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In a covert operation, Iraqi agents have targeted companies in London, Birmingham, Southampton and Reading. The Department of Trade and Industry (DTI) said last week it had received reports of suspected Iraqi orders from British companies. One of those targeted was at the centre of the arms-to-Iraq affair.
An investigation by The Sunday Times Insight team based on the evidence of western businessmen who have recently visited Iraqi weapons sites, and documents from Iraqi defence officials has established that the Iraqi military machine is so far advanced it is only a month away from being able to start work making Scud missiles capable of carrying conventional and biological warheads.
One western businessman who visited an Iraqi installation said he was shown drawings of Scud parts. At a facility on the outskirts of Baghdad, he was told that plans had been drawn up to use British machine tools to help make engines for Scud medium-range missiles capable of delivering warheads 400 miles. Production of the rockets is prohibited by United Nations resolutions passed after the Gulf war.
At another military complex, southwest of Baghdad, the businessman learnt that machine tools exported to Iraq by Matrix Churchill in the 1980s with government knowledge were still operational. The complex has been used to produce precision engineered parts for tanks and armoured vehicles.
Other British machines are also operating in Saddam's former missile production plant at Badr. The machines have in the past been used in the manufacture of gas centrifuges essential for producing enriched uranium required for nuclear bombs.
In an alarming repetition of their efforts to buy western munitions and technology before the Gulf war, Iraqi military officials have provided western businessmen with comprehensive "shopping lists" of hardware they require to upgrade and refurbish the computer-controlled Matrix Churchill lathes.
The documents request that named British companies including the British subsidiary of Honeywell, the American computer giant should be persuaded to supply spare parts for the Matrix Churchill System 10 series of lathes which were originally supplied to Iraq.
Keith Bailey, chief executive of BSA Tools, one of the largest British makers of sophisticated machine tools, said his company had received "five or six" approaches for spare parts from companies he believed may have been acting for the Baghdad government.
Bailey, whose firm now owns Matrix Churchill, said: "I referred all of these approaches to the Department of Trade and Industry."
This weekend the DTI said it would investigate the approaches.
Insight: David Leppard, Tim Kelsey and Jason Burke
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