Examination of Witnesses (Question 400-419)
MR KEVIN
FRANKLIN, MR
MARK FUCHTER,
MR DAVID
GREEN QC, MR
DAVID RICHARDSON
AND MS
HELEN WOLKIND
25 MAY 2006
Q400 Chairman: Do you think your
colleagues check websites to see if arms' companies, just per
chance, happen to be advertising the fact that they are seeking
to export to an embargoed country, or do they check names regularly
to see what is going on, does somebody do this?
Mr Franklin: I think it is fair
to say that the use of internet by our operational staff is increasingly
becoming one of the many tools that they have to do research into
this type of activity. I do need to reinforce the fact though
that we do not do detective work on a speculative basis, that
is not the way in which we are organised, we do it based on intelligence
that comes from a rather sophisticated range of sources that do
come together in the REU, but clearly we make a contribution to
the REU based on things that we have discovered as a result of
the work we are doing on the front line at an operational level,
that is fed back into those intelligence sources and so it would
be correct to say that we use the internet as one of the tools.
I do not have the number in terms of number of people that actively
use the internet and we will write to you on that.
Q401 Peter Luff: Chairman, I have
difficulty in reconciling the two answers we have. Do they or
do they not? Does the Government or does the Government not? Does
somebody do this work or do we have to leave it to investigative
journalists?
Mr Franklin: Our understanding
is that the answer is yes, someone does do that work, but it is
not done in strategic arms control—proactive targeting if
you like—in HMRC in the context of strategic exports.
Chairman: We may have to ask your colleagues
about that.
Q402 Sir John Stanley: Can I turn
to trafficking and brokering? As you know, the Government has
made a very limited extension of extraterritoriality whereby for
the first time those who are normally resident in the UK can face
criminal prosecution if they engage in trafficking and brokering
outside the territorial jurisdiction of the UK, with a very limited
number of weapons or quasi-weapons, and in particular, on the
one end is limited to torture equipment in broad generic terms
and, on the other end, is limited to missiles with a range of
in excess of 300 kilometres. Since those new powers have been
available to you, can you tell us how many investigations you
have carried out into potential criminal offences committed extraterritorially
and how many of those investigations, if there have been any,
have turned into actual prosecutions?
Mr Fuchter: There is one case
that we have adopted and is being processed, is going through
the system, but it is at the stage when I think it has not formally
been reported to RCPO, but we expect to be reporting it to RCPO
with a view to prosecution. I should add that that case is going
to be taken forward under the WMD trafficking and brokering, but
the case was started as a trafficking and brokering inquiry and
I think we will probably be proposing offences under the Anti-Terrorism,
Crime and Security Act. It is a trafficking and brokering case,
and it is the only one that has got as far as that so far in the
two years that the controls have been in place. In the meantime,
we have received a number of allegations and referrals of trafficking
and brokering activity and, again, each one of those we have pursued
in the way that I have described earlier.
Q403 Sir John Stanley: Can I respond
on a point of clarification, if I may? Were you saying to the
Committee that this particular, at the moment, sole investigation
involved components of, or materials related to, a weapon of mass
destruction? Are you saying that?
Mr Fuchter: Yes.
Q404 Sir John Stanley: You were.
Thank you.
Mr Green: Sir John, I would just
add that the case to which Mr Fuchter has referred is one on which
we have provided early prosecutorial advice as to what evidence
is required, and we have been fully involved in that.
Q405 Sir John Stanley: Just taking
this case further, which is clearly of profound significance,
given that I am not aware that this has appeared in the public
domain previously, and that it does involve a weapon of mass destruction,
or components of a weapon of mass destruction, can you give us
any indication as to the timescale within which a prosecution
is likely to be formally entered into?
Mr Fuchter: I cannot. I know there
are particular challenges over the evidence.
Mr Green: Obviously, in due course,
if it came to it, evidence would be submitted to us and we would
apply the code test as to sufficiency of evidence and public interest,
and so forth, but until such evidence has been gathered (and,
as I say, we have had an input into what evidence would be required)
I am unable, Sir John, to give you a particular timing on that.
Q406 Sir John Stanley: Are you satisfied
that the particular individual or individuals concerned are in
a situation in which they could no longer continue these particular
activities?
Mr Fuchter: I think, from our
enforcement perspective, yes, we can say that.
Q407 Sir John Stanley: I am asking
it from a public security aspect.
Mr Fuchter: I am sorry, yes.
Q408 Sir John Stanley: Yes to that?
Mr Fuchter: Our view is the operation
has been thoroughly disrupted.
Q409 Sir John Stanley: And the individuals
concerned are in custody?
Mr Richardson: No, they are not.
Q410 Sir John Stanley: They are not.
We may wish to pursue that separately, Chairman. Can I continue
on another aspect. In paragraph 59 of your paper you say: "Trade
controls on trafficking and brokering do not involve goods moving
from UK ports and are not, therefore, subject to regulatory checks
by HMRC officers". Does the inwardness of that sentence mean
that where you have not got your own officers in place at a port
then you are solely dependent on intelligence for picking up a
trafficker or broker inside the UK who is trying to get out of
the UK other than through a port where you have got your regulatory
operation in place? You are solely dependent on intelligence for
picking up those particular individuals who may be trying to get
stuff out by light aircraft, fishing vessels, etc. Is that the
right deduction?
Mr Fuchter: Yes. I think we would
say that they are not necessarily—because this is trafficking
and brokering—in the process of getting material out of
the UK, but, to answer the broad question: "Are we dependent
on intelligence research?", yes, we are.
Q411 Sir John Stanley: When you say
they are not necessarily in the process of getting them outside
the UK, are you suggesting—
Mr Fuchter: Moving from the UK.
Q412 Sir John Stanley: Moving them
from one place to another within the UK. Is that what you are
saying?
Mr Fuchter: No, I am sorry. I
may have misunderstood you. I thought the question was about activity
that would have taken place where the goods would have moved from
one overseas state to another, and the person is in the UK; are
we solely dependent on intelligence to initiate action against
that—
Q413 Sir John Stanley: No, I am talking
about traffickers and brokers inside the UK who may be seeking
to circumvent your export controls and the physical regulatory
checks you have in ports and are trying, in a trafficking and
brokering capacity—ie they are not involved in manufacture
but are simply involving middle men in trading operations, which
the traffickers and brokers characteristically are. For those
people, who know, presumably, exactly where your staff and officers
are carrying out their regulatory checks, I am just asking if
you are then solely dependent on intelligence for trying to stop
that trafficking and brokering and the movement of, say, a portable
missile consignment out of the UK; you are solely dependent on
intelligence where it is going through something other than a
port.
Mr Fuchter: Yes.
Q414 Sir John Stanley: You are. One
appreciates and understands you cannot have somebody everywhere,
but in terms of the manpower that you have, how adequate do you
think your coverage is of the sea exits and air exits out of the
British Isles?
Mr Fuchter: Given that the whole
process is driven by intelligence, our assessment is that the
manpower we have is adequate for the purpose. We have a number
of regulatory profiles on the system and we do regulatory checks,
all of which are fed back to our intelligence staff. The intelligence
to which you refer is a cycle, a cycle through the Restricted
Enforcement Unit; it is added to, we give feedback to the REU,
we get actioned by the REU. I am conscious I am painting a very
intelligence-dependent picture, but that is why. People such as
middle men who will act in such a way are not going to make themselves
known (rather similar to major drugs operators), and it is only
through intelligence and understanding the results of our previous
activities that we will be able to make an impact.
Q415 Sir John Stanley: Your answer
clearly poses a very key question (obviously not for you) which
is whether the intelligence resources are sufficient to give you
the necessary information that you need to pick up what is potentially
a very sizeable geographical loophole in the coverage.
Mr Fuchter: Yes, and if the intelligence
picture changed—for example, say the REU suddenly generated
in volumes four times the number of quality intelligence logs—we
would be able to redeploy extra resources, on a mobile and flexible
basis, to respond to that intelligence, whether they are intelligence
officers of our own, investigators, or detection staff.
Q416 Sir John Stanley: Thank you.
Just one further one: you say, at the opening of paragraph 15:
"HMRC has no regulatory role in relation to controls on activities
such as trafficking and brokering, intangible transfers and the
provision of technical assistance." Do you think you should
have a regulatory role? Is there a gap in our policing of the
trafficking and brokering and what you describe and intangible
transfers, etc, by virtue of the fact that you do not have a regulatory
role? Have you any proposals that you want to put to the Committee
on this?
Mr Fuchter: We do not have any
proposals that we want to put to the Committee, although I am
conscious that much of the thinking around this was done when
the Bill was going through early stages, and that is quite a few
years ago now (we would obviously welcome your stance and your
suggestions on this). However, going back to the decisions at
the time, I am conscious that a lot of this is done through open
licensing, and I think it really starts with the platform of the
licensing authority deciding how broadly drawn should be the open
licensing arrangements. If they are broadly drawn, which I understand
they are, then we are not sure in that context whether it would
be an effective use of our resource to be regulating the activity.
I am struggling to remember the detail at the moment, and we could
write to you if you would like more specific information on this,
but I think we suggested to lead departments at the time that
there was not a regulatory role that we could effectively undertake
at the frontier, and that was accepted.
Q417 Sir John Stanley: From where
you sit in your key, pivotal position, do you believe or not that
the necessary regulatory role is being discharged satisfactorily
elsewhere?
Mr Fuchter: We have no information
to the contrary. So our assessment is that it is.
Q418 Sir John Stanley: May I put
it round the other way: the information that is available to you
in terms of the degree of what one must describe and rightly describe
as criminality, is the degree of criminality or risk of criminality
such that you have concerns as to how adequate the regulatory
system is?
Mr Fuchter: That is not the position
now but if it became the position and, for example, the lead departments
approached us and said: "I think we need to look again at
how we as departments are interacting", then certainly HMRC
would be prepared to look at that very carefully.
Q419 Chairman: The export control
organisation at the DTI grants a licence on the basis of the information
about the end-user which they regard as being perfectly reasonable,
entirely within the criteria, so they tick the box and this arms
export to this end-user goes ahead. Who in the system is checking
that the arms are going to that particular end-user? I am not
suggesting that every arms shipment should be checked very carefully
in those terms, and most arms exports go to UK allies, but there
are certain countries and certain end-users who are, to say the
least, suspect. Who, in the end, is policing it?
Mr Fuchter: Firstly, as far as
the export taking place, our regulatory system will have confirmed
that the goods were exported, the licence was decremented and
returned, etc—as far as that goes. At the other end of the
spectrum, where we have intelligence on suspect end-users, obviously
that is where our profiling activity comes in.
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