Committees on Arms ExportsLetter to the Chair of the Committees from the Rt Hon Vince Cable MP, Secretary of State for Business Innovation and Skills

Thank you for your letter of 17 January regarding a report in The Independent newspaper of 22 December 2011. The report alleged that a British-flagged merchant vessel—the Thor Liberty—had been impounded in Finland because it was suspected of carrying a cargo of explosives and surface-to-air missiles to China in breach of Finnish export control law and, as you suggest in your letter, in breach of the EU arms embargo on China. You also ask whether there has been a breach of UK trade controls. I am pleased to be able to set the record straight on this story.

The Thor Liberty is registered in the Isle of Man but it is owned and operated by a Danish company, Thorco Shipping NS. This company does not have an office in the UK and is not registered at Companies House. According to other media reports the ship’s captain and crew were Ukrainian. I have seen no reports suggesting that any UK person—as defined in the Export Control Act 2002—was involved in any way in the transfer or supply of these goods. It follows that there can have been no breach of UK trade controls.

Turning now to the vessel’s cargo, the “160 tonnes of explosives” comprised a consignment of a substance called picric acid. While this is indeed used as an explosive it is not listed in any UK or EU strategic export control list. A licence is therefore not required under strategic export control legislation for the export of picric acid from the UK or the EU to any destination, and export of this substance to China would not be a breach of the EU arms embargo on China.

Surface-to-air missiles do of course require an export licence. However the 69 Patriot missiles were actually being exported from Germany to South Korea. The German government has stated that these missiles were the final consignment under a long-standing agreement between the two countries and while all necessary export licences had been obtained before the goods left Germany it seems that there was no transit licence in place to allow transit of the goods through Finland. The Finnish government has confirmed that a transit licence has now been issued so that the missiles may be delivered to South Korea.

I trust that this is sufficient to reassure you that there has been no breach of UK trade controls and no breach of the EU arms embargo on China.

I am copying this letter to William Hague and the Director of Public Prosecutions.

2 February 2011