Iraq

UK taxpayers forced to pay millions for Iraq arms

The British taxpayer has unknowingly picked up huge bills for helping to arm Iraq before the last Gulf war, the Guardian can disclose.

The government has secretly written cheques totalling more than £33m for arms companies who supplied Saddam Hussein in the 1980s.

The files on these disastrous insurance deals have been locked up for 12 years since they were secretly authorised by Margaret Thatcher. The total loss to the taxpayer on military and civil credit sales her administration carried out with Iraq now exceeds £1bn.

In a detailed investigation, we have identified for the first time from Whitehall documents all the arms contracts concerned and the firms and banks who benefited.

Racal, Thorn-EMI and Marconi secretly supplied President Saddam's army with artillery control, anti-mortar radar and secure radio systems, much of which it is believed still to possess. The firms are all now subsidiaries of defence giants BAE and Thales.

Military deals also included generators to start up military jets and helicopters from Houchin Ltd and Braby Auto Diesels; air force reconnaissance cameras from Vinten; and an electron microscope from Cambridge Instruments.

The giant construction firm John Laing, and a smaller firm, Tripod Engineering, were given government insurance for a £23m contract to build a training complex for Iraqi fighter pilots. Whitehall paid out £2.9m on the collapse of the project when the Gulf war broke out.

Other purely civilian deals included a 1990 guarantee for a Rolls-Royce subsidiary to build a power station near Baghdad. The government wrote a compensation cheque for £65m.

Whitehall files show that the government guarantees were given regardless of President Saddam's brutal record and regardless of his being a normally unacceptable credit risk.

The details of these guarantees have hitherto been kept secret by claims of "commercial confidentiality". But in an unprecedented display of commitment to open government, the export credit guarantee department last week agreed to release the files.