The Sleazy State: Royal Ordnance 'exported weapons to East Germany': Arms deals

BRITAIN'S largest state-run arms company was at the centre of a network for the secret supply of arms to the Stasi, the East German security police, the Independent can reveal. The evidence implicating Royal Ordnance in the traffic to the former NATO enemy is in the possession of the German authorities, which are prosecuting a subsidiary of the British company for illegal arms exports.

The evidence points to systematic breaches in export rules by British companies on a scale far greater than that so far exposed by the Scott inquiry into arms for Iraq. Harry Cohen, the Labour MP, has asked Lord Justice Scott to consider evidence implicating Royal Ordnance in these breaches but he has said it falls outside the remit of his investigation. Royal Ordnance has repeatedly denied breaching any arms export rules.

In August 1991, it emerged in German press reports that weapons manufactured by Heckler & Koch, a renowned German machine gun and rifle manufacturer, had been discovered in a Stasi office in Berlin. An investigation by German prosecutors has shown the weapons were exported from H&K to Royal Ordnance in the UK, to evade tight German rules on the arms trade, then reassembled and exported using false paperwork to East Germany. The export licences said the ships were heading for Columbia. In fact, they sailed across the Baltic sea to Rostock.

Evidence for three shipments has emerged: in 1985 and 1986, when Royal Ordnance was a state-run company, and in 1988 when the company had been privatised and sold to British Aerospace. The 1988 shipment appears to have been aborted, and the weapons were not sold.

Inquiries by the Independent have established that an intermediary of the east Germans met a representative from H&K's office in the UK and told him that the Columbians were interested in the purchase of H&K weapons. He provided an end-user certificate for Columbia, which prosecutors believe was acquired by bribing a senior official of the Columbian military. The British provided an export licence on the basis of this end-user, according to the German state prosecutor.

The weapons were ordered through Royal Ordnance, apparently on behalf of H&K's UK representative, from the H&K factory in Oberndorf. They were then handed to a British export agency. The ship, the MS Neuhausen, was managed and licensed to an East German company. A spokeswoman for the shipping agents, Deutsche Seereederei of Rostock, confirmed the ship served the UK, but did not comment on these specific shipments. Royal Ordnance and H&K have denied that they were aware the weapons were going to East Germany. In 1988, the false end-user did not satisfy the British authorities and the export was not allowed to go ahead. It later emerged that the intermediary, identified in documents as Karlheinz Schulz, was contracted by the state-run East German firm, IMES, to arrange the shipments from the UK. IMES was run by a Stasi official. It was later discovered that Schulz worked for the East German security services as an arms procurement agent.

Documents show that H&K sold 100 MP5 machine guns - the same kind used by the British SAS - and 100 sniper rifles to Royal Ordnance for the 1985 shipment. They were sold in parts and reassembled at the Royal Ordnance small arms plant in Enfield, which closed in 1987 when the company was privatised. In 1986, there was a second shipment of 100 rifles. These were among those found at the Stasi headquarters in Berlin in 1991.

After the discovery of the weapons, the German authorities began an investigation. Two years ago, an H&K spokeswoman denied any responsibility for exporting them to the Stasi and said: 'We have exported those weapons to a west European country.' And that, it can now be confirmed, was Britain.

A senior executive from Heckler & Koch is currently on trial in Rottweil, Baden-Wurttemberg, charged with illegally exporting weapons to the Middle East. Royal Ordnance has so far declined to comment on the allegations, which have caused uproar in Germany.

It has also emerged since the trial started that the same network was used to allegedly supply the Contras in Nicaragua, and the Middle East, including Iraq. The Independent revealed last year that H&K weapons have been exported to Serbia since the UN embargo was imposed in 1991. H&K have denied any knowledge of the destination of these weapons.

(Photograph omitted)