Quadripartite Select Committee Minutes of Evidence

Examination of Witnesses (Questions 180-192)


13 MARCH 2006

  Q180  Peter Luff: That is an application. How are you contacted? If they say: "Hey, I have got a problem and this might be something, I am a bit worried about this." Just a telephone call to your helpline?

  Mr Williams: It could be a telephone call and we might then ask for that person to submit a rating enquiry giving details in writing of who the end-user is and what he wants and we can have a look at it.

  Q181  Peter Luff: There is a dreadful trade off, is there not, between speed to help enterprise and efficiency. Are you satisfied that you are getting that balance right because otherwise you could actually deter this car dealer from making the application in the first place?

  Mr Williams: Yes, we have twin objectives, as we said in written evidence. One is to be effective in terms of enforcing the Government's policy and the other is to provide a decent service to exporters and getting the trade-off right between those two is the challenge, which is why we spend so much time trying to improve our performance turnaround times.

  Q182  Peter Luff: The message would be to anyone like this car dealer: if you are in any doubt, get in touch.

  Mr Williams: Yes.

  Q183  Mike Gapes: Can I take you slightly away from here but it is related in a way. We have talked about globalisation. Where a British company has got overseas subsidiaries how does the Government ensure that our companies have a proper internal compliance process within their overseas' subsidiaries so that you are certain that all aspects of that company are complying, or do you have a problem because those subsidiaries might be subject to the laws of other countries which might not be so rigorous—putting it politely—in enforcing export controls?

  Malcolm Wicks: This is one of the more difficult questions. I do not just mean your question, Mr Gapes—they are always difficult—but conceptually, ethically this is one of the more difficult issues. We do not feel that all overseas subsidiaries should be subject to UK jurisdiction because this would mean applying, by definition, extra-territorial jurisdiction which, as the Government has consistently maintained, should only be applied in the most serious cases, and by that we mean facilities which export into embargoed destinations, long-range missiles or torture goods. I can see ethically you could argue it the other way but it comes back to my earlier point about when jurisdiction can reasonably end. My understanding generally of British law is that we do not pretend that we can police the world or police every UK citizen, but in special circumstances we feel that we need to make exceptions. One obvious exception in another area of policy is paedophiles and in this area it is about torture goods and long-range missiles and embargoed destinations where we do feel that we have a duty to police the UK citizen. I turn to Mr Williams to make sure that I have that explanation approximately right or not?

  Mr Williams: Yes, that is correct.

  Q184  Mike Gapes: Can I probe you a little further on this? What you are telling me is that there is no policy for the ECO to check the compliance procedures of subsidiaries of UK companies?

  Mr Williams: The short answer is no, but I am not sure that I have grasped what you are driving at. Companies that are based overseas, essentially we are checking exports from the UK. We have powers in that respect.

  Q185  Mike Gapes: A no answer is clear. I prefer yes and no answers. There are exceptions apparently from what the Minister has just said. Could you clarify the relationship between the exception and the general policy that you are not doing here?

  Malcolm Wicks: The exceptions are essentially that we feel that embargoed destinations, yes, the really wretched regimes of this earth, the long-range missiles and torture goods are so significant and so appalling that they should be the exceptions. I can see that if I were in your place I would say why long-range missiles and not this or that.

  Mike Gapes: That is not my question.

  Malcolm Wicks: It is a question on my mind and again I think it is a very difficult question.

  Q186  Mike Gapes: My question is how do you know that the subsidiary is involved in these activities unless you are going to check?

  Malcolm Wicks: Again, it would be by the various methods that we have been discussing and intelligence we receive.

  Q187  Mike Gapes: But there is no automatic process whereby you would ask the parent company to have a policy of compliance of any kind?

  Malcolm Wicks: No.

  Q188  Chairman: Can I briefly explain the problem. Last week with Mr Luff's committee I visited Ashok Leyland in Chennai in India and was advised that they had intended to export military vehicles to Sudan but that they had decided not to do so because Ashok Leyland is 51% owned by a UK company, the Hinduja Group, and that Sudan is an embargoed destination. They were essentially caught under that part of the brokering arrangements to which, Minister, you have referred. However, if they had sought, as indeed they do, to export military vehicles to African countries other than the Sudan and Zimbabwe, there would be absolutely no control over those exports whatsoever. We are talking here about a company that is 51% owned by a UK company and to some people this would suggest a kind of loophole. Does that worry you?

  Malcolm Wicks: The answer on, for example Ashok Leyland vehicles, would be whether they required a trade licence and the answer is if the goods were specially designed or modified for military use.

  Chairman: In the example I gave you there was no question that they were not military vehicles. It was perfectly clear that they were hoping to export military vehicles. It was the military vehicles director who was providing the Committee with this information, was it not, Peter?

  Peter Luff: That is correct, from India.

  Q189  Chairman: From India to Sudan, so there is no question that we are talking about military vehicles here. They were quite open about that and they were quite open about the fact that they were not able to do it—and this is to the Government's credit because under the Export Control Act the brokering provision did kick in because there is an EU embargo on Sudan. Good news in that Export Control Act 2002 works and serious congratulations to the Government on that, as always. The only problem is that that was the only thing that stopped them exporting any form of arms to Africa other than the embargoed destinations, namely Sudan and Zimbabwe. That means we have a British company with a subsidiary overseas over which for most part of its arms trade there are no controls at all.

  Malcolm Wicks: Because they are not going to those embargoed countries. Is that your point?

  Q190  Chairman: If they wanted to export to non-embargoed countries there would be no control by the UK at all. I was advised that the Indian controls were not as rigorous as our controls.

  Malcolm Wicks: If they were embargoed countries and if a UK person was involved then it is subject to our jurisdiction. If it is non-embargoed then it has to be up to the policy of that nation state, namely India.

  Q191  Chairman: I thought you would say that. I am suggesting that that does raise an important issue about the role of British companies exporting arms from subsidiaries overseas when the export control regime there is infinitely more liberal than in the UK. Does this not present an issue? Is this not, for example, why the Government wants an international Arms Trade Treaty?

  Malcolm Wicks: It is why we are developing in the EU policies on this. It is an argument for some general global or international agreement. It is also important to recognise that in many of these situations it is up to that nation to police these things just as it is up to our nation to police the things that we are accountable for and can reasonably have jurisdiction over.

  Q192  Chairman: One final question, Minister—you and your colleagues have been very generous with your time—we understand that the Government will be reviewing the export control regime next year. We will have had the Export Control Act 2002 for five years and the Government is reviewing it next year. We are very pleased about that and we obviously welcome it. Could you say a little about the timing of that and the scope and nature of the review that the Government is thinking of undertaking so that we can make the best contribution that we possibly can?

  Malcolm Wicks: I welcome a serious contribution from the Committee on that.

  Chairman: Our contributions are always serious, Minister.

  Malcolm Wicks: Of course. I used to say that when I chaired a select committee.

  Chairman: And you were right!

  Malcolm Wicks: And I was right with this one and that one. We have not decided upon the details of that review yet. We have just hesitantly entered 2006 but we will do so and, being genuine, we would welcome your advice on that. The minutes will note some of the advice I am seeking in particular. One is how do we balance anecdote—I do not use the word pejoratively—how do we balance the specifics which inevitably excite interest? We have mentioned some specifics today—the Ashok case, for example and so on—how do we balance that against a more general empirical assessment of how well or badly we think we are doing. That is one of the things I want to look at in the review and the Committee might give us its judgments on that one. The other one is possibly related to this very difficult area ethically whereby our society says there are some things so intolerable that, even though they may be geographically far away from the UK, we are going to take some responsibility. Paedophilia is one kind of example, and some of the weapons of torture equipment is another. Many would urge us to add to that list, but how conceptually do we make judgments about what should be on that list and what is not? Therefore, related to that is this issue of jurisdiction. To what extent do we feel that Britain can intervene with subsidiary companies all over the world or to what extent do we feel our controls are inevitably rather more limited than that just as another foreign nation would have limited controls when it comes to what happens to their subsidiaries in this country? They are the more conceptual issues that I want to look at in the review as well as of course the more important routine work on how well we are doing as a piece of public administration.

  Chairman: We would welcome that because they are the kind of issues that we feel should be subject to review as well. We promised you that it would last no longer than an hour and a half but it has been one hour and 31 minutes. Minister, we thank you for your time and for your thoughts and analyses and also for those of your colleagues attending. We are very grateful indeed. We will certainly attempt to produce a report that addresses the issues that you have agreed with us should be addressed urgently. Thank you very much indeed.

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