Quadripartite Select Committee Written Evidence

Memorandum from the Export Group for Aerospace and Defence (EGAD)

  At present we believe that Industry is currently quite satisfied with the overall level of service being provided by HMG in the processing of export licence applications, although, of course, there will always be occasional cases where problems may arise. As this performance has been achieved at a time when there has been considerable resource pressure on those departments involved (especially the Export Control Organisation), we believe that this should be acknowledged and applauded. Naturally, there are concerns about the future and whether the excellent level of service which is being provided to Industry can be maintained in the face of the resource staff cutbacks which have been faced within the Export Control Organisation, especially. We have seen a highly noticeable improvement in the turnaround of licences over the last two years or so within the Foreign and Commonwealth Office (for which they are to be warmly commended), resulting from investment in new IT systems and processing changes, and this is to be welcomed, as any example of a Government IT programme which actually works should always be!

  We have been discussing with the ECO [Export Control Organisation] the issue of the need for a Compliance Manual, for issuing to all companies to ensure that they are aware of exactly what is expected of them in compliance terms, and which could also be used by the ECO's own compliance officers to ensure consistency in what they look for during compliance audits of companies, and we are taking the action to endeavour to work on drafting such a document, for the ECO's approval.

  The ECO's highly commendable on-going initiative of running compliance workshops around the country to promote awareness within Industry of best practice has been continuing, and EGAD has been discussing ways in which we can further assist in enhancing these activities.

  One thing which HMG in general, and HM Revenue & Customs in particular, could do to assist in promoting greater awareness and commitment to compliance would be (as is the practice in the USA) to publish details of actions which have been taken against non-compliant companies and individuals. We know from discussions with HMRC and the ECO that there is a large amount of enforcement activity against the non-compliant which is being undertaken all of the time, but very little information on this ever gets into the public domain.

  In 2005 details were published by HMG of successful prosecutions which had been taken in two cases. Details on these two cases can be seen at:

  http://www.dti.gov.uk/export.control/applying/praetorianassocscustomsfine.htm and


  We believe that the publication of more information on a regular basis of actions which have been taken against the non-compliant, which have resulted in disruption of their commercial activities, or the imposition of fines, etc would be invaluable in demonstrating both nationally and internationally the seriousness with which HMG takes export controls, and would assist greatly in promoting compliance.

  At present all too often cynics will clearly believe, given the scarcity of information in the public domain about enforcement actions which have been taken, that the likelihood of being caught is negligible. This is further exacerbated when cases are reported in the media of alleged apparent breaches of export or trade control regulations which do not seem, to the public at least, to have been actively and forcefully pursued by the authorities, or resulted in any action having been taken against those involved. Such cases, which have been reported on since the new regulations came into force, have included, amongst others:

    —  Sinclair Holdings 7 and its alleged dealings with Sudan, see:


    —  TLT International and the alleged sale of electric shock batons to Zimbabwe, see:


    —  TAR Ideal Concepts (and others) at the DSEi 2005 exhibition, see:


    —  Ashok Leyland's alleged deal for the sale of "military trucks" to Sudan, see:


  The lack of any public reports of any follow up actions which have been taken in these high profile, and other media-reported cases, as well as the lack of information made publicly available about the considerable amount of enforcement activity which we have been led to believe by ECO and HMRC is taking place on a regular basis, does not assist in efforts to convince people that they must take export controls seriously, and that the consequences of non-compliance could be costly.

  Interestingly, one issue which is coming to the fore is a need for greater awareness of US export and re-export controls within British companies who are seeking to do business with the USA, for instance through participation in the Joint Strike Fighter programme. EGAD is now looking at ways in which it can assist in this, including by working closely with the US Department of Commerce and the US Department of State, and our sister US Industry body, the Society of International Affairs (SIA), on the organization of workshops here in the UK.

  EGAD has also been invited by the House of Commons Defence Committee to work on producing a paper to propose, from the Industry perspective, ways to address the current impasse in reducing the amount of bureaucracy involved in transatlantic defence trade and collaboration with the USA, in light of the lack of progress with the proposed ITAR waiver, and work is beginning on this.

  We hope that the above additional comments may be of interest to the Committee.

January 2006

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