Scott Report

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The Scott Inquiry, also known as the Inquiry into Exports of Defence Equipment and Dual Use Goods to Iraq was set up after the collapse of the Matrix Churchill trial. The inquiry was led by Lord Justice Scott. It's final reporting document was known as the Scott Report.

The immediate cause for setting up the Scott Inquiry was the collapse of the trial of directors of Matrix Churchill, a firm suspected of breaching export control guidelines. The company had been exporting "dual-purpose" machine tools to Iraq. The prosecution case in the Matrix Churchill trial was that the export licence applications were deceitful.

Alan Clark, in his evidence to the trial, admitted that "discussions he had with the Machine Tool Technologies Association could be regarded as advising companies to stress the civil applications of their equipment even though they knew that it could be used for military purposes". It exposed the discrepancy between the government's version of the policy on exports to Iraq (the so-called Howe guidelines) and the policy's implementation.

The Inquiry into Exports of Defence Equipment and Dual Use Goods to Iraq, also known as the Scott Inquiry, was undertaken to establish whether all parts of Government followed agreed Government policy on defence exports to Iraq, and to report on related prosecution decisions. The Scott Inquiry concluded that Britain supplied no lethal weapons to Iraq.

On non-lethal defence equipment (such as radio systems or hovercraft spares) and on possible dual-purpose equipment (such as machine tools) the Government carefully balanced British export interests alongside wider foreign policy consideration. The Government's policy was to remain neutral in the Iran-Iraq war. The report recognises that no lethal weapons were sold to either side. The Government also took measures to prevent the export of non-lethal goods, which could nevertheless have exacerbated the conflict. A set of guidelines was introduced to assist in the application of this policy. Davina Miller assembled her notes and photocopies in preparation for her PhD thesis at Lancaster University. The thesis was later developed into a book, Export or die: Britain's defence trade with Iran and Iraq (London: Cassell 1996). "

External Sources

From the BBC:

"The Scott Inquiry was set up in 1992 following the collapse of the Matrix Churchill trial.

"Matrix Churchill was a Coventry firm involved in exporting machine tools, which could be used for making military equipment, to Iraq.

"Three senior executives of Matrix Churchill were charged in 1991 with deceiving the Government over the intended use of the machine tools when they applied for export licences.

"They defended themselves on the basis that the Government knew exactly what Matrix Churchill was up to: not least because its managing director, Paul Henderson, had been supplying information about Iraq to the British intelligence agencies on a regular basis.

"The prosecution went badly from the start. The judge overturned Public Interest Immunity Certificates signed by several Government ministers, forcing them to hand over confidential documents to the defence.

"Then Alan Clark MP admitted under cross-examination that notes of one DTI meeting were 'economical with the actualité' and he knew full well the machine tools could be used to manufacture munitions.

"The inquiry that followed was a spectacular exposé of the inner workings of Whitehall..."

"In September of 1990, Customs Service agents padlocked the doors of an Iraqi front company in a Cleveland suburb and, in response to a presidential order, froze its $2 million in assets.

"Customs Commissioner Carol Hallett said the action against Matrix Churchill Corp. came after agents learned that Iraq, which had invaded Kuwait one month earlier, had bought the firm "for the specific purpose of illegally acquiring critical weapons technology." But, unknown to Customs officials, government intelligence agencies had been aware of Matrix Churchill's role in Baghdad's arms procurement network for more than a year and had warned Bush Administration policy-makers, according to newly obtained documents and sources interviewed by The Times.

"The Administration, however, allowed Matrix Churchill to continue operations, in keeping with President Bush's decision to try to influence Iraqi President Saddam Hussein through favorable policy on high-tech exports and economic incentives. Administration officials maintain that any military assistance to Iraq was an inadvertent consequence of the attempt to moderate Iraqi actions. They said that they were unaware of the extent of the network's operations in this country and that top officials were distracted by other foreign policy concerns.

"But Rep. Henry B. Gonzalez (D-Tex.), whose House Banking, Finance and Urban Affairs Committee has been investigating Matrix Churchill and the Administration's policies toward Iraq, said: "The Administration knew a great deal about Saddam Hussein's military procurement program and made a conscious decision to tolerate it, and in many cases facilitated the effort."

"As early as June, 1989, a top-secret U.S. intelligence report had identified Matrix Churchill's British parent company as a key component of the Iraqi network, according to a newly disclosed document.

"And two months later, Defense Department analysts discovered that the Cleveland operation had funneled tens of millions of dollars worth of U.S. technology to Iraq's nuclear weapons and ballistic missile programs, according to sources. "Recently declassified State Department documents show that after Iraq's invasion of Kuwait, Administration officials calculated that the Iraqi regime spent $10 billion to $20 billion acquiring nuclear weapons and missile technology in the 1980s. Most of the buying took place through a series of front companies and shadowy agents operating in Europe, but some occurred in the United States.

"In the spring of 1989, a CIA officer approached the president of a small engineering firm in Alabama and quizzed him about a carbide-tool manufacturing facility the company was building at an Iraqi government installation southwest of Baghdad. In the fall of that year, a Customs Service agent and an Agriculture Department criminal investigator visited the firm, XYZ Options Inc. in Tuscaloosa, and posed a similar set of questions to its president, William H. Muscarella.

"In both instances, I told the government what we were doing," said Muscarella. "I gave them blueprints and told them everything about the plant. They knew everything."

"By the fall of 1989, U.S. authorities suspected that Iraq intended to use the plant as part of its ambitious weapons program, according to newly obtained records. Yet, while the government blocked the export of a key piece of machinery, it apparently did nothing to discourage construction of the $14-million plant by withholding export licenses for other components, which were shipped to Iraq.

"When Iraq invaded Kuwait in August, 1990, the plant was virtually complete and capable of turning out military goods as well as consumer products, according to Muscarella. After the Gulf War, the military use was confirmed. U.N. inspectors hunting for Iraqi weapons facilities discovered the carbide factory was part of Iraq's main nuclear-weapons complex. After determining that the factory had been used in the effort to develop a bomb, the inspectors blew up the plant, U.N. documents show...

"The Times reported previously that U.S. intelligence agencies warned high-level Administration officials as early as June, 1989, that a company outside Cleveland named Matrix Churchill was a front in Iraq's worldwide arms-procurement network. However, the "Administration rejected efforts to restrict sales of U.S. technology to Baghdad as late as May, 1990. The XYZ Options deal is a clear example of how the Iraqi network operated. Described as a commercial transaction, the arrangement was set up by Matrix Churchill and financed by the Atlanta branch of Italy's Banca Nazionale del Lavoro.


From [1]

Also see Richard Norton-Taylor on the Scott Inquiry

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