All news on this page courtesy of the The Times & Sunday Times Newspapers, London, UK

The Sunday Times: Focus:

January 19 1997

In the back of his chauffeur-driven car, Richard Martin felt his pulse quicken as the plant loomed ahead. There were no road signs to guide visitors; no indication of its true purpose. Soldiers waved the driver past a small gatehouse, and they were inside al-Medain.

Martin, whose identity has been disguised to protect him, is an old hand in business with Iraq, possessing all the carefully honed skills of placating officialdom that such trading requires. He knew that the 9 or 10 large buildings they passed, each with its own loading bay, had churned out many long-range cannon and mortars over the years. They had also provided parts for Saddam's missiles, including the infamous Scuds.

But that was before the Gulf war. His mission now, on behalf of The Sunday Times, was twofold: to establish what progress Saddam had made in rearming for some future conflict; and the extent to which British companies might be lured into supplying parts.

The official fiction woven by Iraq around al-Medain is that it has ceased military production and been converted to civilian use. Martin's first clue to its true function came when he saw, at the entrance to one building, a set of Russian metal presses which are used to make the brass sections of howitzers, short guns for firing shells at a high angle and low velocity.

The importance of British manufacturers to al-Medain was made clear in the meeting that followed between the delegation and the plant's engineers. A crowd of them spoke with animation of their urgent need for British-made machine-tool spare parts.

It was the first of a series of illuminating meetings held by Martin. But an al-Medain engineer confided the most chilling insight. "We could start producing components for Scud missiles within a month if we had to," he said.

AN Iraqi government minister who briefed Martin during his trip, which took place towards the end of last year, persisted in toeing Saddam's official line. Seated at his mahogany desk beneath the dictator's portrait on the seventh floor of his ministry building, he was ingratiating. "We want to rebuild our industrial base for our people," he said. "We no longer want to go down the route of threatening our neighbours".

The reality, however, is that the rearming of Saddam's regime is by no means confined to al-Medain. Martin met engineers from all over the country who told the same story.

At one electrical plant outside Baghdad, engineers produced a shopping list ­ now in the possession of The Sunday Times ­ of parts needed to service some of the worn-out machine tools that survived the war. An engineer at the same plant then took out a set of plans. They described parts for the rocket engines used to power Scud missiles.

Saddam has been desperate to rebuild his shattered war machine ever since the final hours of the Gulf conflict, when allied forces halted their devastating aerial bombardment of Iraqi troops retreating in disarray amid scenes of conflagration on the so-called "chicken run", the road north from Kuwait to Basrah.

In a matter of days the world's fourth-largest army, which had boasted an estimated strength in 1990 of 800,000, had been reduced to a rabble. Some 3,000 battle tanks ­ half the pre-war total ­ 2,000 artillery pieces and 1,900 armoured personnel vehicles had been destroyed.

Western intelligence officials were confident that dozens of munitions factories had been smashed. They believed that Saddam's ability to produce large quantities of weapons, including Scuds, had been devastated.

To ensure Iraq's compliance with United Nations resolutions, a UN special commission (Unscom) sent inspectors to scour the country and reassure the world that weapons of mass destruction were kept out of Saddam's reach.

Under the terms of the ceasefire, Iraq was not prohibited from rebuilding what was left of its state-run conventional arms industry. But it was forbidden from importing spares and western governments predicted much of the dictator's weaponry would fall into disrepair.

First indications that this hope was forlorn came in 1993, when a report by a security committee of the American House of Representatives concluded that the Iraqis had partially or completely re-equipped more than 200 munitions factories and other establishments with military links, and had resumed limited production of Soviet designed T-72 tanks, artillery, ammunition and short-range rockets.

The Sunday Times has now established, through its undercover investigator in Baghdad and other inquiries, that Saddam hatched an elaborate plot to reactivate his procurement network in Europe.

The most audacious aspect of the sting was its targeting of companies in Britain, where the ill-fated prosecution of Matrix Churchill, a Coventry machine-tool company, for exporting computer-controlled precision lathes to Iraq with secret-service connivance had resulted in one of the biggest scandals of John Major's premiership.

Sir Richard Scott's arms-to-Iraq inquiry concluded last year that the government had misled parliament and the public about ministerial complicity in the affair. But even as Scott was preparing his report, Iraqi agents had already moved in on old, familiar territory.

One of their first targets was BSA Tools, a Birmingham company which had supplied lathes to shell-making factories in Iraq before the war, and which had bought Matrix Churchill in 1992.

Keith Bailey, BSA's jovial millionaire chairman, revealed that in the past two or three years, his company had received "five or six" suspicious approaches from middlemen in Jordan, India and elsewhere for spare parts for lathes of the kind the company had previously supplied to Iraq. "I referred all of these to the DTI [Department of Trade and Industry], who came back to us and told us to find out more. We gave quotes for most of the orders but they have so far come to nothing."

Paul Henderson, the former managing director of Matrix Churchill, has also learnt of such approaches. "The serial number they quoted and the parts they required were for machines we supplied for Iraq," he said.

IT was to unravel the web of intrigue in which British companies might find themselves trapped that The Sunday Times dispatched Martin to Iraq.

At several facilities associated with Saddam's arms programme in Baghdad, he found that British machine tools were once again operational, suggesting that the Iraqis have been able to acquire at least some spares.

Martin saw Matrix Churchill and other British machines operational at the huge Hutteen and Nassr military complexes. Officials left him in no doubt: Saddam has set up a network of front companies, many based in Jordan, solely to provide spare parts for high-technology machinery banned under UN sanctions.

Martin was reliably informed that British machines were also being used at other sites to make weapons, notably at al-Qaqa, south of Baghdad, where reconditioned lathes from this country are said to be making explosives and detonators.

But the Iraqis are nobody's fools. The machines are constantly moved from plant to plant; many are temporarily converted to civilian use while UN investigators are in the vicinity; the factories change their names; even the ministries that run them are disguised. The ministry of health runs a number of factories which have dedicated heavy-industrial capacity and are identified with the old weapons industry.

The "shopping list" brought back to Britain by Martin bore the names of four other companies identified by Iraq as potential suppliers. Last week none of these companies ­ Honeywell UK, of Bracknell, Berkshire; Vero Advanced Products, of Southampton; SEM, of south London; and Timken, of Reading ­ said it had received direct approaches. Vero, however, had encountered a suspicious request.

Part of the "shopping list" refers to the Matrix Churchill 10T turning system, a sophisticated computer-controlled lathe exported to Iraq in 1988 and 1989 for the production of fuses at the Nassr facility, where cluster bombs were manufactured. Trevor Abraham, Matrix Churchill's former commerical contracts manager, said the list indicated that the parts were for Saddam's weapons programme. "This is a request for spares for machines which we only supplied to Iraqi munitons factories," he said. "The likelihood is that they are trying to reactivate the factory, which we thought had been destroyed in the Gulf war. It begs a question about what the UN observers have been doing."

A recent relaxation of sanctions which allowed Iraq to trade oil for food marked, for many, the beginning of the end of Baghdad's isolation. It was greeted with fireworks in Baghdad.

While there is no evidence that any oil revenues designated for humanitarian supplies have been diverted to arms, the renewed flow of cash is believed to have enabled Saddam to stop drawing on reserves for emergency supplies of food and medicine and start using them to bolster his rearmament programme.

Sir Jim Lester, a Tory member of the Commons select committee on foreign affairs, said any evidence of an Iraqi capacity to produce weapons of mass destruction was "very alarming. It is a serious threat to stability in the Middle East". Euan Buchanan, a Unscom spokesman, commented: "Since the Gulf war, Iraq has made a series of attempts to acquire components and equipment for use in banned weapons systems. Any time it occurs it casts doubt on Iraq's stated intention to co-operate and abide by the UN resolutions."

Insight: David Leppard, Tim Kelsey and Jason Burke