British companies exploit loophole to sell arms abroad without licences

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The Independent Online
BRITISH ARMS manufacturers are bypassing export rules by moving production of their weapons abroad, according to a report to be published next month by Oxfam.

Robin Cook will come under pressure to close the loophole as the charity is joined by MPs in calling for a change in the law to stop a series of deals - all perfectly legal under current regulations - from going ahead.

Some of the UK's biggest arms companies are negotiating "licensed production" deals under which their goods are manufactured abroad. Although military components and technology need export licences, some of the products are being exported as civilian items.

There are also fears that the British government cannot control where the arms end up. Oxfam workers in Southern Sudan recently retrieved a bullet made by a UK-owned firm under licence in Pakistan. They believe Pakistan had sold the ammunition on to the Sudanese government.

Turkey has announced it plans to sell 500 sub-machine-guns made under licence from Heckler and Koch, which is owned by British Aerospace, to Indonesia this year. The deal, worth pounds 250,000, will not need an export licence from the British government, nor would one be likely to be granted under Labour's rules on arms sales.

Heckler and Koch is currently negotiating another deal with Turkey to make 200,000 assault rifles plus 50 million rounds of ammunition per year.

Other bids by British firms include a joint operation between British Aerospace and Saab to sell Gripen fighter aircraft to Poland and the Czech Republic. Poland could be allowed to market the planes on to foreign markets as part of the deal.

Another operation causing concern is a tie-up between Land Rover and a Turkish firm, MKEK. Civilian vehicle parts are exported from Britain without any need for a licence, but when they are assembled in the Otokar factory near Ankara they have machine-guns added to them. Turkey, which has been heavily criticised for human rights abuses against the Kurds, has already sold some of the vehicles on to Algeria and Pakistan. This spring, a new contract was signed for the MKEK factory to make 4,000 more for the Turkish government.

Oxfam's report, "Out of Control," will be published in November to coincide with the Government's annual report on arms sales, which has been delayed since July. It believes these deals should not be permitted where a licence for direct sales of arms would be refused, and that recipient countries should demonstrate they will not sell the weapons without permission. Countries with a record of breaking UN embargoes should not be allowed to make British arms, the charity argues, and the UK annual report on arms should list all such agreements.

"It would appear that the companies have established a legal mechanism whereby products can be manufactured in a number of different countries, none of which seems to concern itself with the licence procedures of other national governments," the Oxfam report says.

MPs who have campaigned for tighter arms controls expressed consternation over the issue. Ann Clwyd, Labour MP for Cynon Valley and chair of the Parliamentary Human Rights Group, described the deals as "outrageous".

"Any British company doing this ought to be stopped by the government. It is undermining the whole purpose of the arms export policy which Robin Cook has spelled out," she said.

Menzies Campbell, the Liberal Democrat defence spokesman, said all British arms companies should be registered and subjected to UK regulations regardless of where they made their goods, as chemical weapons makers are.

"We simply cannot allow companies based in Britain to drive a horse and cart through British arms export policy," he said.

Kevin Mullen, of Campaign Against the Arms Trade, said the Government was effectively exporting control of foreign policy by allowing the deals. British jobs would be lost, he added.

"Some may say this is in the Government's interest and helps them to dodge the bullet over politically sensitive arms sales," he said.

A spokesman for British Aerospace and Heckler and Koch said he thought there would be safeguards to stop weapons being sold on without control.

"I am sure the British government would not allow us to circumvent export regulations in that fashion. It is not the way we do business in this company, and we would not allow it to happen," he said.

A spokeswoman for the Department of Trade and Industry, which controls export licensing, said the onward sale of weapons made abroad was not a matter for the British government, and even if there were controls they would not be enforceable.

"The Government has taken steps to monitor end use of equipment where it is proper, but the best way of preventing diversion is to refuse to issue a licence if there is evidence that significant concerns exist," she said.



GKN Defence has an agreement with a joint venture company, Asian Armoured Vehicle Technologies, to produce Simba Armoured Personnel Carriers (above) in Subic Bay in the Philippines. These are used by the Philippine armed forces and are fitted with Browning machine-gun turrets. The original order was for 150, eight of which were supplied from the UK and the rest of which were assembled at Subic Bay. GKN says the order has been completed, though the company still exists. A licence was granted for the use of the vehicles in the Philippines, but last year the Trade minister, Barbara Roche, said the UK had no means of stopping the country from selling them on if it chose to do so. "The control of exports from the Philippines is a matter for the Philippine Government," she said.


Vickers wants to supply about 1,000 main battle tanks (above) to the Turkish government. In the early stages these would be imported from Britain but later the tanks would be produced in Turkey. The company says Robin Cook gave approval for it to bid for the contract, and export licences will be needed if it goes ahead. It also says the deal will include guarantees that the tanks will not be sold on. However, researchers say the deal would allow Turkey to sell on its existing tanks, of which it has more than 3,000, to any country it chooses. A Vickers spokesman said there were controls even on giving information to Turkey about its products.


Armoured Land Rovers (above) have been built in Turkey since 1987, but this spring a new deal was signed for the supply of 4,000 vehicles. Land Rover ships parts to Turkey, which do not need export licences because they are classed as civilian goods. At the Otokar factory near Ankara the vehicles are assembled and fitted with machine-guns and infra-red lights which allow soldiers to aim the guns in the dark. Civil rights groups say the vehicles have been used in attacks on the Kurds, who have been subjected to serious human rights abuses by the Turkish government. Land Rover says the parts it exports are not meant to be used on military vehicles. Turkey has exported them for use by armed forces in Algeria and Pakistan.


British Aerospace and Saab are bidding for deals which will allow Saab's Gripen fighter planes (above) to be built in the Czech Republic and Poland. The Czech deal would see engines or possibly entire aircraft built in the republic, while Poland would receive a guarantee that 100 per cent of the contract's value is covered by work in Polish factories. In addition Poland, which wants to buy 150 fighters at a cost of up to pounds 4bn, may be allowed to market the Gripen abroad. British Aerospace says it will operate within UK regulations, and it does not believe they would allow the fighters to be sold on without control.


Heckler and Koch, owned by British Aerospace, wants to build factories for 200,000 new assault rifles (above) and 50 million rounds of ammunition per year in Turkey. The deal would involve Turkey's state- run artillery manufacturer, MKEK. MKEK has previously exported arms to Jordan and Northern Cyprus - both of which are notorious for shipping arms. Heckler and Koch has licensed production facilities in countries including Burma, Iran and Mexico, according to Jane's Infantry Weapons. Factories in Turkey already make Heckler and Koch weapons. Turkey announced in July that it was shipping 500 sub-machine guns made by them to Indonesia. Heckler and Koch was German-owned until 1991, and the company says it does not now control all facilities set up before the change.