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CORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 873-ii House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE DEFENCE, FOREIGN AFFAIRS, INTERNATIONAL DEVELOPMENT & TRADE AND INDUSTRY COMMITTEE
Monday 13 March 2006 MALCOLM WICKS MP, MR GLYN WILLIAMS, MS JAYNE CARPENTER, MR DAVID WHITEHOUSE Evidence heard in Public Questions 92 - 192
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Oral Evidence Taken before the Defence, Foreign Affairs, International Development and Trade and Industry Committee on Monday 13 March 2006 Members present Roger Berry, in the Chair Mr David S Borrow Malcolm Bruce Richard Burden Mr David Crausby Mike Gapes Linda Gilroy Mr Fabian Hamilton Mr Lindsay Hoyle Robert Key Peter Luff Judy Mallaber Sir John Stanley ________________ Witnesses: Malcolm Wicks, a Member of the House, Minister of State, Department of Trade and Industry, with responsibility for the Export Control Organisation, Mr Glyn Williams, Director, Ms Jayne Carpenter, Assistant Director, and Mr David Whitehouse, Head of the Licensing Casework Unit, Export Control Organisation, Department of Trade and Industry, gave evidence. Q92 Chairman: Good afternoon, Minister. Welcome to you and your colleagues. Could I ask you to introduce your colleagues to the Committee? Malcolm Wicks: Glyn Williams is director of the Export Control Organisation, the ECO. Jayne Carpenter is head of policy and business relations in the ECO and David Whitehouse is head of ECO's Licensing Casework Group. I wonder if it would be possible to make a very brief opening statement? Q93 Chairman: If it is very brief, that would be fine, yes. Malcolm Wicks: I welcome the opportunity to give evidence with my colleagues. The Committee has our written answers to questions on the 2004 annual report and I certainly attach great importance to export control and getting it right. I am glad to have the Committee's input which I hope will strengthen the system further. In its last report the Committee said that it believed that the UK's export control system had improved substantially during that parliamentary session and that the Act and secondary legislation introduced in 2004, together with changes in reporting practice and more joined up working between departments, had brought us to a point where we had generally efficient and reliable export controls. We obviously welcome that broad judgment. Over the past 18 months, we have faced the challenge of implementing the new controls, some in areas which bring in activities not previously subject to control. We have sought to do this effectively while not overburdening business. We have also maintained a sharp focus on processing licence applications as promptly as possible and we could tell you more about that. We think the ECO wants to build on this good performance this year for a continuous improvement programme and again we could explore that with you in terms of IT systems and the rest. At one level, the ECO like other parts of government is about competent and cost effective public administration. You will forgive me if in answers to some of those questions on that aspect I bring in my colleagues who are the experts. At another higher level, however, it is about our role in combating terrorism and human rights abuses. That is a sensitive and complex question and certainly I would welcome the Committee's advice as we strive to get this right in the future. Q94 Chairman: Thank you. We are very grateful that you and your colleagues are here. We have given your department some indication of the details in the questions we might ask. This is not a memory test for people; it is about searching for the truth. We do acknowledge the work the government has done already, as you rightly point out. Can I start by asking whether the Export Control Organisation reviews the internet for contraventions of the export control system? Malcolm Wicks: The brief answer is that that is not a regular role of the ECO. We do not have a dedicated official looking at that. We recognise the importance of the internet of course. We have a restricted enforcement unit. This is a fortnightly meeting of an interdepartmental committee, chaired by our director, Mr Williams, on my right here, which reviews intelligence relating to procurement attempts and possible breaches of control. One of the actions they may take is to follow up leads by reviewing a company's website. That is in addition to other work we do through our DTI compliance officers. Q95 Chairman: The reason I raise that is, as you probably know, we have received evidence in the last session from Mark Thomas that suggested that UK companies were advertising torture equipment on the internet; that if you looked at the websites of a UK company, TLT International, stun batons and stun guns were for sale. If you looked at Army-Technology.com, the website run by SPG Media, a UK company, again you were offered introductions to Chinese and Korean arms manufacturers who advertised stun batons. Stun batons are on the government's proscribed list and they require a licence. They are weapons of torture. If journalists can spot these things on websites, has your department a similar track record of spotting UK companies who are advertising things of that kind that they should not be advertising, certainly without a licence? Malcolm Wicks: Our general approach is that having someone dedicated, say, full time to doing this would not be cost effective. We rely much more on an intelligence based approach in common with many other aspects of policing. Mr Williams: We do not do detective work on a speculative basis. We will follow up any leads that we are given from any source and, as necessary, pass them on to HM Revenue and Customs to follow up with their enforcement powers. You are really referring to the brokering controls on internet advertising of the Restricted Goods category. Clearly those are relatively new controls. They have not been in force for two years yet so we are still getting to grips with the compliance and enforcement side of that. I think it is not unusual that in the early days you will find examples. Q96 Chairman: Does the department not have a list of UK companies and their websites? From time to time, does someone pop along and check whether they are engaged in advertising kit that they should not be promoting without a licence? I can log on and do that. Why cannot the Export Control Organisation? Malcolm Wicks: We are not saying we do not. I said earlier that we will look at company websites. I suppose the resource question is whether making this a regular, daily part of the work would be cost effective. I suspect, like a lot of these things, there is probably no right and wrong answer. This is a relatively new organisation, a new area of policy, which I think we should all be proud of and we want to get it right, given the resources we have. We have as much interest as you in rooting out wrongdoing. If the Committee urged us to look at this we would look at it again. It is a question of just using resources appropriately and effectively. Q97 Chairman: Is it the responsibility of the ECO to do that or, in your view, is it the responsibility of HM Revenue and Customs because they are the enforcement agency? Who is dealing with websites or who should be in principle if they had the resources? Should it be the ECO or HM Revenue and Customs? Malcolm Wicks: My guess would be that there is no one agency dealing with websites. If we had reason to pursue an inquiry, we would use all available evidence at our disposal. I am not sure it would be sensible to say that we are websites and someone else is not. Customs will use that as part of their policing activities. We work very closely with Customs of course. Q98 Mr Hoyle: You spoke about resources. Does that mean the ECO is under-resourced? Malcolm Wicks: No, I do not think it does mean that. Whether we were talking about mainstream policing, the secret service, which is not my province, or combating social security fraud that used to be my province ministerially, nevertheless, with the resources you have, however adequate, there is always a judgment about how you use those resources. Much policing now is based on what people call the intelligence led approach. Q99 Mr Hoyle: You think they are adequately resourced? Malcolm Wicks: Yes. Q100 Mr Hamilton: One of the objectives of HM Customs and Revenue is the following: to strengthen frontier protection against threats to the security, social and economic integrity and environment of the United Kingdom in a way that balances the need to maintain the UK as a competitive location in which to do business. I am sure you are very familiar with that. May I ask how cooperation between licensing officers in the ECO and HM Revenue and Customs is currently structured? Is there, for example, a liaison unit and, if there is, how many staff work in it? Are their IT systems linked up? Malcolm Wicks: Obviously I want to satisfy myself that the relationships are good but I might ask Mr Williams to say more about the operation level. I am satisfied that the ECO is working with HMRC at all the appropriate levels. The fortnightly meeting I mentioned that Mr Williams chairs is one which HMRC attend, for example. The ECO has an HMRC liaison officer who helps gather evidence and witness statements within our organisation to support HMRC investigations. In a whole range of ways we work very closely. For example, we provide a round the clock, 24/7 as they say these days, advisory service to Customs on the licensability of goods and company checks. I am sure that at all sorts of levels there are very good relationships but Mr Williams may wish to add to that as he is closer to the operational end than I am. Mr Williams: We have two liaison officers with different functions. We have regular, bilateral meetings to discuss both policy and, to some extent, operations. We provide training. We send our officials to give instruction on export licensing to Customs at their training sessions. We have also developed some software tools which will help exporters and Customs officials to identify controlled goods. There is quite a lot of liaison. Q101 Mr Hamilton: Are the IT systems linked? Mr Williams: No. When you say "IT systems" you mean? Mr Hamilton: I mean the databases. Mr Williams: No, they are not. Q102 Mr Hamilton: Do you think they should be? Mr Williams: Not necessarily. They are not part of the licensing process. Their role is deliberately separate from ours. They do investigations and prosecutions and we do the licensing. You could argue as a matter of principle that they should be separate. I am not sure. As a matter of fact, they are anyway. Q103 Richard Burden: Could we talk about the Land Rover Defenders that were used in the Andijan massacre of May 2005? We have obviously raised this issue before. This was a case where large amounts of components of Land Rover Defenders were exported from this country, went to Turkey, were assembled in Turkey and exported onto Uzbekistan, where those finished products were used in that massacre. We had a reply from you about that and we put that reply to the UK Working Group on Arms. Essentially, the reply was that if components were in flat packs they did not require an export licence. When we put that to the UK Working Group on Arms - they gave evidence to us on 31 January - they made the point with some force that if you have 70 per cent of a vehicle that can be exported outside of the licensing system that is a bit of a problem. They also made the point that the Turkish equivalent of the DESO lists those vehicles as military specification. In other words, if the finished product had been exported from here it would have fallen within the definition of ML6A and thus required an export licence. Do you not think this rather demonstrates that there is a gap in the system? Malcolm Wicks: I do not think the critical issue here is the flat pack. It is not an Ikea test. It is a rather more serious test than that. My understanding is that we are talking here about the export of civilian version chassis of Land Rovers to Turkey. I am assured that Land Rover do not control the further work done on these or their onward sale. They are not sold as Land Rovers. Otokar is not a licensed overseas production facility. It raises the question which I think is a serious question, which I genuinely welcome the advice of the Committee on, essentially about where British jurisdiction starts and ends and what is reasonable in terms of jurisdiction. We can control the export of militarised vehicles from the UK. Also, if Land Rover were involved in the onward transfer of military vehicles from one third country to another, that could be controlled under our powers, under trafficking and brokering, but this seemed to be outside of that situation. Q104 Richard Burden: Would one way round it be to have more of a catch-all clause on end use than we have at the moment? Clearly, it is a loophole. Whether it is an Ikea test or not ---- Malcolm Wicks: I only said that because that was not the issue. Q105 Richard Burden: 70 per cent of what was a military vehicle was produced here, exported and ended up being used in that massacre. One way round that presumably would be some sort of catch-all clause that could require the export of components that are designed for a system which has a military end-use to be licensed. Would that put some discipline on UK companies? Instead of them saying, "Of course we have no idea what the end-use will be", it would put some obligation on them to check what the use of their components is going to be. Malcolm Wicks: I ask a rhetorical question: where would this end? I am interested in this because - I am not a technical expert by any means - there must be a whole range of components that societies and economies like our own export that could in the wrong hands be quite important in developing weapons or whatever it might be. I am genuinely interested in trying to get this one right without, on the other hand, over-reaching ourselves in terms of our jurisdiction. I imagine that people could come to the Committee with a whole range of proposals which they might argue, on ethical principle, should not be exported. Richard Burden: Would it not be reasonable to expect companies, perhaps monitored by yourselves, to take reasonable steps to establish the end use of what they are exporting? This is a major company and a large part of their business is exporting military equipment and who knows? Those particular vehicles may end up in a catalogue somewhere later, showing them as being military vehicles. Q106 Chairman: We have had evidence from Oxfam that suggests there is a pretty close working relationship between Otokar and Land Rover for the manufacture, promotion and export of military vehicles. You raise the point: how close is the relationship? Forgive me for mentioning websites again but I am informed that on Otokar's website we are told, "Otokar manufactures Land Rover Defenders model 4x4 tactical vehicles under Land Rover licence in parallel with customer needs" with photographs of vehicles on display at the DSEi[1] arms fair and photographs from catalogues. If we let your department have the evidence that Oxfam have submitted to us that seems to demonstrate a close relationship here, would you not feel that in that case the ECO ought to be asking questions of Land Rover as to what the end-use of its exports might be, particularly if the military vehicles have indeed been used to abuse human rights elsewhere? Malcolm Wicks: I am open minded about that. We have discussed this before the hearing. I discussed it before I knew I was coming to this hearing because it is obviously a matter of very real concern. Although it is not for me to suggest how the Committee might deliberate on this issue, some of the wider principles about where our jurisdiction starts and ends, which is a difficult question, are ones I would welcome the advice of the Committee on. It is a difficult one which we need to grapple with to get all of this right. Q107 Richard Burden: I appreciate that and I am sure we will follow that up. One point that was put to us when we questioned the UK Working Group on Arms on 31 January was the fact that since November 2005 Uzbekistan has been the subject of an EU ban on the sale, supply, transfer or export of arms and related materials of all types. That includes weapons, ammunition, military vehicles, equipment and so on and spare parts. Do you think, if those Land Rover Defenders had left the UK for Turkey after November or the bits had left the UK for Turkey after November 2005, an export licence would have been required? Malcolm Wicks: The difficulty here is that the components we are talking about, the chassis, were being exported to Turkey, not to Uzbekistan. Mr Williams: You are referring to the military end-use control in the EU dual-use regulation which says that you can control non-listed civilian dual-use goods if you know they are going to an embargoed destination and will be put to military use, a fairly rarely used control. We have looked at this. It is a bit of a moot point but the way that control is worded in the EU regulation it has to go directly to the embargoed destination. In this case, it was going to Turkey. At the time, I think Land Rover had no idea that the Defenders or whatever the Defenders were turned into were going to find their way to Uzbekistan so it may be academic anyway. Q108 Richard Burden: Could you let us have a note about the point you made about them going directly to the embargoed destination, because that is a new one on me. Mr Williams: Yes. Q109 Mike Gapes: You have been referring to EU controls. Turkey is a NATO country. Do not NATO countries have their own internal regulations about what they should do? When you reply to my colleague, perhaps you could also comment on the fact that, although Turkey is not in the EU and therefore not subject to EU controls in that sense, it might as a NATO state have some obligation to its NATO partners about what it does. Malcolm Wicks: If we can help you with that, we will. Q110 Mr Hoyle: What would have happened if Uzbekistan had ordered civilian Land Rovers? I understand you can get gun clips for those who go out in the countryside to shoot. Could those have been exported direct to Uzbekistan as a civilian Land Rover does not seem to be any use? My understanding would be yes. What can we do to stop that in the future if that is the case? Mr Williams: The military end-use control I have just mentioned might come into play if we knew that the Land Rovers were for a military end-use in Uzbekistan. Q111 Mr Hoyle: But were bought for civilian use? Mr Williams: No, because they are civilian goods. I think I am right in saying we did try something like this when there was an embargo on the former Yugoslavia. There was a national control on civilian four wheel drive vehicles which had above a certain ground clearance, which we made licensable in the 1990s. I am told that was not a particularly successful experiment because it got us into all sorts of issues about controlling very routine exports. Q112 Mr Hoyle: I think you would agree that it is a great worry that you can buy any four wheel drive, a Toyota or whatever, that can be used for the same use. If the only adaptation is a hook or a couple of hooks to hook the gun on, all these can be military vehicles and I understand there is nothing to stop it. Malcolm Wicks: There has been at least one issue recently that I can think of where - I will not mention the country - there was an embargo but it suffered some natural disaster. It could have been the tsunami. There was a need for relief operations. Occasionally, one has to make judgments. There are always risks. Q113 Chairman: No one doubts that judgments have been made. It is about asking the right questions, when somebody applies for an export licence - what is the end-use going to be? - and being reassured that what you are told is (a) correct and (b) that the end-use is acceptable. There is a second issue about the fact that the Land Rovers that have been transformed into military vehicles, topped up, where there are newspaper photographs of Land Rover military vehicles being used against civilians wherever it might happen to be, questions might be asked, might they not, about whether the UK exports Land Rovers to a Third country for this purpose? I am just a bit surprised that Land Rover has not been interrogated a bit more carefully about the end-use of their exports from the UK. Am I being unreasonable? Malcolm Wicks: I can see why you ask the question but my understanding is that what they have said to us is that they are exporting the chassis to Turkey and there their responsibility ends. You are raising a wider question about ethical responsibilities and I have said I will reflect on what you have said. I do not want to overburden the Committee in terms of its deliberations but I am sure you could make a scenario whereby certain perfectly innocent IT software goes from this country to a perfectly reasonable country. I am not an expert on software but none of us could be quite certain that it would not be used for wrong purposes. Where does this end? Chairman: It is the job of the ECO to evaluate these problems and to make the right decisions. Therefore, we are interrogating the ECO about how well it appears to be preventing UK produced products being used to abuse human rights overseas. We will send you the Land Rover details that have been supplied to the Committee and maybe that will throw more light onto it. We can always check the websites. Q114 Judy Mallaber: We received evidence at our last session that alleged that exhibitors at an arms fair may have contravened the Export Control Act. What does the ECO do to ensure that those organising, exhibiting and attending arms fairs keep within the law? Malcolm Wicks: I was very distressed to hear about that because it is clearly wrong that that was being exhibited. As soon as the authorities heard about it, it was closed down. The position here is that since the beginning of this, May 2004, it has been illegal for any person here in the UK or any UK person anywhere in the world to do any act calculated to promote the supply or delivery of restricted goods, including torture goods and long range missiles, from one Third country to another Third country. That is the principle. As you said, there were one or two exhibits there and, as soon as they were discovered - I think Mr Thomas was at the forefront in this - they were closed down. What do we do about this? The ECO issues guidance on exhibition activities which is published on the exhibition organisers' websites. The ECO liaised with the exhibition organisers on a bulletin sent to all exhibitors prior to the exhibition, which included information about relevant UK controls, including our trade controls, and the exhibition organisers held a pre briefing for exhibitors immediately prior to the exhibition in order to make those exhibitors further aware of control requirements. We also maintained a presence at the exhibition to answer queries and raise awareness and so on. HMRC officials were also present at the exhibition. You could say to me, "Yes, but at the back of the brochure", I am advised, wherever it was - I do not think it was right at the front - "there was this advertisement." That is distressing and it was stopped as soon as we heard about it. Q115 Judy Mallaber: Do the officials go round the stalls to see what is on offer? Malcolm Wicks: Yes, I think they do. Whether they can look at every page of every brochure is another matter. Q116 Judy Mallaber: If the organisers, as we were told, were shown brochures by one of the companies at the DSEi fair and the brochures included electroshock weapons and leg irons, the organisers should have said to that company that that was something they could not exhibit at the trade fair. Is that right? Malcolm Wicks: That is right. Q117 Judy Mallaber: What responsibility is on the organiser of the trade fair if they were shown the brochures in advance? Mr Williams: In respect of the export control regulations, I do not think there is an impact on them. The organisers did work very closely with us and put information on the entrance ticket, for example. I think DSEi had a contract with the exhibitors and it was part of the contract that no exhibitor should breach its export control obligations. That is how they were able to close down these stalls immediately they were discovered. Q118 Judy Mallaber: We were told that Imperial Armour was at the fair starting to negotiate deals about providing stun weapons. Is that something you would know was happening? Would it be clear to Imperial Armour that they were not meant to be doing that? Malcolm Wicks: That should not have happened. Mr Williams: They would need a trade licence to do that. Q119 Chairman: Yes, they would. Given that this illegal activity, you admit, took place how many prosecutions have there been? Mr Williams: That is a matter for HM Revenue and Customs. There has been none, as you know, in respect of that trade fair. It is up to HMRC to investigate whatever took place. Q120 Chairman: So they are aware of this, are they? Revenue and Customs were advised that this took place and that officials told these guys to stop so we can ask Revenue and Customs what action was taken subsequently. Mr Williams: Yes. They had two officers at the fair. Malcolm Wicks: They were issued with warning letters by HMRC but you would have to pursue with HMRC as to exactly their activities. Q121 Judy Mallaber: You said that when you saw this evidence that we have had it caused you concern. You are not saying that that was the first you knew about it; you are just confirming that you did have officials at the fair that did pick up the problem? Malcolm Wicks: Soon after I became Minister I was told about this and it distresses me that that is happening. We have all been at big conferences and exhibitions, sometimes speaking at them or whatever. Sometimes there will be things exhibited that should not be and the important thing to do is to find out, act on leads and take action. Action was taken. Q122 Chairman: I accept that action was taken and that is commendable but, if it had not been for an investigative journalist who had a pass to visit the arms fair and if he had not observed this, would we know about it now? Malcolm Wicks: I alluded to that earlier. You could well say why did it take an investigative journalist. Q123 Chairman: So that the record is clear, what is the answer to that question? Malcolm Wicks: It is regrettable. I do not have the materials in front of me but I think some of them were not prominent. There was not a great display. Some of them were somewhat buried. I am told that was the case and it is just a question of what is reasonable. We have laws on this in this land and they should be obeyed and enforced but sometimes they are broken. Where they are broken, the authorities have to take action. This is an instance. Q124 Chairman: We are all required to have TV licences but we do not just leave it at that. We have these vehicles chasing us up and down streets checking that we have TV licences. In this case, if serendipity had not spotted this presumably we would not know about it and that raises an obvious question about the enforcement of our legislation which is why we are probing these questions. Malcolm Wicks: It also raises the point that we are still talking about relatively new laws and new policies. They should not be forgiven but some foreign companies may not have been as fully aware as they should have been, despite what we said to the exhibition organisers. Chairman: To the government's credit, the statement on torture equipment goes back to 1997. Q125 Robert Key: Minister, in your desperate attempt to cut the number of jobs attributable to the Civil Service and the DTI, you were forced to see if you could outsource the ECO. Were you very disappointed that you had to withdraw from that exercise? Malcolm Wicks: No. Q126 Robert Key: How finely balanced a decision was it? Malcolm Wicks: In terms of administration there were pros and cons. Those who argue for outsourcing I always feel to some extent are arguing for an unknown quantity. I do not take the view that the grass is always greener somewhere else. In the end a judgment was made, which ministers endorsed enthusiastically, that we could manage the thing ourselves, albeit with smaller staff numbers but cost effectively and efficiently. Q127 Robert Key: Seriously, it was suggested that you had downward pressure on numbers, that the Foreign Office wanted you to get much more friendly with certain states who you were not allowed to export the military goods to, that the Ministry of Defence were dead against it and it was a very finely balanced argument ranging across a number of government departments. Is that a fair representation? Malcolm Wicks: It is not the representation I have seen or heard. Things pull in different directions. Genuinely, what you said about the Foreign Office wanting to get friendly I have not heard at all. This is the first time I have heard that. Q128 Robert Key: We are always pleased to help. Malcolm Wicks: It is always a pleasure to come to select committees and learn of new hypotheses. Q129 Robert Key: The export industry was quite strongly opposed to this, as were the NGOs. Did they make strong representations? Malcolm Wicks: I heard different voices, yes. Q130 Robert Key: Do you agree that there is a period of stability now for the ECO? There will not be any attempt now to downsize them? Malcolm Wicks: I think there is a period of stability. We have made the decision. We are not about to revisit it. Whether colleagues in the distant future revisit it is a matter for them. As the Minister responsible for this immediately, I personally feel more comfortable about it being within the public service. Q131 Malcolm Bruce: What you have said is reassuring. As you will recall, this started in the previous Parliament and I think I asked Patricia Hewitt about it in oral questions. Her reply was that she had no plans to privatise the export credit guarantee department, for which I think there is some merit, when she knew perfectly well that we were asking about this organisation, which you then answered after the election as not being the case. It was interesting to us that the industry itself sees no case for a private Export Control Organisation. Can I press you as a matter of government policy? Is the Export Control Organisation simply an instrument of policy that should be within government and the privatisation or outsourcing of it is really not compatible with the role that we are trying to secure, namely the prevention of arms getting into the wrong hands? There is a conflict of interest involving a private agency. Malcolm Wicks: One dimension is that this needs to be run efficiently and, given our objectives, cost effectively. That is one dimension to the argument. If one day in the distant future someone revisits this, that will be up to that government, but I said earlier to Mr Key that as the Minister responsible I feel more comfortable about this being within the domains of the public service. There are certain issues for government which are so sensitive - and this is certainly one of them - where that would be my desired outcome. Malcolm Bruce: I am glad to hear it. Q132 Mr Borrow: The department sought advice from ASE Consulting and ASE Consulting gave us the view that it should not be outsourced but amongst the findings of ASE Consulting was that unless the department continued to invest in this area there was a danger that the functions would not be met. Obviously, you mentioned that this was a new area of work and there are signs that in certain areas perhaps controls are not being implemented as tightly as many people would wish. Do you accept that there is a resource side, not simply a stacking side? In a general sense, there is a duty on the department to ensure that there are sufficient resources devoted to this area to make sure that the functions as laid down by Parliament are carried out efficiently and effectively? Malcolm Wicks: I am satisfied that there is adequate resource. We face this in other parts of government but I do not think that head count is always entirely correlated with effectiveness. The head count is going down. I am satisfied that we are running the operation effectively. Obviously, there are always judgments to be made about where we use resources. Should we have two or three people on these websites, for example, or not? Of course there are judgments to be made but they are judgments you would have to make if you had double the resources. There are always those judgments to make in any organisation. Q133 Mr Borrow: Would you agree with me that it is reasonable in the early days of the implementation of this policy to keep the resource aspect under constant review and be prepared to listen to those organisations with a direct interest in the effectiveness of these controls when concerns are expressed that perhaps they are not being implemented as effectively as Parliament would have intended? I recognise it is early days but there are at least concerns amongst many people that, after a couple of years, things should be a bit tighter than they are at the moment. Malcolm Wicks: Of course I agree we have to listen. As the Minister responsible I need to make sure that I am getting enough resource for the ECO as I think and am advised is appropriate. At the moment, with strong management, greater use of IT and so on, we are doing the job well. Q134 Mike Gapes: Can I pursue this ASE review? It was concluded in December 2004 but not published until after the election in June 2005. It contains rather strong criticisms of the IT systems in operation, including, it says, "Specifically, the Department needs to invest now" - we are talking about the Department of Trade and Industry - "in additional resources and deployment of pan-government IT/IS systems if they wish [the Export Control and Non Proliferation Directorate] to make a step change in its operation." I understand that £157,000 was invested, according to a letter we received in December, on small scale IT systems but clearly you need to do a lot more than that if you are going to get a pan-government integrated system that works efficiently, rather than what is described as a wide range of disjointed IT systems. Can you tell us what progress has been made so far in solving that problem? Malcolm Wicks: The ECO at the moment is currently reviewing proposals to replace its main licensing database with new IT systems. The issue of pan-government is something we touched on earlier. We would need to evaluate that carefully, even if we had the resource because obviously there are issues about confidentiality of data of HMRC et cetera. Mr Williams: It is accepted that the IT we have could be improved. Management consultants always say that but in this case it is largely true. We are looking to improve the way exporters first apply to us to make that more of an electronic process. We are looking to improve the work flow systems within the ECO and to join up electronically with the FCO, the MoD and DFID so that we can send them licence applications electronically and get them back electronically and be able to extract more management information and data from the systems. Q135 Mike Gapes: Where are we with this review? What you have just said is hardly the significant investment in IT that was called for. Is the review at a point where we could say that there is agreement to go forward or nearly go forward on a business integration of the type that was called for, or are we just doing a kind of sticky paper and Sellotape exercise to try to get over the cracks and pull the thing together in an ad hoc way? Is this going to be a systematic improvement so that the systems are integrated and work efficiently and we do not have the problems of the ECO depending upon different computer systems and different departments which do not talk to each other? Mr Williams: We would like to make it as systematic an IT system as possible. It is not easy, as I have discovered over the last three years since I have been director - and this has been talked about during that period in varying forms - to link up IT systems across different government departments that have their own security protocols, for example - that is a big issue - and their own IT systems and so on. This is a serious proposition. We have been drawing up detailed user requirements. It is an investment of the order of two, three to four million. We have to make sure the business case is right because the running costs of the ECO are four to five million a year. As soon as you start talking about an investment more than your running costs, that raises questions. The systems we have at the moment have been described as disjointed by ASE, which is true. The performance levels within the ECO, which are a great credit to the staff, despite the head count reductions, have been excellent since 2003. One has to see all this in perspective. We are not in a disastrous situation where we need to invest endlessly in IT to rectify it. We have a sound base to build on. Q136 Mike Gapes: When are we going to get the decision? Mr Williams: I hope that we will move into the procurement phase of the IT project in the next two to three months. Malcolm Wicks: I have been in one or two areas of government where the grand computer solution has not always worked entirely efficiently and on time. Chairman: We were not going to remind you of that. Q137 Mike Gapes: Can I refer to the Foreign Office Prism system which you will see if you read the annual report of the Foreign Affairs Select Committee which was published last week. We also have some problems in departments other than those which you worked in. Malcolm Wicks: That is my Easter reading. Q138 Linda Gilroy: Various references have been made to head count loss. Between 2003 and April 2006 there will have been a staff cut of a quarter down from 146 to 117. How has this affected activities? What activities have been cut and how has it particularly affected the availability of ECO staff for UK and international outreach? Malcolm Wicks: I am sorry; again I have to defer to my colleagues who are at the operational end of this. As you know, we are not alone in government in terms of facing head count reductions. A judgment has been made, I think appropriately, that we need to reduce the size of the Civil Service and it is not surprising therefore that we are having to make our own contributions to that. Q139 Linda Gilroy: A head count loss of a quarter when it is a very new organisation merits some explanation, especially when sometimes that follows IT being put in which increases productivity, but we have just heard that these head count losses are not following in advance of IT being procured. Mr Williams: We are not a new organisation. The new controls have been in place since 2004 but they are obviously building on the existing controls. I have not cut any single function that we do in the ECO because we do not have any optional extras. We have achieved a reduction by a combination of measures such as restructuring. Not all the units were arranged very logically and they have been better integrated. We streamlined business processes. I think the Committee has already had evidence in the past about innovations like the so-called smart front end filter mechanism at the front end of the process. We are giving staff better training in export control so that they are more flexible and deployable. The joined up working - this is a cliché but it is true in this case - of the government departments has become much better. The ECO is only one cog in the export licensing wheel. The support we get from the FCO, the MoD and DFID is crucial. The system as a whole is only as strong as its weakest link so it is not just a question of getting the ECO up to strength; it is a question of keeping everything together in tandem. I think we have become much better at that and we have put a lot of effort into outreach to exporters to improve the quality of the applications they put in to us in the first place, which helps. Q140 Linda Gilroy: When we had evidence on 31 January from representatives of the industry, they told us that because of staff cutbacks there were no longer any in-house capabilities to provide expert guidance on encryption matters. Is that right? Why did you make that particular cut and are there other areas of technical expertise that are no longer available? Mr Williams: We have expertise at our disposal. It does not need to be always within the ECO. For encryption we can go out to GCHQ and the MoD, for example, and solicit advice from them. I have no worries about our ability to tap into expert advice that we may need. Q141 Linda Gilroy: You can get that and commission it from other departments. What is SPIRE? Mr Williams: That is the IT programme. Q142 Linda Gilroy: That is an acronym of the IT? Mr Williams: Yes. Q143 Linda Gilroy: The ECO currently has plans to reduce the head count by a further ten posts as the information technology changes are fully implemented? Mr Williams: Yes. If I can bring the Committee up to date, the current head count is 110. Substantively, that is 115 because we have five IT experts who are effectively working for us, who have been transferred to the centre at the DTI. We expected that further IT investment might allow us to reduce the head count by, say, another ten but I cannot guarantee that because that depends on exactly what form of IT investment we decide we can afford and implement. Q144 Peter Luff: Can I ask two questions of the director and the Minister? Can I ask the director, first of all, how much enthusiasm is there for work in your organisation? When I was a specialist adviser at the DTI, it was regarded as something of a pariah status for the rest of the department because it did not do policy; it just administered which was a very dreary task for civil servants. That was a problem then but now there has been cut upon cut upon cut. You must be a very demoralised bunch of people. Mr Williams: Not at all. I have a tremendous staff and I am very proud of the achievements that they have made over the last three years. It is not true that we do not do policy. Much of the discussion within your Committee is about policy. We are responsible for the legislation. It is true the FCO and the MoD obviously in many ways lead on policy but the DTI is responsible for legislation, the Export Control Act and all the regulations made under it, all the EU stuff, all the sanctions legislation, and there are some important issues. Q145 Peter Luff: You are satisfied with the morale of your staff in these rather difficult circumstances? Mr Williams: The whole of the DTI has faced cutbacks and we are not immune from that. We are not a special case in any respect. Malcolm Wicks: The ECO is regularly set challenging and detailed questions by this Committee which stimulate of course. Q146 Peter Luff: You have one of the most important jobs in government at present as Minister for Energy. How much time do you spend on the ECO? Malcolm Wicks: I certainly spend a great majority of my time on energy policy which, wearing one hat, would no doubt please you but I do not neglect my other responsibilities and this is one of them. When I talk to officials in the ECO, yes, like any other area of government there is an amount of administration and, I guess, routine work to go through but officials are very much aware that they are at the forefront in dealing with some immensely important issues of national concern. I think they take their work very seriously, as I do. Q147 Peter Luff: You are happy that your day job as Energy Minister does not get in the way of an effective supervisory role for the ECO? Malcolm Wicks: Yes. Q148 Chairman: How much was the ability to cut staff made easier by the fall in the number of standard individual export applications? I think they fell by about 13 per cent in 2004 and it clearly required more effort to evaluate an application for open licences. Malcolm Wicks: You probably have the data that I have on this. There has been something of a fall since the early part of the century, I suppose I could say. There were about 9,000 SIELs processed in 2004 and a similar number in 2005, while the number of multiple ones issued had a blip upwards in 2004, which I am advised was for technical reasons, but I think they have been relatively steady as well. I know the Committee is concerned about this but when I look at the data does it bear it out, Chairman? Q149 Chairman: In terms of applications received, yes, it does bear it out. Do you accept that the greater use of open licence does reduce transparency? Malcolm Wicks: Yes. We need to balance here the number of applications against the numbers issued, yes, and the ones issued - the OIELs, the multiple ones - has been fairly steady, I believe. Q150 Chairman: I am assuming that the ECO staff deal with applications. Malcolm Wicks: Yes. Q151 Chairman: The figures that we have indicate a very substantial decline in SIEL applications. That would seem an obvious way in which it would be possible to save staff without too many dire effects elsewhere in the system. What has happened is that we therefore have a higher proportion of applications being open licences which you have accepted reduces transparency. We do not have data on volumes and values and so on. I do not know whether you regard this as a problem in a way that some members of this Committee might regard that as a problem? Malcolm Wicks: The short answer is no, but I will let Mr Williams answer. I hope that we have the same statistical table in front of us. The number of SIELs processed has gone down. In 2000 it was about 10,500. Q152 Chairman: We have got it from page 20 of the annex in the document you gave to us. Malcolm Wicks: I have got it going down from 10,500 number of SIELs processed in 2000. Q153 Chairman: I am talking about applications received. Mr Williams: As we have seen in the process there is a slight difference but not much. Between 2000 and 2003 the number of SIELs processed or received was in the 10,000s and something. In 2004 and in 2005 it was just over 9,000, so there has been a drop of just over a thousand. It has been stable. Q154 Chairman: At around ten per cent. Mr Williams: Yes. It has been stable in 2004 and 2005. The number of OIELs which were received, processed and issued has been stable, except that in 2004 the number received went up from the 600s to 806. I think that was linked to the advent of the new controls with companies getting in open licence applications in advance of those coming into force. Q155 Chairman: There are two separate issues, are there not, between what has happened and what your attitude is towards what seems to be a greater use of open licences. We have heard what you have said and we will, as a committee, think further on that and perhaps even have a recommendation on that issue as well, Minister, who knows? Malcolm Wicks: We look forward to that. Q156 Chairman: We look forward to drafting it as well. Malcolm Wicks: If it is a ten per cent decline or whatever it is, then it is ten per cent. Chairman: That is quite a lot of staff I would have thought, but there we are. Q157 Mr Crausby: I would like to ask a couple of questions on how responsive the open licence system is to security concerns. For example, let's take a UK company exporting computer components to a company within the EU under an Open General Export Licence. Then the recipient country's security services discover that the company has been taken over by a terrorist organisation. The computer components would then obviously be of some concern. Firstly, how would you stop the UK company exporting further components? Secondly, will the ECO have records of other UK companies and their exports to that initial front company? Malcolm Wicks: The short answer to the first part of the question is that if we became aware that someone in the UK was trying to export to a company that had been taken over by a terrorist organisation, then they would not be given a licence. That must be the simple answer, Mr Williams, must it not? Q158 Mr Crausby: The point I am making is that these things move on part-way through. How do we deal with that? Malcolm Wicks: Do you mean if after the licence has been granted? If it had already been exported then it has been exported, I guess, but it would not happen again. Q159 Mr Crausby: How would we do that? We would clearly clamp down on that. What information would we have on other UK companies? Would the information be available that other UK companies were exporting into that front company? Mr Williams: If you are talking about exports under an individual licence, we can revoke the licence if the export has not already gone. We would ask the authorities in the other country to see what they could do at their end. We would put that end user on our watch list to ensure if it came up in future it would get a red flag in the system and we would not issue a licence to it. Q160 Sir John Stanley: How are we picking up electronic devices that could be used as triggers for explosions? Malcolm Wicks: Technically I do not know the answer to that. Mr Williams: When you say "picking up"? Q161 Sir John Stanley: Catching them in the control system. Mr Williams: There are certain trigger devices which are controlled. I am not expert enough to tell you now what they are and where they are on the control list. We would have to give you a written answer on that. Sir John Stanley: If you would, please. Malcolm Wicks: I imagine it is a difficult area because presumably a lot of rather innocuous things could be used as trigger devices. Q162 Sir John Stanley: It is an important area and that is why I am asking the question. It is a crucial area. Malcolm Wicks: I am not technical either, but it is a question of what you then have to stop, I guess, but let us look at that. If we can write to the Committee, Mr Chairman, on that we will probably have something useful to say. Q163 Chairman: Yes, we would be grateful. Malcolm Wicks: Can I just go back to the earlier question because recently there has been a development on Iranian end-users of concern. The purpose of a list is to alert UK exporters to end-users that we are concerned about in Iran. That is an example of how, when there is a concern, we disseminate that concern to appropriate companies. Q164 Judy Mallaber: When representatives of the industry gave evidence to us in January they cited a very worrying case which highlights a very difficult problem which is hard to resolve which we would like to explore with you. Their case was about a car dealership which had a very large order from a country, to which they did not normally export, for certain components, and the company was puzzled by the order so they checked up on it and it turned out that the reason was that the components were ideally useable in low-grade, low-cost missile systems. We understand that the order did not go ahead. That company was clearly very on the ball. What was alarming was that, without any knowledge of, or intention to breach, the Export Control Act, that could easily have gone through. How do you reach sections of British industry which have never regarded themselves as defence manufacturers and who could unwittingly supply components for military systems? I realise that is a very difficult issue and I wonder how you tackle that? Malcolm Wicks: Obviously we know about this case, so again if I could ask Mr Williams to answer that point? Mr Williams: We have within the EU Dual-Use Regulation the so-called 'catch all' control, end-use control, which allows us to make something licensable which is not otherwise licensable where it may be going into a WMD programme. I am not familiar with the specifics of the car parts case, but there is a frequent problem which is that proliferators, having been denied access to controlled goods because of the export licensing rules, will seek goods which are slightly less sophisticated and which are not normally controlled; things like machine tools which have three axis instead of five axis. In a way that is a good thing because they are having to procure sub-optimal goods. We essentially use intelligence which is our source of information about these things and then we will target awareness accordingly. It is not sensible to target the whole of the UK car dealers for the sake of one case, but if we heard about something like that then we would home in on it. Q165 Judy Mallaber: You clearly have the powers to deal with it, but does it not just show the weaknesses of the system? Are you just dependent on somebody fairly on the ball picking it up within the industry? Malcolm Wicks: As I said earlier, we have to act on intelligence but, put the other way, how difficult would it be - you are talking about car parts, which are fairly common - to make sure that every car part going to country X does not end up two stops later in country Z. There is an issue about proportionality here, is there not? The only safe way to do it would be to ban all exports from the country more or less. At the end of the day, Mr Berry, there will be - when I say anecdotal evidence, I do not mean that pejoratively - I mean important evidence where things do not go right and things get through or are exhibited at exhibitions. The more general issue is whether we have got any overall worrying evidence from intelligence, customs stops, what has been found or not found in Libya and Iraq, what we know about AQ Khan, all of that to suggest that our system at the moment is not doing a reasonably good job. That is one of the judgments we need to bear on this and weigh it against the important specifics that inevitably are brought to us and brought to a committee like your own. Q166 Judy Mallaber: More generally, the representatives gave us an estimate of how they saw the size of the problem because of the Act and they said that some years ago the DTI estimated in the region of 35 per cent of UK companies who should be applying for export licences were not. Malcolm Wicks: Who gave that estimate? Q167 Judy Mallaber: This was the representatives of the industry at the January meeting, EGAD. They said that your estimate was 35 per cent of UK companies should be applying. That was some years ago and I am not sure exactly when. Does that sound like a plausible figure still? Malcolm Wicks: First of all, through you, Mr Chairman, it is not our estimate. We believe, but I am not sure that we are absolutely certain, that it is an ex-ECO staff member - we think we know who - who estimated that it is 35 per cent of UK customers. I am advised that he did work for ECO about 15 years ago. Q168 Chairman: That is what your current estimate is? Malcolm Wicks: We do not have a current estimate. Q169 Judy Mallaber: Can you make a guess? Malcolm Wicks: No. Q170 Chairman: If there is no current estimate then I think we ought to move on. Malcolm Wicks: Mr Chairman, my current judgment, as I alluded to earlier, is that given what we know about the general situation in terms of Iraq and Libya and the things I have mentioned, my judgment is that we are doing pretty well. Are we perfect? No, we are not. I would be interested in the Committee's judgment as to how you weigh the anecdotal and specific cases against the overall picture. That is the issue. Q171 Judy Mallaber: Your judgment would not be that this is an endemic problem. Malcolm Wicks: It is not an endemic problem. I am agreeing with you that that is my judgment. Q172 Richard Burden: Given the problems that you have identified on a couple of occasions now of identifying exactly what is or what could be a dual-use item, could you tell me is there written down anywhere any criteria for what should be included on the list of dual-use items of regulation and, secondly, who adds items to that list? Mr Williams: The EU Dual-Use Regulation has a specific list attached to it - the annex - those are the goods for which you require a licence in order to be able to export them. Does that answer your question? Q173 Richard Burden: How do you actually get something added to the list and who would do it? Mr Williams: There are the International Export Control regimes such as Wassenaar, the Nuclear Suppliers' Group, the Australia Group and MTCR.[2] They are the four in which the experts decide to negotiate on what should be controlled or de-controlled as well and then that is transposed back into the EU regulation that then takes effect in UK law for the dual-use. For the UK military we do it directly ourselves into our military list. Q174 Richard Burden: Do you think it works? Are you happy with the way that whole process works? Mr Williams: Yes. The important point is that it has to be an international process because obviously if we are doing one thing and other countries are doing another it is not going to be very effective. It has got to bring in the international community. Globalisation is mentioned. Q175 Richard Burden: I am just saying whether that process, which seems a bit long and drawn out, works? Mr Williams: Yes, it is long and drawn out. There is an annual cycle. The control lists are there and they exist all the time. They are being added to and subtracted from annually but the fact that that annual process might be drawn out I do not think matters. I do not think there are gaps in the control lists that are causing these difficulties. Q176 Malcolm Bruce: Is there a danger with small companies very often who are innovative in their own area - I am talking about reputable companies not trying to export illegally - who might not fully appreciate these dangers where things might go as second or third user? Is there some kind of promotional campaign you could or should run to alert companies in that situation that they should seek guidance? Malcolm Wicks: In general we are doing a great deal on that. A lot of outreach work, seminars, DVDs and all the rest of it. That is a very important point because I am generally aware, but not least from my work with my energy portfolio, that some of our best and most entrepreneurial companies in terms of science and technology are often preciously small and many could be forgiven for not knowing about this particular legislation. We have got to ensure that they do know about it because they could be at risk of being hoodwinked into wrong exports. We do need to reach them and we are doing our best. That is a very important point. Q177 Mr Borrow: Following on from that, in the evidence we have received before there is only one full-time post at the ECO dedicated to outreach work for the UK industry and two staff supporting the website and telephone helpline. Do you think that is sufficient, given the scale of the problem and the complexities that we have been hearing about? Mr Williams: There are two members of staff who work full-time on organising and running the seminars and training sessions that we do for exporters. We bring in other staff from around ECO and MoD, FCO, Customs, to support those activities. It is slightly misleading to home in on the figure of two, but that is enough for what we do. Q178 Mr Borrow: Following on from the gist of my earlier question, which was that if evidence comes to light as the new system beds down that resources are not adequate to do the job properly, whether the department would be prepared to look at representations seriously for improvements of further resources in this area? Malcolm Wicks: I have a note here that since June 2004 a total of well over 1100 individuals from 461 companies have attended various seminars and training courses run by the ECO. No doubt someone will say that is only X per cent of all the companies, but it does show that we are working quite hard in this area. Q179 Peter Luff: I have an issue with this discussion because one of the problems here is, say you were this car dealer and you did not know and you just exported them, that is obviously a problem you have to deal with in this promotional activity. If you had a suspicion at the back of your mind that there might be an issue, but you were quite strapped for cash and would not mind an export order, you would be tempted not to. If you thought you might take a long time to reach a decision on whether or not there is an issue here, how quickly would you have turned round that car dealer's enquiry when he made it to you? If he made a tentative enquiry saying "I think I may need a licence. What is your advice?" what would be the timescale? Mr Williams: Our target is to turn around 70 per cent of such applications within 20 days. 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 per cent 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 per cent 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. [1] Defence Systems & Equipment International Exhibition [2] Missile Technology Control Group |