Stephan Adolphus Koch

[Magda Hassan]

Return to an Address of the Honourable the House of Commons
dated 18 July 1996 for the Appendices to the Report of the Inquiry into the Export of Defence Equipment and Dual-Use Goods to Iraq and Related Prosecutions laid before The House on 15 February 1996*

Volume Three
Section F Supergun
Chapter 3 Government Knowledge - January 1989 until December 1989

Excerpt:
ASTRA HOLDINGS PLC

ASTRA HOLDINGS PLC
F3.19 Astra Holdings plc (Astra) completed its acquisition of PRB on 11 September 1989. [size=12]*14 Stephan Kock was a non-executive director of Astra at the time of the acquisition. *15 According to Mr Kock’s evidence to TISC, he went with others to visit the PRB plants in Belgium on 19/20 September 1989. At the PRB plant at Kaulile he was told by the manager that PRB were involved in exporting unusual propellants. *16 Mr Kock reported the matter to colleagues in the company and discussed it with them. He also says that he telephoned the intelligence services on 22 September 1989. *17 He next came down to London from his home in Scotland on 11 October 1989 and “made a full report”. Intelligence documents confirm that Mr Kock telephoned from Scotland to ask for an urgent meeting. Intelligence documents also suggest that on 10 October, a preliminary meeting was held with Mr Kock at which he mentioned the take-over by Astra of PRB and suggested that “PRB’s books indicated some shady dealings in the past”. It appears that the preliminary meeting was soon followed by another meeting. The source report on the meeting records the following information: [/SIZE]

“PRB of Belgium.

1. The British arms firm ASTRA Holdings has recently acquired a wholly owned subsidiary in Belgium ‘PRB sa’. A rumour circulating in the Astra Boardroom is that PRB has been (and probably continues to be) engaged in some shady business which involve supplying rocket propellant to the Iraqis. The rumour goes that a weapons system - probably a ‘155mm enhanced shell’ is being sold by a consortium .... The warhead could be chemical or nuclear device ....”

A copy of the report was sent to SIS.
F3.20 Quite independently of Mr Kock, other information was simultaneously put forward by Astra for the consideration of the British authorities. After completion of the acquisition, Mr Christopher Gumbley, chief executive of Astra at the time of the acquisition of PRB, was also told of PRB contracts of “a sensitive nature”. PRB managers had indicated that “the contracts, particularly for propellants, had a capability which was for - and they hinted towards this - nuclear and chemical weapons systems”. [size=12]*18 Mr Gumbley was also told expressly that the contract for propellant was intended for delivery to Iraq through the use of Jordan. The propellant was for a very large gun. [/SIZE]
F3.21 It was at about this time that MOD/DESO had begun to have its own suspicions about PRB. Mr Robert Primrose was Director of Marketing Services (D Mktg Svcs) at DESO between 30 April 1986 and 30 April 1991. The role of Marketing Services was to assemble, analyse and disseminate information on world markets for defence exports; and on the performance of UK industry in these markets. Mr Primrose has told the Inquiry that his concerns about PRB predated the disclosure of information about PRB by Astra to the MOD. He had no concrete evidence; rather “only an undefined suspicion which developed gradually during August and early September 1989, that PRB might have been approached, directly or through third parties, to supply artillery ammunition, or ammunition components, to Iraq or Iran more probably Iraq.” This suspicion stemmed mainly from Mr Primrose’s “general knowledge of the kind of defence procurement exercises which Iraq and Iran had mounted during the war; a little public information about PRB ....; and indications from a number of quarters that both Iraq and Iran had embarked on a new round of re-equipment and replenishment of their forces following the cease-fire.” [size=12]*19[/SIZE]
F3.22 Mr Primrose’s immediate superior was Mr Roger Harding. Mr Harding was the Director General of Marketing Services (DGMktg). [size=12]*20 Mr Primrose shared his initial concern with Mr Harding on 23 September 1989. Mr Primrose had noted that Mr Harding was due to have an “informal meeting .... with Astra that weekend” and he hoped that Mr Harding would raise the matter at the meeting. Mr Harding agreed to do so. He has told the Inquiry that he and Mr Primrose believed that the most sensible action would be a “low key approach to the executives I already knew at Astra.” *21 His first opportunity to talk to an Astra executive occurred at the Royal Naval Equipment Exhibition at Portsmouth in September 1989, when he saw Mr Gumbley. He told Mr Gumbley that he had heard rumours that there might be problems connected with contracts which Astra were inheriting in consequence of their purchase of PRB. He suggested that Mr Gumbley should check them out to make sure that “he had not ‘done a Ferranti’.” This was a reference to publicity about the ill-fated merger of Ferranti and ISC as a result of which Ferranti had acquired suspect ISC contracts. Mr Gumbley agreed to review the PRB contracts.[/SIZE]
F3.23 On 26 October 1989, Mr Gumbley and Mr Jolly (also of Astra) attended a meeting in Mr Harding’s office. DESO was represented by Mr Harding and Mr Primrose. Mr Gumbley tabled a document entitled ‘Contracts: Third Party destinations.’ [size=12]*22 The first three items on the list were:[/SIZE]

“CONTRACTS: THIRD PARTY DESTINATIONS

NR Country Product Remarks 1 Jordan (1) High Energy propellent See Annexure 2 Jordan (2) Propellent powder See Annexure 3 Jordan 130mm LR/BB ammunition See Annexure..." The comments in ‘Annex 2’ to the list included the following:
“....
1. JORDAN

1.1 Project BABYLON: Phase 1 (end user IRAQ)

* PRB Contract No 5397 signed February 1989

* Product M8M high energy propellent: qty 235 tons

* Value scheduled for delivery by 31/3/90 £1.96m

* Order routed from Jordan to PRB via SRC (Dr Bull)

* Delivery presently suspended due to technical difficulties

* Belgian government export licence approved

1.2 Project BABYLON: Phase 2 (end user IRAQ-SMPE)

* Sales prospect for large quantity propellent

* Value £5.5m

* Scheduled visit by J L Jourdain in November 1989 to begin negotiations with contract signature January 1990

* Partial delivery within October 1990

* PRB anticipate export licence approval for Iraq will be sanctioned by Belgian government early 1990

1.3 Project: 130mm Long Range Base Bleed Ammunition

* PRB forecast sale of 130mm LR/BB within 31/3/89

* Value £11m Quantity 20000 rounds ....”

In discussion, Mr Gumbley said that he suspected, although he had no direct evidence, that the first and second contracts “might be missile-related and might be intended for Iraq”. He also “felt that No 3 was for Iraq”. Mr Gumbley added, as to the Iraqi-related contracts, that he was inclined to withdraw from them even if they were approved by the Belgian Government. Mr Harding was recorded as having said that he recognised the primacy of the Belgian Government in “all export matters conducted by Belgian firms”, but he agreed “that Astra should give serious thought to their public image in UK and elsewhere”. Mr Gumbley, for his part, offered to seek further information on the contracts and pass this to DESO so that more specific advice could be given.
F3.24 Between 26 October and the date of the next MOD meeting with Mr Gumbley on 3 November, Mr Primrose, Mr Harding and Mr Tidy had a discussion [size=12]*23 about how to take forward action on the information provided by Mr Gumbley. It was decided that the matter “did not involve any direct or potential [breach] of UK law or regulations” and that it should be referred to the intelligence services. Mr Primrose was asked to act accordingly. After the discussion, Mr Primrose contacted SIS to pass on orally all the information which he had received. Although DESO officials considered SIS to be the appropriate agency to takeforward any necessary action in the light of Mr Gumbley’s information, Mr Primrose also briefed a close contact in the DIS in early November. *24 This is a matter more fully dealt with below. *25 [/SIZE]
F3.25 Mr Gumbley returned to DESO on 3 November 1989. He met Mr Primrose, who was on his own, and provided him with further details of PRB’s activities. Mr Primrose’s record of the meeting was incorporated in a minute to Mr Harding of the same date. [size=12]*26 The note was copied to Mr McDonald and to Mr Tidy. Mr Gumbley’s primary concern remained the supply of high energy propellants, ostensibly to Jordan but, in his view, almost certainly intended for Iraq. Although Mr Gumbley was still awaiting details of the chemical composition and shape of the charges, he was able to say that he had been told:[/SIZE]

“... that the propellant is of a special high energy composition and that it would be in the shape of short grains (sticks). Much more alarming to him was an allegation that they were to be used in a very large artillery piece in Iraq, mounted on rails and using several bags of grains and igniters in series to produce a weapon of strategic range. The direct involvement of Dr G V Bull of SRC in the Iraqi project was a further indicator of the type of technology. [He] mentioned the possibility of nuclear shells ....”

Mr Primrose reiterated DESO’s advice that the supply of propellants was a matter for the Belgian authorities and advised Mr Gumbley that he should consult them if he suspected Iraqi involvement. Mr Primrose was, he said, left with the clear impression that Mr Gumbley:

“... did not intend to supply the propellant; that he might consider divesting Astra of the propellant plants to SRC if the Belgian government agreed; and that he intended to raise the whole matter with the original owners Société Générale. He also promised to keep us informed and to tell us about the chemical and physical details of the propellant when these come to hand.

10. I have refrained from introducing into this minute any collateral information which we have to hand about SRC, Dr Bull, Iraq etc; but you are aware that there is a considerable body of such material ....” [size=12]*27

[/SIZE]
F3.26 Mr Primrose spoke to Mr Q on the telephone after his second meeting with Mr Gumbley. Mr Q remembers Mr Primrose telling him about a “rather bizarre” story which he had been told by a British company. The company, which was not named, had indicated:

“... that propellant of abnormal characteristics was being manufactured in Belgium, ostensibly for Jordan but in truth intended for an Iraqi end user. [Mr Primrose] was unsure whether to believe the story, and if he did, which government departments should be informed and how. [He - Mr Q] replied that [he] had other straws in the wind along the same lines so that, taking all the indicators together, [they] ought to take the story seriously however bizarre it sounded. As to government departments [they] agreed that the matter did not fit neatly into any one pigeon-hole but DTI and FCO had an obvious interest as well as MOD ....” [size=12]*28[/SIZE]

Mr Primrose agreed to record what he had been told.
F3.27 In early November 1989, a meeting was arranged at the Grantham offices of BMARC which was attended by Gerald James, Stephan Kock, an SAS officer and Mr Q. Evidence given to TISC by Mr James was that “the objective alleged [of the meeting] was to look at equipment purchases. Instead [Mr Q] spent most of the time grilling James about the Jordan contract and who had knowledge of it.” [size=12]*29 Mr Q’s account of the meeting was recorded in a MOD brief for the Minister (DP)’s appearance before TISC. Mr Q is reported to have said that the meeting was set up to discuss equipment for the Special Forces, that he was invited by an SAS officer to be present and that he took the opportunity to assure Mr James that the information provided by Astra about PRB’s Iraqi propellant contract was being taken very seriously. *30 [/SIZE]
F3.28 On 13 November 1989, Mr Primrose sent to Mr Q a letter headed ‘PRB’. [size=12]*31 Mr Primrose enclosed with his letter an “exact transcript” of the information passed to MOD/DESO on 26 October, as well as a “slightly edited” version of the note of the meeting on 3 November. The purpose of editing the copy of the 3 November note was, according to Mr Primrose, to underline an oral agreement that he had reached with Mr Gumbley, namely, that Astra would not be identified in intelligence reporting to “UK or Allied customers as collaborating with UK intelligence; and that their private commercial affairs should not be published more widely than necessary ....” Mr Primrose accepts that his editing was hurried and quite transparent and that the company was readily identifiable by anyone with no more than a “slender knowledge” of the defence industry. *32 In fact, Mr Q had already known by 6 November that Astra was the company concerned. In oral questioning at the Inquiry, it became apparent that Mr Primrose had deleted more than he needed to if his purpose was to exclude details identifying Astra and Mr Gumbley. Thus, for example, the version which was sent to Mr Q excluded the reference to Mr Gumbley’s mentioning the “possibility of nuclear shells”. But, be that as it may, the fact is that Mr Q was provided with a great deal of highly pertinent information. Taken on its own, the story of a so-called “monster gun” might have been discounted as a rather wild story by Mr Q; but, taken with the other straws in the wind, it seemed to him that this was a matter worth pursuing. *33 [/SIZE]
F3.29 It is worth noting one point in Mr Primrose’s letter to which I shall refer again. He records Mr Q as having suggested on the telephone that an official, but confidential, démarche should be made to the Belgian Government in relation to the PRB propellant exports. At the time Mr Primrose considered this to be the best permanent solution to the problem. But, in his view, a démarche needed to be made quickly. [size=12]*34 The request for the démarche was eventually made to the FCO on 15 December 1989.[/SIZE]
F3.30 A meeting between Mr Q, Mr Primrose and members of the board of Astra took place on 23 November 1989. There were two matters which were explored at the meeting. First, it was sought to clarify the technical question of what precisely the device was for which Iraq was procuring such an abnormal propellant. Mr Q recounts this part of the discussion in a lucid, lively manner and I shall quote his written evidence in full:

“... The technical part of the meeting was a little confused at first in that Mr PRIMROSE and ASTRA were considering the possibility that the propellant was for some novel form of rocket motor rather than a gun for which it was considered far too thick. The thickness (web thickness) was the key parameter in that it determined the time required for the propellant to burn up. This time was far too short for any reasonable rocket or ballistic missile but too long for a gun of any reasonable size. Therefore this propellant had to be for a gun of monster proportions, around 100 metres in length. This tied in with the other sketchy evidence I had and I must confess to being very excited at the realisation that we were on the verge of uncovering a completely new concept in weapons. It struck me at the time that the situation was comparable to that moment in 1942 when Dr R V JONES realised that the Germans were developing the V2 rocket ....” [size=12]*35

[/SIZE]
The second matter discussed was the question how the British Government could seek to achieve the disengagement of Astra without infringing Belgian law. It was assumed by those present at the meeting that the contract to supply the propellant was valid under Belgian law. [size=12]*36 A number of points for further action were then agreed by those who were there. In a letter to Mr Q recording the discussion at the meeting with Astra, Mr Primrose said that Astra had been advised by the Government representatives to monitor “very closely” the activities of PRB in negotiating any further related contracts and to take advice from the authorities at every stage. *37 Mr Primrose said in the same letter that, after the meeting with Astra, he and Mr Q had agreed that the concerns of the British Government should be communicated to the Belgian Government as soon as practicable and, in any event, by the end of 1989. They had noted that, once Astra assumed full control in January 1990, the perception both domestically and internationally would be that PRB’s activities were carried out under the direction of Astra. In those circumstances, Mr Primrose said in his letter to Mr Q, “any activity which could be seen as violating the spirit of the MTCR and other relevant policy decisions will be attributed to the UK firm”. DESO’s view, said Mr Primrose, was that Astra should “terminate this line of business” and that the correct way to achieve this was for the British Government to persuade the Belgian Government to review its export licence policy. *38 This was a reference to the démarche which, on 13 November, had already been suggested by Mr Q to Mr Primrose. Finally, it is important to draw attention to the fact that Mr Primrose and Mr Q agreed that all relevant information “should be reported to Ministers as a matter of urgency”. In fact, MOD Ministers were never told. *39 [/SIZE]

Endnotes:
*14 - Memorandum by Gerald James to TISC: HC 86-x: p.350
*15 - Mr Kock’s evidence to TISC: HC 86-xii: Questions 3036-37. Mr Kock has confirmed to the Inquiry that, subject to two points, the minutes of his evidence to TISC have been accurately recorded, although he does also say that some of the questions put to him were based on “assumption” or “incorrect evidence” by “others”.
*16 - Evidence to TISC (Mr Kock): HC 86-xii: Questions 3044-3060; 3116-3119. I have already referred (supra) to a propellant contract between PRB and the Royal Jordanian Armed Forces.
*17 - TISC (Ibid): Q 3239
*18 - TISC: HC 86-xii: Evidence of Mr Gumbley: Question 2870
*19 - Mr Primrose’s first written statement to the Inquiry dated 11 May 1993: paragraph 3
*20 - The functions of DGMktg are described in paragraph F3.84 infra
*21 - paragraph 13 and p. 5 of Mr Harding’s first written statement to the Inquiry dated 20 May 1993
*22 - MOD/125.1
*23 - Mr Tidy, as AUS DES Admin, had oversight within DESO of export control and enforcement matters
*24 - Mr Primrose’s first written statement: p. 2
*25 - see also paragraph F3.85 infra
*26 - MOD/125.7
*27 - MOD/125.7 (Ibid): I have assumed that Mr Primrose was referring to the information held by the intelligence services about SRC’s Learfan project and, more generally, about Dr Bull’s activities over the years unrelated to Iraq
*28 - Mr Q’s first written statement dated 26 April 1993: paragraph 2a
*29 - paragraph 10(b) of the Appendix to Mr James’ memorandum to TISC: HC 86-x
*30 - MOD/212: Letter from Mr Keen (MOD) to the Inquiry dated 19 May 1993, paragraph 4c of a brief from Nicolas Bevan to the Minister(DP) dated 25 February 1992 prepared for the Minister’s appearance at TISC;
*31 - MOD/125.19
*32 - Mr Primrose’s first written statement, p. 3
*33 - transcript of Mr Q’s oral evidence to the Inquiry on 18 May 1993: pp. 5/6
*34 - MOD/125.19
*35 - Mr Q’s first written statement: paragraph 3
*36 - Mr Q’s first written statement: paragraph 3
*37 - MOD/125.27
*38 - In his written comments to the Inquiry, Mr Primrose said that the intention was not to ask the Belgian Government to review “their whole export policy”; rather to look a the two export licences with a view to discovering whether false end-user certificates had been used
*39 - see paragraphs F3.83 et seq

* The Full report is available from The Stationery Office Ltd., PO Box 276, London, SW8 5DT.