries and activities involved, and taking account of the conditions and limitations specified for the licence." What do you think is wrong with that approach?

  Mr Isbister: SIELs, the Standard Individual Export Licences are valid for two years. That is what open licences for military list goods were valid for, and now they are saying that they are valid for five years. If we were calling for a change we would probably call for a tighter time period because a lot can happen in a short period of time.

  Q89  Mr Hamilton: But if there are regular checks throughout that period, then why not five years?

  Mr Isbister: What would be the difference between a regular check and a new licence application? There are compliance visits carried out; I am not an expert on what goes on in those compliance visits, which is partly because I think there is not enough transparency in what goes on in those compliance visits, but my understanding is that the people who are carrying out those are doing a technical job, they are checking that you are compliant with the terms of the licence. The decision on whether it is a good idea to have the licence or not is surely taken at a different level.

  Mr Thomas: If you are going to introduce a greater use of OIELs covering a five year period because of staff cuts within the ECO and because of pressures being put upon them, then are you not adding more work by getting people to carry out more checks? It seems to be slightly contradictory.

  Mr Sprague: I do not want to go into the ins and outs of open licences, but one thing that is quite apparent about them is that they are subject to a much lower level of transparency in, for example, the Government's annual reports than SIELs are. There is no data on volume or value, there is no data on incorporation cases or what open licences are going for incorporation, and the only way that we as NGOs and you as Committee members—although you do have access to more information than we do—can scrutinise the Government's policy in regard to some sensitive country destinations is their annual report, so a shifting towards open licences does have a problem in terms of transparency and what is reported to us in the annual report.

  Q90  Mr Hamilton: You would like to see more restriction on these open general export licences.

  Mr Sprague: I would like to see greater transparency and explanation about what is in those licences being put in the annual report. I know that we are in discussions with government about improving the overall nature of the annual report and the quarterly reporting, so I do not want to prejudice those discussions but that is one thing we will be looking at.

  Q91  Chairman: Mark, have you got your thumb cuffs back? I did give an undertaking about Mark Thomas holding the thumb cuffs, but I gave no undertaking as to my colleagues, so I am anxious that you have them back. Thank you very much indeed, it has been a really helpful session and we are very grateful. As you probably heard me to say to EGAD and SBAC an hour ago, we hope the transcript will be on the internet in about a week. If there are any corrections let us know, but if having read that there are points that you want to develop, further examples, feel free to let the Committee know. We will be taking evidence from Malcolm Wicks, the minister responsible for the Export Control Organisation and from the Foreign Secretary, and I think on the basis of what has been said this afternoon we probably ought to have a look at HM Revenue and Customs as well and take evidence, in the light of what you and the previous witnesses said. Thank you very much indeed, we are very grateful.

  Mr Sprague: Thank you very much.

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