THE ARMS TRAFFIC

Evening Post, Volume CXXII, Issue 13, 15 July 1936, Page 4

THE ARMS TRAFFIC

DENIAL OF BRIBERY

EVIDENCE OF SERVICES

RESENTMENT FELT

■Representatives of the Admiralty, the War Office, and the Air Ministry gave evidence before the Arms Commission recently, denying allegations that armament firms had attempted to bribe Government officials, both at home and abroad, says the "Daily Telegraph." ' Sir John Eldon Bankes 'presided, and the representatives of the three services were: . Admiralty .—Vice-Admiral Sir Reginald G. H. Henderson, Controller of the Navy,-arid Sir Walter St. D. Jenkins, .Director, of Navy Contracts. . War Office.—Mr. F: C. Bovenschen, Director of Army Contracts; Lieut.Geheral Sir Hugh J. Elles, MasterGeneral, of .the Ordnance; and Sir Reginald Townsend, Director of Ordnance Factories.. ' . Air Ministry.—Air Marshal Sir Hugh C. T. Dotyding, ■ former Air Member for Research and Development, and Mr.'B, E. Holioway, Director of Contracts. . : : ' '" • They presented a memorandum dealing with the attitude of the Services towards the proposals to set up a National Armaments Board and for "the" nationalisation of armaments and ! domestic matters pertaining to the Admiralty, War Office, and Air Ministry." I Rebutting allegations of bribery made iri:previdus evidence, the memorandum stated that-so far as the Services' Departments were concerned the allegations were without foundation, -but that- they might be considered from the point of view of whether the. systeni was such as to afford adequate safeguards against bribery,' and whether cases of bribery had occurred. \\. precautions: taken. The memorandum stated that the! same broad principles regarding precautions against bribery applied to all three Departments, and it was claimed that they rendered effective bribery difficult, 'if not impossible. It was pointed out that bribes might be offered' by armament firms to induce a Department to embark oil a programme of purchase of armaments which ■it would otherwise not purchase, to buy stores from one firm in preference to another, and to^ pay a higher price than was justified. • After giving details of precautions I taken, the 'memorandum stated that there was no shadow of evidence for suspecting • that. any case of corruption or ■ undue influence had ever arisen.. • The system in force in the three Departments was such as to safeguard the State against bribery in connection with the placing and administration of contracts. y To the question whether, despite the system, bribes had been offered to and accepted by members of the three Service Departments from armament firms, it was, of course, impossible to prove a negative. It could only be said that in none of the three Departments was there a record of any such case since the war. All three Departments were satisfied that in the placing and administration of contracts their officials carried out their duties with honesty and integrity. : No scrap of evidence had been pror ducedethat ,officials:.of the Departments had been directly-bribed by armament firms, and the-Departments, were aware of none, • - , . •;. ■ Regarding themore "subtle" form of bribery allegation, that discrimination had teen made by officers of the Ministry in allocating orders in order to obtain jobs upon retirement as directors on the boards of armament firms, the. memorandum stated that in support of these allegations certain names had been mentioned. "It is freely admitted, indeed it is com'monknowledge," the memorandum continued, "that members of the Services, have, after retirement, joined the boards of armament firms providing munitions' for the Crown. .'"The fact that such appointments have been given is no evidence that they have been given for improper motives, and -no shred of evidence exists that discrimination has been made. " : -EVIDENCE AGAINST IT. "It may, perhaps, be suggested that if this system of inducement to officials to show improper discrimination were really in existence, senior officials of the Contracts Departments of the Services who made peace-time allocation of contracts might be expected to be the special objects of such inducements."

"In fact, no such official has been, appointed so far as is known." ■ Dealing with proposals for the increase of efficiency, the memorandum said a-suggestion by Sir Eric Geddes for a" research laboratory, to make sure that the possibilities of mass production were fully taken into account in. considering "any armaments invention, was worthy of "careful consideration." '- ~.

Regarding a proposal to set up a national armaments board, the memor-andum-stated that it was hardly reasonable" to" suppose that a board with its •unfettered:powers, .and no responsibility , to-Tarliament, .would be less liable :to . improper influence than Ministers of; the- Crown responsible to Parliament, for. the work and methods of their Departments. In many respects it'would be intolerable to. have to resort to an independent armaments board before certain- actions could be taken. To interpose, an .independent authority would constitute a serious and \probably crippling handicap -to defence services in- peace; and war. The Departments also opposed proposals fot.the partial.nationalisation of the armaments industry. In the view of the Departments the •proposal.was open,to objection because it would reduce the ".'war potential" of industry; it was of very doubtful practicability on technical grounds; it ■would cause considerable dislocation of. commercial establishments and affect the efficient production of commercial goods; and the nationalisation of selected industrial units would result'in very serious difficulties. It was also emphasised that a moderate measure of nationalisation would. involve the State in very considerable financial loss, or in competition with private enterprise. CAPITAL COST UNKNOWN. The War Office stated that it would be impossible to estimate the capital cost of providing Government factories with the capacity.for war expansion. It would run into many millions. 1 The Air Ministry stated that if one of the schemes were adopted the cost would not. be less than £25,000,000, while' a cheaper scheme would cost £5,000,000. Regarding .cost of production any new innovation was opposed. The Departments considered that the public interest was well served by present arrangements. The War Office view was that both the factories and the trade were efficient and the prices of both were reasonable. Denying that there was neglect of inventors, the Memorandum stressed that inventors were encouraged and there were facilities for the recogni^

tion of inventions and suggestions. Dealing with allegations that secrecy was not observed in protecting Government designs under private manufacture, the Services stated: "Contractors may be relied upon, out of self-interest as well as loyalty, to observe the Departments' desires'. In the most unusual event of a contractor being disposed to consider private profit before the national interest, every deterrent by way of penalty and loss of favour to turn him from that course was also emphasised." It was also pointed out that the Departments were protected under the Official Secrets Acts. Sir Philip Gibbs, a member of the Commission, raising the question of keeping the latest types of weapons secret, asked, "Don't you think from the Services' point of view that the Government ought to have closer control over the sale of weapons of war by private enterprise?" Lieut-General Sir Hugh Elles: We have a strong licensing system. Sir Philip said it did not seem to prevent the sale abroad of our latest types of weapons. Sir Hugh: I hope there is no sale of that sort. , Sir Philip: Are not many of our most modern types of weapons and most recent discoveries in -armourpiercing shells, for instance, available to foreign countries? "WOULD SOON BE KNOWN." Vice-Admiral Sir Reginald G. H. Henderson: There was the Hadfleld shell. Although it represented an advance it would soon have been found but, and we came to the conclusion that it was not necessary to take out a patent for it, Sir Thomas Allen (a member of the Commission): Secret or otherwise, is it an advantage or a disadvantage to the Defence Services that there should be export of armaments? Lieut.-General Sir Hugh Elles said it was not a disadvantage, but definitely helpful to the extent that firms were using their brains to improve things. Replying to Sir John Eldon Bankes, Vice-Admiral, Sir Reginald Henderson said that he would say that an export system was essential. Replying to Sir Philip Gibbs, Sir Hugh said that if a country backward in manufacturing facilities wanted an air force, it would buy its machines somewhere else if it could not get them in this country. Sir Philip: But they would not get our best types?—No, they will have somebody else's best types. We are making them a present of our brains.—We are riot making them a present, but a sale of our brains. . Sir Philip: The sale might be very costly if they used our brains against us. '■■-■. Sir Hugh Dowding: We have a system by which every new aeroplane and engine goes on what is called the "secret'list." That is not published anywhere outside the Air Ministry, but manufacturers know they are not permitted to disclose any details of aeroplanes or engines, or even their existence in the early stages, and any request for export or sale abroad would be unhesitatingly refused at that stage. There comes a stage in the life of the aeroplane where it is impossible to keep its existence secret any . longer. A new type could not be kept secret when it went out on to the aerodrome. No aeroplane can be sold at any time without the permission ■of the Ministry. Sir Hugh added that at a later stage, manufacturers were allowed to discuss sales with bona fide purchasers, but the general principle followed was that the Service should have something over a year's lead. RURITANIA AND UTOPIA. Professor Gutteridge: Suppose, say, Ruritania bought so many aeroplanes from one of our and then proceeded.to' sell them,.to Utopia, a country, say, just across the Channel, which can easily bomb us, what steps could you take to prevent that? Sir Hugh: Actually we have stopped such a case. A consignment was being bought by one country, and it came to our notice that the machines would very probably be exported to another, and we stopped the sale. We have in certain cases obtained an undertaking from countries not to resell. Professor Gutteridge: Unfortunately, international undertakings are not always kept. Sir Hugh said he did not know of any instance where they had not been kept in this connection. Sir Walter Jenkins, Director of Navy Contracts, in answer to questions dealing with exports, referred to the building of warships. He said that it was of advantage to the Admiralty that British firms should get orders from similar Powers, as it kept men employed. It would- be very unfair to handicap manufacturers by forbidding the export of craft to smaller countries, which would only go to other countries for their orders. Sir Philip Gibbs referred to "the difficult situation that might arise" if the private armament firms were unable to expand to meet wartime production, and mentioned the number of firms in the north-east which had gone out of existence. . Vice-Admiral Henderson said that in the naval dockyards the building of the ships was really akin to building up a. jig-saw puzzle. The parts were merely assembled. Vice-Admirai Henderson agreed, in reply to another question, that the private armament firms wece totally insufficient in themselves to meet a great expansion. . Sir Thomas Allen said that the Commission viewed with apprehension the awkward position in regard to the capabilities of private firms in an emergency. Sir Reginald Townsend said that the Government factories were extending rapidly. Dame Rachel Crowdy, a member of the Commission, asked about sales of second-hand arms to foreign countries. Mr. F. C. Bovenschen, director- of finance at the War Office, said that there was a danger of the question getting out of perspective. Old and' surplus stores sold by the War Office contracts branch included clothes, tents, trophies, huts, and obsolete arms. The average receipts in the years 1931-34 totalled £114,000, or more than the cost, of a battalion of infantry. Referring to an agreement mentioned at previous .sittings, Mr. Bovenschen said.the Commission might have drawn the conclusion that large quantities of old rifles were allowed to be sent to a reconditioning factory at Liege. The facts, were that 1000 rifles only were allowed to be sent to Liege, with the definite stipulation that they were not to be sent on without the concurrence of the export department of the Board of Trade. To the best of his knowledge over 900 of these rifles were still at Liege; the balance had either been destroyed in experimental operations or sent abroad as samples. Professor Gutteridge: What I am thinking is that this is a sort of "ra°and bone" trade, and that it is undignS fled for this country. To be peddling arms seems to be running the risk of bringing our good name into disrepute and it really is not worth it Referring to the allegations of bribery, Professor Gutteridge said- "I gather that the departments strongly resent the suggestions that had been made?" Mr. Bovenschen: Very strongly We repel the insinuations. Sir Kenneth Lee: You will agree that no regulations will' prevent bribery if the parties are willing?—Yes. The main safeguard against bribery is the very high standard of the Civil Service