Malaysian dam fixer had supergun role: Midland Bank consultant's links with special forces cast new light on 'aid-for-arms' Pergau deal

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The Independent Online
THE MAN who helped to pull together the controversial Malaysian aid and arms package also played a key role in the Iraqi supergun affair.

According to former executives from Midland Bank, which funded the sale of arms to Malaysia, Stephan Kock was the architect of the deal. Mr Kock, who acted as consultant to the bank's defence equipment finance department, was also an adviser to the Government's Joint Intelligence Committee. He is understood to have visited Malaysia with Ministry of Defence officials before the signing of a memorandum of understanding between the two countries in 1988.

That memorandum provided the basis for the subsequent sale of arms, the building of a secret special forces base in Malaysia and, most controversially, the granting of pounds 234m of British overseas aid to the Pergau dam project.

Mr Kock was also director of Astra, the British munitions company which bought PRB, the Belgian supplier of propellant for the supergun.

In February 1992, he appeared before the Trade and Industry Select Committee inquiring into the supergun. Describing himself as a senior consultant at Midland Bank, he said his 'main function was to help the bank to get defence manufacturers, but not only on defence, on other aspects as well'.

He told the MPs his job included advising the bank whether specific proposals fell foul of government export guidelines. He also admitted being in contact with the security services and having links with the special forces.

In one exchange he recalled how he had been able to arrange visits by special forces personnel to Astra's factory. In another, he described how he had kept the authorities informed of some of PRB's activities.

News of Mr Kock's involvement with Pergau and his close ties with the security services provides further evidence of linkage between aid and arms. It was Mr Kock, said an ex-member of Midland Bank's defence equipment finance team, who encouraged the bank to look at Malaysia and appeared to have 'a shopping list of items for the Malaysian government'. These included the special forces base at Mersing and hospitals.

Paddy Ashdown, the Liberal Democrat leader, wrote yesterday to John Major asking whether British aid was being targeted on countries which buy British arms.

Kock profile, page 2