Thatcher told Iraq wanted to buy arms

BARONESS THATCHER, the former prime minister, received intelligence reports warning of a 'well- financed and sophisticated' Iraqi arms procurement network in the UK in early 1989, the Scott inquiry heard yesterday.

The reports led to a secret Whitehall committee being set up to monitor Iraqi activities but it was abandoned after just nine meetings because of a lack of interest.

A second, separate committee which took over monitoring was hindered by professional rivalry between intelligence agencies holding back vital information from each other, according to Eric Beston, former head of the Department of Trade and Industry's export controls and licensing branch.

Mr Beston said the Working Group on Iraqi Procurement was set up in May 1989 after detailed intelligence reports warning of Baghdad's efforts to build up its weapons industry, including ballistic missile and nuclear capabilities, using UK companies.

The Cabinet Office wrote to him saying it was pleased the group, which involved Customs, the Ministry of Defence and the intelligence agencies, had been formed because of 'No 10's interest'.

The group's aim was to track Iraqi attempts to obtain equipment, needed to build nuclear weapons, from British firms. As many as 300 British companies were identified as potential Iraqi targets. 'Certain agencies then made visits to warn them,' he said.

Monthly meetings quickly became bi-monthly because not enough people turned up.

The Prime Minister's office asked for 'periodic situation reports', he said, and was sent minutes of the meetings of the group - which always met in a room swept for bugging devices.

The job of monitoring the Iraqi Procurement Network reverted to the Restricted Enforcement Unit but its work was hampered because intelligence was withheld because of inter-agency rivalry, he added.

It became apparent to him personally while giving evidence in the Matrix Churchill trial last year that some agencies had held back information.

Earlier, Mr Beston said it was 'a matter of regret' that DTI officials made no checks on precise nature of Matrix Churchill exports to Iraq.