3. THE GYROCOMPASS CASE
Kevin Davis (HMRC) gave a second presentation, and answered questions,
on the recent gyrocompasses case in which a UK businessman of
Iranian descent, Mehrdad Salashoor, (MS) received 18 months imprisonment
and a £432,970 confiscation order in relation to the commission
of four export control offences and perverting the course of justice.
He explained that the gyrocompasses were dual use goods in that
they could be used in maritime navigation and as internal components
of ballistic missiles. MS was a UK resident and a regular exporter
of marine equipment to Iran.
Timetable of the case:
3 May 2006: MS sought advice from BERR on the proposed
export of gyrocompasses "to Azerbaijan". BERR advised
that an export licence was required.
26 May 2006: 11 gyrocompasses were exported to Malta. Because
Malta was an EU destination (for the purpose of dual use goods)
no export licence was required. The Maltese intermediary submitted
Customs documents to tranship 11 gyrocompasses to Iran. On the
basis of local risk assessment the Maltese Customs selected the
goods for examination and sought assistance from UK on license
ratings. BERR advised Malta that the items were controlled and
the Maltese company applied for an export licence to ship gyrocompasses
to Joalee Marine, Iran. The application was refused. The Maltese
company requested to send gyrocompasses back to MS in the UK and
the Maltese authorities granted an export licence to UK.
5 July 2006: 11 gyrocompasses were sent back to UK.
20 July 2006: 6 were sold by MS back to the manufacturer.
23 July 2006: 2 were exported to Norway without an export
licence.
24 July 2006: the 2 gyrocompasses were diverted to Joalee
Marine, Iran. (The remaining three gyrocompasses were under HMRC
control in the UK.)
Mr Davis continued that on 28 July 2006 MS was interviewed by
HMRC. He had produced e-mails and correspondence to demonstrate
how he had been deceived by shady middlemen and how he had attempted
to stop the goods leaving Malta when he heard about the Iranian
deal. These were later forensically proved to have been concocted
in a deliberate attempt to mislead the authorities. The investigation
also established that there had been six previous exports to Iran
via Malta which included three gyrocompasses and pumps, the later
being licensable under WMD end-use control. Additionally, the
French manufacturer of the gyrocompasses had been given a false
end user certificate from "Azerbaijan". The investigation
also revealed a dichotomy in the interpretation of dual use regulations
at the time; the British Government considered the gyroscopes
to be controlled under Dual Use Regulations whereas the French
did not.
As a result of a joint operation in UK and Norway evidence of
shipment to Iran had been obtained for the UK prosecution. Investigators
also established that MS's claim that the gyroscopes were to be
fitted to vessels berthed in Oslo was false - the ships did not
exist.
The Norwegian shipping agent was under local investigation for
a false transit declaration. The agent had declared the goods
in transit whereas they had actually been sent to the agent's
shed for repackaging and relabelling.
MS was arrested and charged and on 11 December 2007 and had pleaded
guilty to the aforementioned offences.
HMRC cited that this was an excellent example of international
cooperation and considered that it would be a deterrent to proliferation
networks.
4. THE NATIONAL CLEARANCE HUB AT SALFORD (NCH)
Lee Barham (HMRC) gave a presentation, and answered questions,
on the National Clearance Hub (NCH) at Salford which was the single
centralised site replacing Entry Processing Units (EPU) previously
located at all major air/sea ports. The hub was designed to provide
a consistent, seamless clearance system for imports and exports
within defined timeframes with minimal manual intervention.
Mr Barham explained that the NCH had primary customs responsibility
for:
- the inputting of manual import and export entries to the Customs
Handling of Import and Export Freight (CHIEF) declaration processing
system;
- the inputting of manual requests for export arrival and departure
loading information;
- all import and export entries selected for further checks;
- issuing import and export examinations to Detection Officers
at the Frontier;
- controlling un-entered goods for inventory linked ports and
airports;
- authorising and amending inventory records and removals; and
- issuing Customs Civil Penalties and Warning Letters.
He explained that CHIEF functioned as a system for license declaration
and verification, and allowed legal goods to be imported or exported
with minimal delay. If an importer or exporter was unaware of
the need to apply for an export license this would be detected
by CHIEF. CHIEF allowed the use of both risk analysis and specific
intelligence to be targeted on imports and exports.
Members pointed out that when the Export Group for Aerospace and
Defence (EGAD) had given oral evidence to the Committees on 20
March 2008 it said that the interface between CHIEF and SHIRE—the
Export Control Organisation's system—was not working correctly
(Qq 54-55, HC (2007-08) 254). HMRC did not recognise the problems
raised but undertook to seek further information from EGAD.[339]
Members also raised the concerns of the UK Working Groups on Arms
which in its oral evidence on 20 March 2008 had said that it was
almost impossible to monitor open general licences because of
the incompatibility between the way the HMRC database and the
Customs CHIEF system reported information and the way the Export
Control Organisation registered use of the licence. The Working
Group had asked HMRC whether cross-referencing was possible and
the answer that had come back was: "in the six months alone
to December 2007 that would involve the manual cross-checking
of some 8,000 individual references" and that "we have
no way on our system of extracting information about what has
been exported under these licences" (Q123, HC (2007-08) 254).
HMRC said that the system produced sufficient information for
their purpose but it would provide the Committees with a note.[340]
HMRC also undertook to provide the Committees with a note on monitoring
the Internet.[341]
May 2008
338
Mutual Legal Assistance Back
339
Subsequently supplied, see Ev 97, para 8. Back
340
Supplied subsequently, Ev 96 Back
341
Supplied subsequently, Ev 96 Back
