The Ministry of Defence, whose internal police are still investigating alleged irregularities, was criticised by the National Audit Office for not ensuring tight financial control over the pounds 269m supply operation.
Sir John Bourn, the Comptroller and Auditor General, reported that half of all air freight was routine and should have gone by sea - 17 times cheaper. He suggested that up to pounds 38m could have been paid to shipowners as 'wartime military premium', over and above normal shipping rates.
His report also disclosed that 7,000 freight containers were so well camouflaged that troops often had no clue as to what they contained and, when the war was over, 80 containers 'remained unaccounted for' and were 'written off'.
The National Audit Office provoked rare, open conflict with Whitehall officials with an attack on the ministry's preference for small ships - when big ones would have been significantly cheaper.
Framing its reply with care, the ministry said: 'Their assessment of the balance of risk favoured the choice of smaller vessels because of the problems of port limits on the loading of explosives, a reluctance to commit too much vital equipment to a single ship, and a desire to maintain a steady flow to achieve economy of movements and to ease logistics problems in the Gulf.'
However, the auditors replied: 'Ammunition could comprise a part of a load on a larger ship or be loaded outside port areas and the extra loading time for large ships might be offset by shorter sailing times.'
The ministry responded: 'Loading outside port areas was slow and expensive and dependent on weather conditions.'
The auditors said: 'The slow transit speeds and susceptibility to bad weather of the smaller vessels affected arrival dates and caused problems.'
Because of delays, operationally critical items became 'lost to view' and one artillery unit was without guns for a fortnight, forcing it to train after the fighting started.
The report also said that a special Shipping Committee responsible for 245 charters kept no comprehensive record of 'competing ships, prices quoted and discussions leading to decisions'; the ministry not been 'aware' of the total commissions paid; and brokerage fees for 56 out of 186 charters had since been queried following internal audit.
Criticism was levelled against Hogg Robinson (GFA), the Government's freight agency, which argued that the 'limited war scenario' was outside the terms of its contract.
The agency used four brokers to arrange more than 87 per cent of its 186 charters. Although it advised the General Council of British Shipping of the opportunities, only five British ships were among the 162 chartered.Reuse content