Arms-to-Iran firm bypassed Cyprus embargo

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The Independent Online

Westminster Correspondent

The defence company at the centre of the arms to Iran affair was also using Singapore as a way of avoiding a British embargo against supplying Cyprus, the Trade and Industry Select Committee was told yesterday.

A former director of the company was also accused by an MP of having a "selective memory" after denying he had not even heard factory rumours arms were destined for Iran.

A memorandum to senior executives of BMARC reveals Singapore was being used as a conduit for ammunition for 35mm guns - the same role it played in the supply of 140 naval guns to Iran in defiance of a United Nations blockade.

Jonathan Aitken MP, who sat on the BMARC board, has denied knowing Iran was the final destination for the naval guns order, codenamed Project Lisi.

In evidence to the select committee, which is investigating the Lisi deal, other ex-BMARC directors, William McNaught and Major-General Donald Isles, have maintained they did not know the artillery pieces were heading for Iran or that Singapore was a stop-off.

Dated 4 January 1989, the memo was sent by Mr McNaught, BMARC's managing- director, to five colleagues, including Major-General Isles. It details how the firm had failed to obtain an export licence for Greek Cyprus in 1987. As a way round the embargo, the ammunition was ordered by Oerlikon, BMARC's former Swiss parent, from the company's Grantham factory and sent to Singapore, from where it was shipped to Cyprus. At the same time as BMARC was using this device to arm Cyprus, shipments were being made to Singapore as part of Lisi.

The memorandum emerged as MPs quizzed Stephan Kock, another ex-BMARC director. In a session that became heated at times, Mr Kock downplayed Lisi, claiming it was not "a very large project". He admitted, though, it had been discussed. Board minutes did not include much mention of Lisi - possibly, it was revealed, because the minutes had been doctored.While Major-General Isles said he had heard factory rumours that the Lisi guns were going to Iran, Mr Kock said he had not heard them. He was accused by the MP Ken Purchase of having "a selective memory".

MPs repeatedly questioned Mr Kock about his own background in the defence industry, the armed forces and intelligence. He admitted keeping in contact with the security services while on the BMARC board.

After Mr Kock accused Gerald James, the former BMARC chairman who claims his fellow directors did know Lisi was bound for Iran, of "always looking for spooks under the bed", Martin O'Neill, the committee chairman, replied that Mr Kock was "a spook above the bed".

Mr Kock also denied the company ran "a secret order book", as alleged by Mr James. And he avoided answering a question by the MP Keith Hampson about the Cyprus memorandum. Instead, Mr Kock paid tribute to Government officials administering the export licensing system.