Ex-directors of arms firm disagree on Iran scandal story

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Westminster Correspondent

Two directors of the arms company of which the former defence minister Jonathan Aitken was also a director, yesterday gave MPs starkly contrasting accounts of whether the company was exporting illegally to Iran.

The Commons Select Committee on Trade and Industry is investigating the supply of guns to Iran by BMARC, of Gran-tham, Lincolnshire, and virtually every claim made by Maj- Gen Donald Isles was subsequently rejected by John Anderson, his one-time colleague, prompting MPs to ask who was telling the truth.

Maj-Gen Isles sided with a fellow former director and witness William McNaught, while Mr Anderson agreed with Gerald James, the company's former chairman, who claims that it was common knowledge internally that the exports of guns to Singapore were actually bound for Iran. The MPs' inquiry thus runs the risk of being reduced to weighing one group's word against the other.

The committee's difficulty has been exacerbated by the lack of documentary evidence that can be checked. Mr James and Mr Anderson maintain that all their papers have been seized by Ministry of Defence police and not returned.

Mr Anderson said senior staff were so concerned at the prospect of their naval guns covertly going to Iran that they closed down the special office dealing with the relevant order. The committee was told by Mr Anderson, a former director of Astra, BMARC's parent company, that a photograph in a defence magazine and rumours among staff prompted the office's closure.

Code-named Project Lisi, the arms order was ostensibly to Singapore. Jonathan Aitken, the former Chief Secretary to the Treasury who was on the BMARC board as a non- executive director, has denied knowing its final destination.

Earlier, MPs heard that another senior Conservative politician, Douglas Hogg, the present Secretary of State for Agriculture, was also involved with the company, frequently acting as a go-between with the Government on export licensing problems.

Maj-Gen Isles said Mr Hogg, as BMARC's constituency MP in Grantham, was used to sound out the attitude of the authorities to possible orders.

Following Astra's purchase of BMARC from the Swiss company Oerlikon, Mr Anderson was sent to Lincolnshire to smooth relations between staff and their new owners. He checked with Maj-Gen Isles about Lisi. "When I was in Grantham I heard rumours that Iran was the ultimate end user, which I mentioned to General Isles. He assured me this was not so and that everything was OK," he said.

Then, a sales engineer produced a clipping from an American defence journal showing the BMARC 20mm gun aboard an Iranian ship. The upshot of the picture and the rumours was the closure of the special Lisi office at BMARC.

MPs were told by Maj-Gen Isles that no such Lisi office existed.