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22 Feb 2007 : Column 164WH—continued

The Congolese war economy revolves primarily around two things: the transnational trade in arms and the trade in natural resources. Deals are struck between influential businessmen, politicians and high-ranking military officers on one side, and multinationals on the other. Minerals and diamonds go out and arms come in, through deals with businessmen and the brokerage that we are discussing. It is a complex trade, and part of
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the problem is that the conflict is over control of the natural resources, which are used to pay for the weapons to continue the conflict. We have to try to break that connection, but if we say that we are not going to deal with brokerage—the Leonardo DiCaprio character in “Blood Diamond”—or say that it is important, we will not be able to do so. If we do not look at how the trade operates, we will not tackle the problem.

In the case of the DRC, weapons enter the conflict zone primarily from Bulgaria, Serbia, Bosnia and Herzegovina, and Montenegro through Rwanda, Tanzania and Uganda, often via official networks. As part of any international arms trade treaty, we will also need to give assistance to some of those interim countries to get a grip on that trade. That will be a complex task, but it is important to consider the mechanisms for that as part of the international arms trade treaty. The all-party group’s report was done by a Belgian-based international think tank called the International Peace Information Service or IPIS. Although there is an arms embargo, there is evidence that the trade is continuing through eastern Europe and those other countries into the DRC. The issues that we need to take up to ensure that UK individuals and companies are not trading should also feed into the international treaty in relation to the other countries that are involved.

As we know, the issues are complex and quite hard for us to get to grips with, but it is important that we deal with them. However, I was heartened that the officials we met to discuss the international arms trade treaty took that on board. For instance, we wanted to ensure a big human rights dimension within the philosophy of the international arms trade treaty. The minimum standards to prevent arms sales might include not exacerbating existing conflicts or aiding the commission of human rights abuses, but I also suggested including the relationship between financial exploitation and the exploitation of human resources and how that is used to finance trade. It should be important that we know how the trade is financed and where the money comes from. One of the officials to whom we spoke said that the proposed inclusion of brokering in the treaty—a heartening comment—would expose the financial transactions behind many elicit transfers of arms. It important that we make those connections.

I would like those issues to be within the international arms trade treaty, as well as the connected issue of good governance. The Government are trying to give considerable assistance to the new Government and Parliament in the DRC on good governance. The issue is critical, because states must have the ability to control their own borders and natural resources. They must also have the willingness and the desire to do that in the first place, which is a problem, but good governance is important. I hope that that will also be fed into the principles of the international arms trade treaty.

In “Blood Diamond”, the broker ended up becoming the good guy, going from Sierra Leone to giving evidence to something that became the Kimberley process. Under that process, everybody in
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this country must ensure that the diamonds that they go out to buy—even through apparently respectable sources—have not come from a conflict zone, where they might have been used to purchase weapons. I hope that everybody in this country will ensure that they know where any diamonds that they are about to buy have come from and how they have been financed. It should be a criteria in the international arms trade treaty that people know where the money comes from to do the deals in weapons, because those connections lead to such horrendous, appalling conflict and trauma.

The DRC is undergoing the first International Criminal Court trial of one of the warlords, Thomas Lubanga, who is being indicted for recruiting child soldiers, which is a horrendous problem in all those countries. Again, he could have got the weapons only through some fairly unsavoury trade. We need to ensure that the mechanisms that finance and service that trade are fed into the work that we do, and that we consider the issue of brokerage in both the international arms trade treaty and the work that we do in controlling our own citizens. I do not know whether our citizens have been involved in that evil trade. It is perfectly possible, but at the moment we do not necessarily have the will-power, knowledge or commitment to try to take that on board, difficult as it is.

I am pleased to have been a member of the Quadripartite Committee. The process is absolutely fascinating, and I hope that we shall be able to do much more good work. I urge Ministers to take on board the useful recommendations in our report. I thank my fellow members of the Committee, our Chairman and our Clerk for the work that has been done. I look forward to carrying on that work in the future.

4.6 pm

Malcolm Bruce (Gordon) (LD): I want to make a few comments, but first I want to pick up what the hon. Member for Amber Valley (Judy Mallaber) has said. She will be aware that the Select Committee on International Development published a report on conflict resolution and went to the DRC, as well as Sierra Leone and Uganda. In our report, we highlighted the concern that international companies, some of which were identified as British, were trading in minerals that were, knowingly or unknowingly, being used to sustain warlords and civil wars. One of the ironies of the DRC is that, if it were not rich in resources, it would not have had such a devastating conflict or be such a failed state, and the people would not be so poor. The DRC is a classic case where wealth has caused poverty and hardship, as well as death and destruction.

The hon. Lady should also be aware that my Committee was concerned that the United Nations should investigate and draw up a list of companies that it at least suspected of having engaged in trade in conflict resources in that region and ask the relevant host Governments to investigate those allegations, but our Government failed to do so.

One witness came before our Committee—to be fair to him, he came to us perhaps rather naively—and gave answers to our questions that revealed that, at the very
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least, he was not too interested in finding out where materials had come from or who he was transacting with, even in relation to his operating licence, which turned out to be under the control of the rebels rather than the official Government. His argument was that they were operating from the same office, so he just paid the fee. The consequence of that was that he was able to say, “Oh, well, my case was resolved.” When the United Nations was asked what “resolved” meant, the answer was, “Well, we couldn’t take it any further”, not that the case had been investigated or that there was no case to answer. Frankly, nothing had been done.

We also asked that witness what the Department of Trade and Industry had said to him when it investigated him. He said, “Who are the DTI? I’ve never had any conversations with the DTI. They’ve made no investigations, either informally or formally, and had no engagement or conversations with us as a company.” My Committee intends to take evidence from the DTI to ask why, when such allegations are put into the public domain, it does not follow them up.

The right hon. Member for Tonbridge and Malling (Sir John Stanley), in his inimitable style, explained in huge detail his concern about the obvious misuse and misappropriation of weapons and the dilatoriness with which we appear to take action to bring them out of the system. Of course, people can argue that it is perhaps somewhat strange to talk about a qualitative analysis of weapons of destruction—arms are designed to destroy and kill—but we have international codes and practices and we have the Geneva convention. Also, we accept that certain weapons are more offensive than others, and there are international agreements not to deploy them. Given that, the issue should be rigorously pursued. The right hon. Gentleman is right to be so assiduous in demonstrating how often that has been called for and how lacking the response has been.

It so happens that today marks the public announcement of the £1 billion profit made by BAE Systems, the biggest British arms manufacturer. Many people, and possibly many pension funds, will rejoice at that as it will yield dividends to shareholders, and I am sure that much of it is testimony to British technology and capacity. However, problems are associated with such profits. One is the suspension of the investigation of the Saudi situation, which has left a cloud over how the company does business—and that is not the only investigation relating to it.

I make a positive point in saying that if the United Kingdom is to be engaged in the international arms trade—obviously, there are people who wish that we were not at all—and if it is trying to adopt and promote high standards, it needs to ensure that its major contractors are free from taint. I have to tell the Minister right now that that simply cannot be said. That is why we think it really important that the Minister and the Government accept the Committee’s recommendations in a constructive spirit—in other words, try to get a system together that will make the trade more transparent, more controllable, more respected and perhaps more respectable in the end. That is what we are trying to do.

I chair the International Development Committee, and obviously there are development issues of particular concern to me and the members of my
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Committee. One is the extent to which we should be selling expensive arms to countries that cannot afford them. The Saudi investigation has been abandoned, but the investigation of the sale of the air traffic control system to Tanzania is ongoing. More than anything else, the argument about that was that a very expensive system was being sold to a very poor country and that there was no evidence that that was sustainable or was making, or could make, any contribution towards poverty reduction. I do not want to prejudge the result of the inquiry, although others have made their views about the circumstances pretty clearly known. Indeed, at the time, many people clearly stated that the sale was inappropriate.

In 2005, I think, the United Kingdom sold £1 billion of arms to Africa. For those of us who support our international development obligations, that raises real questions whether that is consistent with our objective to eliminate poverty in Africa and tackle its very real problems. The poor people whom I and many others visit when we go to Africa simply want the opportunity to get out of poverty. Are they well served by Governments who buy arms from us on that scale? That is an important question. We need a clearer steer on what is happening.

Reference has been made to the role of arms brokers, which our Committee and organisations such as The Corner House and the consortium on arms think critical. That is the grey area where everything gets hidden—what is being exported, from where, to whom, to which third party and whether the lubricant of bribery is being used, whether simply for procurement purposes or for subverting licensing and regulations. The Committee’s recommendation that the Government should consider taking tighter control of the role of brokers and extending jurisdiction over British nationals abroad in that sphere should be seriously considered. It is easy to hide information in third countries.

The issue of dual use is particularly pertinent to me, as I represent a constituency heavily engaged in oil and gas exploration, development and production. We will all surely be mindful of the fact that the arms to Iraq scandal centred on supposed oilfield equipment—actually components for making a supergun—being exported to Iraq. In case of misunderstanding, let me be clear: I do not believe that the companies, big and small, engaged in the oil and gas industry in my constituency are willingly or intentionally or in any possible way engaged in anything that converts oilfield equipment to arms. However, the problem, particularly for small companies that may be asked to provide components for what they would regard as perfectly legitimate oil or gas-related activities, is that it may not always be realised that such components could be adapted, subverted or in some way diverted for military use.

We had a good discussion in the Committee about the risks associated with that and the proactive nature of the Export Control Organisation in giving people access to information on the issue. However, it remains my view that more could be done proactively to ensure that companies appreciate such risks, particularly if they get orders from unusual areas, and that they know that they can get advice to check the situation out. I think that 99.9 per cent. of companies would rather not
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accept even a profitable order if they thought that it would be misused in that way. They need to know that they have help available.

We all take the view that the exercise at the Department to consider the privatisation or part-privatisation of the Export Control Organisation was an untimely distraction that put a lot of pressure on the organisation and certainly depressed morale. One can say only that it ended happily, in that the Government realised—quite quickly, to be fair—that the proposal was neither defensible nor even sensible. We were pleased when the Minister in question admitted that it was not going to proceed. He expressed his personal satisfaction. I hope that such a thing is not proposed again.

I am not making an ideological point about the role of the private sector, but it seems to me that an organisation with a job as crucial as controlling what arms are exported from this country and where they go, and ensuring that they are not misused, is fundamentally a public policy agency that could only be compromised by being put in the private sector or even by being part-privatised. The Government have accepted that argument.

The hon. Member for Amber Valley rightly said that the issue is complicated and difficult for the Quadripartite Committee. That is why we need such a Committee. I commend its Chairman, the hon. Member for Kingswood (Roger Berry), and its other members who apply a little more assiduity than me to the complexity and the details of weapons systems and the means of regulating, licensing and so forth.

With the excellent support of its staff, the Quadripartite Committee does a really good job of putting pressure and focus on such issues. Nevertheless, it is exactly because the issues are both technically complicated and administratively so difficult that the risk of things going wrong is so high. We need to find simpler, more transparent systems that are more easily understood so that the alarm bells ring earlier.

It does not help when people get into a compromised situation in respect of jobs and UK arms exports. If we can manufacture weapons within an agreed system of international trade that develops technology, and provides jobs and export opportunities to the United Kingdom—and we do—I shall not complain in principle about that.

I was concerned, however, when some of my colleagues and I were giving evidence to the Organisation for Economic Co-operation and Development peer review about bribery and corruption, especially in the arms trade, by something said by the then Chairman of the Defence Committee, the right hon. Member for Walsall, South (Mr. George). A freedom of information note that I received from the civil service states:

I believe that the right hon. Gentleman had not quite appreciated the environment into which he had put
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himself. I should point out that I was at the meeting as well. When the report was published, he called me and asked if he had really said those things, and I had to tell him that he had.

Unfortunately, that is the problem that we get into. Many jobs and a great deal of money are involved, but that is exactly why we need clear, open and transparent regulation, and a rigorously enforced licensing system that people understand and that is likely to lead to prosecutions on a grander scale than we have had to date. The fact that there have been no prosecutions could be interpreted as a wonderful vindication of the absolute integrity of our system and British executives, but I do not believe that the public at home or abroad would accept that at present.

I can put no finer a point on it than this: it is in the interest of us all to get this right. As long as a cloud hangs over the British arms industry, our ability to provide moral leadership in international arms trade and treaties is diminished. I hope therefore that the Minister will take seriously that what the Committee is trying to do in different ways and by different approaches—it comes from different perspectives—is to help the Government come up with a rigorous system that works. However, that requires that our recommendations are properly dealt with, either by implementing them or by explaining clearly why they cannot be implemented or why things should be done differently. We would regard that as a perfectly constructive exchange.

4.22 pm

Susan Kramer (Richmond Park) (LD): I congratulate the Committee on its report, which, again, is of the high quality that its reports have consistently been, and on obtaining this debate. On behalf of my party, I am delighted fully to support the recommendations. Indeed, we wish that the Committee had been more vigorous at times, but we are definitely on that side of the picture rather than the other.

We also appreciate the evidence given to the Committee by many groups, particularly the UK Working Group on Arms, which has been good at keeping us all reasonably informed on the issues. It is an important balance to a sector that has powerful communications mechanisms. I pay tribute to the work that Saferworld, Amnesty International UK, Oxfam GB and the British American Security Information Council do to ensure that information comes out.

This is an important time to debate the report. We appreciate that the Government will begin a review of the Export Control Act 2002 in May. That is exceedingly timely, but it will be extremely important that the scope of the review is as broad as it needs to be, and that it covers all aspects of this complex set of issues and this complex trade. Also, the focus of the report will be critical. The Chairman of the Quadripartite Committee, the hon. Member for Kingswood (Roger Berry), defined two core areas of concern: loopholes and weaknesses, and enforcement. They are exactly at the heart of the issues that the review must address.

Let me first spend a few moments on enforcement, which has been less discussed in this debate, although it has been mentioned from time to time. I have been
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fascinated by answers to written questions that I have submitted to Ministers. I suppose that it is serendipitous that I happen to be speaking on behalf of my party today. In a question to the Chancellor of the Exchequer, I asked

That was an attempt to find out who has been successfully prosecuted. The answer was that there have been only six cases. In 2001-02, a party—the names are not given in the response to the question—was prosecuted for knowingly breaching the prohibition on the export of aluminium and other WMD-related items to Pakistan. The punishment was 12 months’ imprisonment, suspended for two years.

There was another success in 2003-04. The offence was exporting aluminium to Pakistan without a licence, and the fine was £1,000. In 2004-05, for an offence of knowingly breaching the prohibition on the export of aircraft parts to Iran without a licence, the punishment was rather stronger: 18 months’ imprisonment, suspended for two years; a ban from being a company director for 10 years; and asset forfeiture of just under £70,000. There was yet another success in 2005-06. The offence was exporting body armour to Kuwait, Iraq, Saudi Arabia without a licence. The fine was £10,000, plus £500 costs.

In 2006-07, believe it or not, there were two offences for which prosecution was successful and for which there was punishment. The first offence was exporting three consignments of body armour and helmets to Kuwait and Iraq during 2004 without a licence. The fine was £10,000, plus £1,600 costs. The second offence was exporting 10 consignments of military helmets and flak jackets to Kuwait for export to Iraq without a licence. The fine was £8,000, plus £500 costs.

I do not know how other people react to that list, but it strikes me that we must have the most extraordinary arms industry in this country—its integrity must be beyond that of any other industry.

Malcolm Bruce: I am listening closely to what my hon. Friend is saying, and I concur. It is worth adding that the UK Working Group on Arms, in a submission to the Committee in November, said that it had documents showing that arms brokers in the UK were involved in negotiations for arms deals to supply £2.25 million of arms to Sudan, and other British-based companies were involved in providing arms from Albania to Rwanda for the Democratic Republic of the Congo. The point is that those cases were not even investigated, never mind prosecuted.

Susan Kramer: I thank my right hon. Friend for those comments. There may well be other ongoing prosecutions. Indeed, we know about BAE Systems in Tanzania. I suppose that one could consider that to fall into this category, but there have been few prosecutions and punishments, at least to date. I find that exceedingly worrying.

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