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Lord Clinton-Davis: Of course I am reading. I am going to quote. Will he also indicate why a memorandum was sent by a senior civil servant in the Department of Transport criticising the BR vendor unit which managed the sale for,
Lord Mackay of Ardbrecknish: My Lords, I shall repeat the point I made to the noble Lord, Lord Harris of Greenwich. I am astonished that the noble Lord is also prepared to found his case on leaked documents. But never mind about that. As far as the sale is concerned, clearly if the cash had been removed from this company--the Eastleigh BRML--the price obtained for it would have been that much less because it was part and parcel of the assets and liabilities of the company for which the private sector and indeed the management buy-out, which was successful in this case, were bidding. The answer to the noble Lord is that if the cash had been removed the price obtained would have been a good deal less.
Lord Harris of Greenwich: My Lords, as the Government constantly proclaim their enthusiasm for open government, why was this procedure used in the first place? Why are the Government so secretive when it comes to issues involving taxpayers' money?
Lord Mackay of Ardbrecknish: My Lords, that takes us back to the original Question. I have to tell the noble Lord that there is nothing secretive about the rules I read out. They were contained in a number of letters. The most recent I have is one from the Treasury to the accounting officers of the departments dated 1988. What I have just explained was the subject of a parliamentary Answer in 1985 to Mr. Bryan Gould, who was then a leading member of the party opposite. In fact, the rules I expounded have been in operation with the NAO since its beginning. They were in operation in the preceding body, the Exchequer and Audit Department, for a very long time before that, including times during which the noble Lord himself was a Minister in the last Labour Government.
Lord Ezra: My Lords, it is difficult for some of us to follow what information is being provided to the NAO and what is not. Can the Minister unequivocally state that the Government regard the operations of the NAO as serious; that they will provide it with all the information needed to conduct its inquiries; and that they will treat the resultant reports with the gravity they deserve?
The Parliamentary Under-Secretary of State, Department of Transport (Viscount Goschen): My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.
Lord Strathclyde: My Lords, with the leave of the House, my noble and learned friend Lord Fraser of Carmyllie will repeat a Statement to be made at 3.40 p.m. in another place on the Scott Report. In order that the Statement may be repeated to your Lordships at the earliest opportunity, I beg to move that the House do now adjourn during pleasure until 3.45 p.m.
The Minister of State, Department of Trade and Industry (Lord Fraser of Carmyllie): My Lords, with your Lordships' permission, I should like to repeat a Statement being made in the other place by my right honourable friend the President of the Board of Trade, on the Scott Report.
"The Government have arranged for the report to be debated in both Houses of Parliament on 26th February. During the past three-and-a-quarter years the inquiry, with the full co-operation of the Government, has received many tens of thousands of pages of documentation from government files and has taken written or oral evidence from 268 witnesses. All Ministers, former Ministers, and civil servants who were asked to give evidence, did so conscientiously and thoroughly. The detailed procedures of the inquiry were left to the discretion of Sir Richard Scott himself.
"The House will realise the diligence with which Sir Richard Scott and his team have scrutinised the events covered by their remit, and for which the Government are most grateful. The report is wide-ranging and detailed, extending to five volumes and some 2,000 pages. In addition, the inquiry will be making available as soon as possible several thousand copy documents.
"The House will recall that the essence of the inquiry, as reflected in its terms of reference, was to establish whether the relevant government departments, agencies and Ministers operated in accordance with the Government's policies and to report on decisions by the prosecuting authority in the Matrix Churchill case and by those signing public interest immunity certificates.
'the Government was not prepared to countenance the supply of lethal equipment to either Iran or Iraq'.
"On more general non-lethal defence equipment, Sir Richard Scott recognises that the Government strove to balance the interests of employment in this country with the objectives of our foreign policy. He makes no criticism of the Government's policy. He does, however, make strong criticisms of what he sees as a lack of openness on this, to which I shall return later. Nevertheless, the Government's restrictive policy on exports is in sharp contrast to many of our international competitors who, during the eight-year conflict between Iran and Iraq, in addition to non-lethal defence equipment, were also content to sell fighter aircraft, guided missiles, munitions and other lethal equipment. This country did not.
"I now turn to the most important reason why my right honourable friend the Prime Minister set up the inquiry in the first place. This is the grave allegation that Ministers, by signing public interest immunity certificates, conspired in a way which could have sent innocent men to prison. Sir Richard Scott's report demonstrates that this allegation is false and without foundation.
'Finally, I must refer to the charges made and repeated in the media that the Ministers who signed the PII certificates were seeking to deprive defendants in a criminal trial of the means by which to clear themselves'.
"For three years, several of my right honourable friends have had to endure repeated abuse and attacks upon their honour and integrity of the most offensive and unpleasant nature over their signing of public interest immunity certificates. They now stand wholly vindicated by the report.
'Once again we see Ministers caught trying to cover up their role in arming Saddam Hussein'.
'Next week, we'll have more evidence with the Scott report. Showing how Ministers were prepared to send citizens to jail to cover their own backs'.
"Sir Richard Scott has cast his net widely and examined a whole range of issues. He has made recommendations in a number of areas, and he has also made some criticisms. I should like to comment now on the subjects of these recommendations and criticisms, including in particular export control legislation; the law on public interest immunity; the ministerial guidelines on exports; the Matrix Churchill trial; and ministerial accountability.
"The report deals with the legislation which has governed the control of imports and exports since 1939. This legislation has, since the Second World War, served its purpose effectively in allowing controls to be imposed on the import and export of certain categories of goods.
"The appellants in the Ordtec appeal in early 1995 challenged the 1939 Act, praying in aid Sir Richard Scott's views which he had first expressed a year earlier. However, in the Court of Appeal hearing on 22nd May, before the Lord Chief Justice, the orders made under the 1939 Act were declared lawful. We will, however, wish to consider further the future arrangements in this area in the light of Sir Richard Scott's comments.
"I turn now to the interpretation of the common law as it relates to public interest immunity. The inquiry has suggested that the law did not support, in the period of the Matrix Churchill and Ordtec trials, the concept that Ministers had a duty to sign public interest immunity certificates nor that these certificates could be used in criminal prosecutions.
"The Government followed well-established case law, backed up by independent legal advice, that Ministers both had a duty to sign PII certificates and that such certificates were applicable in criminal trials. It was then for the judge to decide which documents to release. The Attorney-General took advice on this from independent and eminent counsel and the Government's handling of PII was, incidentally, endorsed by three defence counsel in the Matrix Churchill trial. That PII claims were a matter of duty was supported by authoritative judgments of such distinguished judges as Lord Scarman, Lord Donaldson of Lymington, and Lord Justice Bingham. The applicability of PII to criminal cases had been established by a decision by Lord Justice Mann. It has since been confirmed by a series of decisions of the Court of Appeal presided over by the Lord Chief Justice, Lord Taylor of Gosforth.
"In his report, Sir Richard Scott does not in any way question the personal integrity of the Attorney-General. He does, however, express criticism of the adequacy of the instructions to prosecuting counsel conveying the views of the then President of the Board of Trade, and in particular that the Attorney-General should personally have supervised them. It must be a matter of opinion whether that was something which the Attorney-General could reasonably have been
"The Government remain firmly of the view that the advice given at the time to Ministers by my right honourable and learned friend the Attorney-General was correct and there is no doubt he acted throughout with complete propriety and integrity.
"The distribution of intelligence material within and between government departments is an area where the inquiry has found failings to have arisen in the 1980s. We accept that there is substance in this criticism. The report makes it clear, for example, that the junior Ministers who approved the Matrix Churchill licences for which the directors were later prosecuted did so without the benefit of intelligence reports which would have shown the intended military use of the items covered. Sir Richard concludes that the Ministers took their decisions on a false footing, which he makes clear was not their fault. Substantial revisions of procedures have already been made to prevent as far as possible a repetition of such failings. Sir Richard's report recognises that improvements in this area have been made.
"I turn to the Government's policy from the outset of the Iran-Iraq war in 1980. Our policy was to remain neutral in the conflict and not to sell lethal weapons to either side. Further, the Government took steps to ensure that non-lethal defence goods that could have had an impact on the way the war was prosecuted were controlled. In support of that policy, and to assist in its application as events unfolded, a set of guidelines was established in 1984 by my noble and learned friend Lord Howe, then Foreign Secretary.
'significantly enhance the capability of either side to prolong or exacerbate the conflict',
would not be approved. Following the ceasefire in August 1988, these guidelines had to be applied in changed circumstances. Opportunities for expansion of legitimate trade began to emerge. At the same time, relations with Iran and Iraq were affected by concern over the hostages in Lebanon, human rights in Iraq, the fatwah against Salman Rushdie, the execution of Farzad Bazoft, and the safety of British nationals held in both Iraq and Iran. Ministers and officials were obliged to react to circumstances which were continually changing.
"Discussion about the guidelines took place on several occasions in late 1988 and early 1989 between junior Ministers and officials at the Foreign and Commonwealth Office, the Department of Trade and Industry and the Ministry of Defence, as the situation developed. Those Ministers reached no settled decision to change policy which they regarded as requiring the approval of senior Ministers or an announcement to this House. As I said, Sir Richard disagrees with them but accepts they were sincere in their belief.
"The crucial issue is whether these junior Ministers intended to mislead this House and the country. Sir Richard gives an unequivocal answer on this. He accepts that the Ministers believed they were avoiding a formal change to the guidelines and that, in holding this belief, they had--to quote his words--no 'duplicitous intention'. In respect of my right honourable friend the Chief Secretary, who was at the time one of the junior Ministers concerned, Sir Richard goes on to say that--and I quote again--
'he did not intend his letters to be misleading and did not so regard them'.
"The inquiry finds no evidence of impropriety in the way in which the Matrix Churchill prosecution was brought. There was no conspiracy and no deliberate withholding of material known to be relevant that might have helped the defence. It is worth emphasising too that the court itself at the time expressed no criticism of the way in which the prosecution, with the advice of independent and well respected counsel, was brought and conducted. But, as Sir Richard Scott says, with the benefit of hindsight this was a trial which ought never to have commenced. I stress, as Sir Richard Scott himself does unequivocally, that this is a judgment with the benefit of hindsight.
"While Sir Richard dismisses the serious allegations of personal impropriety that have been made about the conduct of Government Ministers, there is a continuing line of criticism running through the report of what he describes as the,
'consistent undervaluing by Government of the public interest that full information should be made available to Parliament'.
"Sir Richard Scott's report contains a substantial section of recommendations. The Government have already taken action on a number of the issues on which the inquiry now makes recommendations; for example, on intelligence handling.
"Other recommendations, such as those on changes to the law, for example, relating to prosecution practices and the approach to public interest immunity, are technically complex and will need careful and detailed consideration. They will receive it.
"The House will recognise that the Scott Inquiry has been long, searching and thorough. It will want to consider the report fully and to discuss the issues raised by it. There are lessons to be learned from the inquiry and Sir Richard Scott has made a number of important recommendations which the Government will now pursue. The inquiry has identified areas where systems and procedures can be improved, and these will be closely and urgently studied. The overall picture which emerges is that, while mistakes were made, Ministers and officials acted honestly and in good faith. This country went to enormous lengths rigorously to enforce a self-imposed ban on the supply of all lethal and other offensive weapons to either combatant in the Iran-Iraq war and to remain neutral in the conflict.
"Our policy towards the combatants in that terrible war was sound and principled. It stands very favourable comparison with that of any other nation. It was conducted and sustained throughout with integrity.
"Not only did Britain sell no lethal weapons to Iraq, but as Sir Richard Scott's report makes absolutely clear, neither was there any conspiracy among Ministers to send innocent men to gaol. Those who
Lord Richard: My Lords, I must confess to a certain sense of anger when I listened to the Minister reading out that Statement. I have not had an opportunity to read the report. I obtained it about 20 minutes ago in the same way as other Members of the House obtained it. But in that very short time that I had before I came into the Chamber I managed to look at three or four sections of the report. I have to say--I shall read it out in due course--that the Statement, and the gloss that has been put upon that aspect of the report, at which, as I say, I have had five minutes to glance, is frankly totally misleading and a travesty of what the report says.
I did not obtain a copy of the report earlier because, as the House will know, I was offered the chance to look at it in a controlled environment at the Department of Trade and Industry in circumstances which I regarded as totally unacceptable and insupportable. I was going to read the letter that I received from Mr. Lang. That is an argument that we have already had in the House, and so I shall read just two sentences from the letter:
I hope that the House will therefore understand why I wrote back merely to say that I regarded the suggestions made in their letter as quite outrageous and that I was not prepared to attend on that basis.
That offer was specific, and was designed to achieve a certain object. That object was clear when the Minister read out the Statement. The object is to read out a Statement which bears not a great deal of relation to the substance of the report so that the House, and indeed the country, may get an impression of what is in the report without yet having had any opportunity to read it. I warn the House, as I have done in respect of Government Statements on a number of occasions in the past, that it is terribly important, particularly in the present atmosphere, that one reads the report and does not rely just upon the Statement.
There is not a word in the Statement which the Minister read about the fact that no less than 27 times Parliament was told that the guidelines were not changed. There is not a word in the Statement about the
I turn to the summary on PII certificates. We were told by the Minister that the Government have been totally exonerated in that regard. During the five minutes that I had, I happened to look at page 1537, which states:
I am sorry that I have not had the opportunity of going through the rest of this fascinating bundle. In view of the brief glance that I have been able to take in relation to those items I suspect that I shall find some rather interesting ammunition in other parts of the report.
Where do we go from here? We shall have a debate on 26th February and I shall make only two or three simple points. In the end, the whole matter of the Scott Report and government behaviour comes down to two or three relatively simple points. First, were the guidelines changed? The answer to that is clearly yes.
As regards Matrix Churchill, the issues again appear to be relatively simple. Did the Government know that the company was exporting those machine tools to Iraq? The answer to that is clearly yes. Did the Government try to ensure that the fact that they knew was kept from the trial court? The answer to that is clearly yes. Did the Government use public interest immunity certificates to try to achieve that end? The answer to that is clearly yes.
This is a murky and disreputable affair in which Parliament was misled and defendants were put at risk. Surely someone is responsible, and it is time that he faced up to it.
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