House of Commons - Defence

Select Committee on Defence Twelfth Report

1 INTRODUCTION

1. Since 1999 the Business and Enterprise (formerly the Trade and Industry),[1] Defence, Foreign Affairs and International Development Committees have worked together to examine the Government's strategic export control system and policies. This arrangement, which is now known as the "Committees on Arms Export Controls", enables the House of Commons to conduct ongoing scrutiny of a complex and controversial area of government policy.

2. Until March 2008 the arrangement was known as the "Quadripartite Committee", a name which arose from the fact that four select committees are involved in the work. While those who dealt regularly with the Committee understood what the Quadripartite Committee did, we considered that the name was confusing to those who were not familiar with its work. We therefore decided to drop Quadripartite and instead use a title that describes the work we do. From 10 March "Quadripartite Committee" was replaced with "The Committees on Arms Export Controls".[2]

3. Our Report this year follows the pattern of earlier years: a review of the policy, enforcement and the annual and quarterly reports on strategic export controls published since our last Report, combined with a detailed examination of a number of aspects of export control. We concentrate in detail on two issues which have featured in our, and our predecessor Committees', previous Reports. The first is the Government's Review of Export Controls, which we covered at length in last year's Report. This year's examination follows up the issues we raised last year. The second area examined in detail is the question of bribery and corruption in arms exports, which our predecessor Committees first reported on in May 2004.[3]

The Government's Review of Export Controls

4. As we noted last year,[4] in line with Cabinet Office guidance, the Government started post-legislative scrutiny of the orders and regulations—"secondary legislation"—made under the Export Control Act 2002 in 2007 as these orders and regulations had been in force by then for three years.[5] The review process started in June 2007 when the Government published a consultation document, 2007 Review of Export Control Legislation,[6] and the latest indication is that the final tranche of legislative changes arising from the Review should be enacted in April 2009.[7] The Review is being carried out by the Export Control Organisation (ECO), in consultation with other interested departments and parties.[8] The Government explained that the Review would be carried out according to Better Regulation principles as set out by the Cabinet Office[9] and "will provide a useful opportunity to take stock of existing controls".[10] The review process therefore looks likely to take about two years and, with the encouragement of the Government,[11] we are keen to make a full contribution. Hence we are returning to the issues thrown up by the Review in this Report.

5. Responses to the Government's 2007 Consultation Document were invited by 30 September 2007. In our Report, published in August 2007, we were able to set out conclusions and make recommendations to the Government which addressed those matters on which the Government had invited views. In addition, we set out conclusions and recommendations on matters which we considered needed to be addressed as part of the Review but which were not addressed in the 2007 Consultation Document. The Government published its Initial Response to the 2007 Consultation on 6 February 2008.[12] We invited evidence from interested parties on the Review and took oral evidence from Malcolm Wicks MP, Minister for Energy, Department for Business, Enterprise and Regulatory Reform (BERR), who has responsibility for export controls and the Review. Both industry[13] and the non-governmental organisations[14] were complimentary about the review process—in particular, the Government's "willingness to engage with external stakeholders in a serious and open manner"[15]—and both, though the non-governmental organisations had reservations about the scope of the Review,[16] welcomed the Initial Response.[17] The Minister told us that he would "continue to involve the Committee as fully as we can in the review and we will shortly send the Committee the draft legislation to implement the next set of changes [and later] in the year we will send the Committee the draft legislation to implement the further changes".[18]

6. The outcome of the 2007 Review of Export Controls will consist of three tranches of legislation. The first, which is now in force, was the Export Control (Security and Para-military Goods) Order 2008[19] which extended the controls to cover the export of, and trading in, hand-held, spiked batons, known as "sting sticks". In our Report in 2006 we called for such a change.[20] We conclude that the Government is to be commended for bringing forward the Export Control (Security and Para-military Goods) Order 2008, to prevent the export of, and trading in, sting sticks.

7. The second order is the Trade in Goods (Categories of Controlled Goods) Order 2008, which extends extra-territorial controls on trading in arms. It will come into operation in October 2008. Although we raised no objection to the Order, we had concerns about the length of time we were given to comment on the Order, which are set out at paragraph 14 below, and see also Annex 1.

8. The third tranche of legislation is likely to be less straightforward than the first or second and it has not yet been finalised. According to the Government, not only will it consolidate the earlier changes but "a further change—to extend extra-territorial trade controls to light weapons—will come into effect in 2009, and it is possible that other changes may also be announced."[21] The main focus of our work on the 2007 Review of Export Controls is therefore on the contents of the third tranche of secondary legislation.

Allegations of bribery and corruption

9. In 2003 our predecessor Committees requested and received—in June 2003—a memorandum[22] from the Ministry of Defence (MoD) commenting on allegations that since the 1970s its defence exports services organisation had condoned and facilitated defence exports to the Middle East which were tainted with corruption.[23] The MoD rejected the allegations.[24] The allegations resurfaced in 2006[25] and a number of assertions appeared in the media quoting a former defence minister in the 1970s as saying that the UK had bribed senior Middle East officials to secure arms contracts.[26] We put these further allegations to the MoD which replied that the "facts given to the Committee in [the 2003] MOD Memorandum were accurate, both as they related to the practices […] at that time and, from the records we have identified, in relation to practices at earlier times."[27]

10. In 2007-08 the Campaign Against Arms Trade (CAAT) and Nicholas Gilby made further submissions[28] to support the allegations concerning bribery in the 1970s. The examination of events which occurred over 30 years ago is not the usual staple of select committees. Neither ministers nor civil servants currently in post have first-hand knowledge of—or direct responsibility for—events 30 years ago and many of those with such knowledge are no longer alive. There is now, however, some material available in the form of the documents at the National Archives. Both CAAT and Mr Gilby and the MoD offered their views on this material. In view of the passage of time we decided that, rather than embark on a general and lengthy review of contracts for the supply of arms to the Middle East, the best course was to focus on one case and this is done at chapter 6. It was our intention in embarking on the exercise to use our examination of the evidence to inform arrangements for tackling bribery and corruption in the future.

Review of annual and quarterly reports on strategic export controls

11. We have reviewed the quarterly reports on strategic export controls issued since our last Report. We had hoped that for the first time to be able to "catch up" on our review of annual reports on strategic export controls. In the past the Government produced the annual report about seven months after the end of the calendar year around the time (in July) that we are usually finalising our Report. This has meant that we have not been able to carry out any detailed scrutiny of the annual report until the following year. This year the Government indicated that it would produce the 2007 Annual Report on Strategic Export Controls in May 2008.[29] In the event it was not able to produce the 2007 report by the time that we concluded our deliberations. The latest indication we have is that the 2007 Annual Report will be produced in July. This is no improvement on previous years. Our Report this year is limited to a review of the 2006 Annual Report on Strategic Export Controls.[30]

12. As well as the process of taking oral and written evidence on policy and the operation of the legislation, we have continued to explore issues raised by particular licences; we have, for example, assessed whether there has been any inconsistency in the issuing and refusal of licences to a particular country and whether other licence approvals or refusals for which the rationale is not obvious have been determined in accordance with the EU Code of Conduct on Arms Exports and the UK's National Export Licensing Criteria.[31] This process is detailed and, necessarily, often confidential, though where the Government has provided a response without a security marking we have published it.[32] We have drawn on the information received to make points on policy issues, and we shall keep certain cases under review.

1 In November 2007 the Trade and Industry Committee was replaced by the Business, Enterprise and Regulatory Reform Committee (Votes and Proceedings, 25 July 2007, pp 208-209), the name of which was shortened to the Business and Enterprise Committee in March 2008 (Votes and Proceedings, 11 March 2008, p 370). Back

2 See "Quadripartite Committee renamed the Committees on Arms Export Controls", Quadripartite Committee press notice 2007-08 No. 03, 4 March 2008. Back

3 Defence, Foreign Affairs, International Development and Trade and Industry Committees, First Joint Report of Session 2003-04, Annual Report for 2002, Licensing Policy and Parliamentary Scrutiny, HC 390, Ev 34 Back

4 Defence, Foreign Affairs, International Development and Trade and Industry Committees, First Joint Report of Session 2006-07, Strategic Export Controls: 2007 Review, HC 117, para 2 and following Back

5 HC Deb, 16 March 2006, col 521WH; HC Deb, 4 May 2006, col 1751W Back

6 Export Control Act 2002: 2007 Review of Export Control Legislation: A Consultation Document, Department of Trade and Industry, June 2007 at http://www.berr.gov.uk/files/file39949.pdf (hereafter the "2007 Consultation Document") Back

7 Q 134; Ev 68 Back

8 HC Deb, 4 May 2006, col 1751W Back

9 Departments of Defence, Foreign and Commonwealth Affairs, International Development and Trade and Industry, Strategic Export Controls: HMG's Annual Report for 2004, Quarterly Reports for 2005, Licensing Policy and Parliamentary Scrutiny Response of the Secretaries of State for Defence, Foreign and Commonwealth Affairs, International Development and Trade and Industry, Cm 6954, October 2006, p 3 Back

10 Cm 6954, p 1 Back

11 Defence, Foreign Affairs, International Development and Trade and Industry Committees, First Joint Report of Session 2005-06, Strategic Export Controls: Annual Report for 2004, Quarterly Reports for 2005, Licensing Policy and Parliamentary Scrutiny, HC 873, para 17 and Q192 Back

12 Export Control Act 2002: Review of Export Control Legislation (2007) Government's Initial Response to the Public Consultation, Department for Business, Enterprise and Regulatory Reform, 6 February 2008, at http://www.berr.gov.uk/consultations/page39910.html (hereafter the "Government's Initial Response to the 2007 Consultation") Back