MIL-TEC – A CAUTIONARY TALE

INTRODUCTION

From time to time, fingers are pointed at the UK, and particularly at the Isle of Man, about involvement in the supply of arms to Rwanda at the time of the genocide in that country in the 1990s.  Putting “Mil-Tec” into Google will link you to news stories and articles from non-governmental organisations (NGO), and even questions and debates in the UK Parliament refer to the case – though it is now more than 20 years since the events at the heart of the case.

In 1996, a story broke of the alleged involvement of a British company in the supply of arms used in the genocide in Rwanda[1].  The company said to have been involved was called Mil-Tec (Mil-Tec Corporation Limited[2]) and was registered in the Isle of Man, where it had supplied by, and was said to be administered by, BDO Binder.  All of its shareholders and directors were described in the reports as being nominees.  These initial reports made clear that Mil-Tec was not thought to have done anything illegal.

THE RWANDA GENOCIDE

The genocide had taken place in April to June 1994[3], and had seen the death of around 800,000 Rwandans, with most of the dead being ethnic Tutsis – the minority population of the former Belgian colony – with most of those who carried out the killings being Hutu – the majority and historically the dominant peoples of the country.  Ironically, the two peoples speak the same language, inhabit the same areas and follow the same traditions.

The former colonial power had been Belgium.  Belgians had considered the Tutsis to be superior to the Hutu, and the better jobs and educational opportunities went to the Tutsis.  There had been rioting before, fuelled by the resentment of the Hutu – for example, in 1959 some 20,000 Tutsis had died, with more fleeing to neighbouring states.  When the country achieved independence in 1962, the Hutu took control.

The initial trigger for the genocide was the death in a plane crash of President Juvenal Habyarimana, a Hutu.  Within hours violence had broken out in the capital Kigali and then spread throughout the country.  Leaders of the political opposition were killed, and then the slaughter of the Tutsis, and of moderate Hutus, began.  Soon the first perpetrators – the military and politicians – were joined by a mass of others.  The most horrifying aspect of the killings at the time was probably that many victims were murdered by being hacked to death by machete.  An unofficial militia group called the Interahamwe was formed, reaching at its peak some 30,000 members, and soldiers and police encouraged ordinary citizens to take part in the massacres.  There were UN troops in the country, but these withdrew after the murder of 10 Belgian soldiers.

Tutsi refugees in Uganda, supported by some moderate Hutus, had formed the Rwandan Patriotic Front (RPF), led by Paul Kagame (later, and currently, President of Rwanda).  This then attacked government forces, and eventually succeeded in capturing Kigali in July 1994, effectively ending the genocide.   Some 2 million Hutu fled to neighbouring Zaire (now the Democratic Republic of Congo, or DRC).  A multi-ethnic government was established in Rwanda, but Kagame later replaced the original Hutu president, and the government became Tutsi-led.  Violence continued, with Hutus implicated in the continual fighting in the DRC, and with incursions by Rwandan forces into the DRC in pursuit of Hutu forces there.

THE DISCOVERY OF INCRIMINATING DOCUMENTS

Mil-Tec was the company name found on invoices for arms, said to be worth around £3.3 million found on a bus abandoned at a Hutu refugee camp in eastern Zaire in November 1996.  In the UK, there were calls for an inquiry, and the office of the Prime Minister expressed concern that a British company may have breached the 1994 UN arms embargo on Rwanda.

The invoices were reported to have been found by a BBC reporter and apparently showed that Mil-Tec had supplied rifles and ammunition, rockets, mortar bombs and grenades until at least July 1994[4].

In its 1999 report, “Acknowledging Genocide”[5], Human Rights Watch said that one of the first actions of the interim government in Rwanda, on 10th April 1994, was to make contact with Mil-Tec to place an urgent order for arms and ammunition, as part of larger efforts to secure such from wherever available.  5 shipments were reportedly arranged.  As well as National Westminster in the UK, banks in Belgium (Banque Bruxelles Lambert), France (Banque National de Paris), Switzerland (Union Bancaire Privée, Geneva), Italy (Banca Nazionale de Lavoro), and in the US (Federal Reserve Bank, Chase Manhattan Bank) were also said to have handled financial transactions involved in the purchase of weapons for the regime.

MIL-TEC CORPORATION LIMITED

Those behind Mil-Tec were said to be a nominee company, Business Management Services Nominees Limited, and company secretary, John Donnelly of BMS Company Secretaries, which was based in Sark.  A shell company, its original directors were both directors of BDO Binder, it was sold “off the shelf” to a client (Anoop Vidyarthi, see below) by BDO Binder, and the original nominees replaced by John Donnelly and his father, Trevor, both from Sark – and who, at the time, were on the boards of thousands of Channel Islands, Isle of Man and Turks and Caicos companies.

Its “manager” was said to be Anoop Vidyarthi, a Kenyan Asian who ran a travel consultancy (above an aromatherapy shop) in Hendon, North London, and Mil-Tec used a correspondence address in Hove (its registered office address continued to be that of BDO Binder in the Isle of Man).  The company’s letterhead stated that it had ‘Associates in – Europe – Israel – Korea – USA’.  Later the letterhead used a Douglas, Isle of Man address, though the company apparently continued to refer to the Hove address as its “correspondence address”.

Another Isle of Man company was also implicated in at least one shipment: Merstone Investments.  Vidyarthi was also said to be linked to a UK arms dealer called Paul Restorick, who ran another arms brokering company, Mil-Tec Marketing, situated in Ashford, Kent.  Restorick admitted that he had ‘advised’ Vidyarthi in 1993, but he denied any corporate connection with Mil-Tec Corporation and any involvement in arms supplies to Rwanda.

THE UN ARMS EMBARGO

The UN Security Council had imposed an arms embargo on Rwanda five weeks into the genocide, on 17th May 1994[6].

However, Mil-Tec was said to have organised the supply of arms and ammunition both before and after the 17th May (and at least until July 1994 – when the RPF had taken Kigali).  The goods were said to have been sourced in Bulgaria and the Former Yugoslavia and flown in from Albania and Israel via Goma in Zaire.  End-user certificates showed Zaire as the end destination[7].

At the time, responsibility for ensuring UN sanctions measures applied to the Isle of Man was the responsibility of the UK Government.  Whilst such binding UN Security Council measures should apply automatically to all member states (and to the Isle of Man by virtue of the UK being the responsible member state), they still required formal implementation by means of orders-in-council under the United Nations Act 1946 of Parliament.  Such orders would also provide enforcement powers, provide for offences and penalties etc.  The Foreign and Commonwealth Office would have had overall responsibility for ensuring the implementation of the UN Security Council Resolution, and there appears to have been a breakdown of communications between it and the Home Office (which, at the time, had responsibility with liaison with the Isle of Man Government authorities).  As a result, the necessary order extending the sanctions controls for Rwanda to the Island was not made until December 1996 – after the story had broken in the press.

Hence, at the time the supplies of arms and ammunition were arranged and made, the necessary order implementing the UN arms embargo in the Isle of Man had not been made, and so there appeared to be no legislation in force outlawing the activities of Mil-Tec in the Island.

A committee of the UK Parliament subsequently reported that “there had been a lack of consistency in implementing embargoes in the UK, the Crown Dependencies[8] and the Dependent Territories” and “that there were no structured arrangements for ensuring the timely and accurate imposition of embargoes”.

Other problems highlighted by the case included the fact that no British arms were involved, and no export from the UK (or from the Isle of Man) – so that no export licence would have been required[9].  Furthermore, though destined for Rwanda, the goods were delivered (at least initially) to Zaire[10].  HM Customs and Excise in the UK did interview Vidyarthi and carried out other inquiries and visited various premises, but no prosecutions ensued.

Hence, it was considered unlikely to have been any breach of export control or general customs law in the Isle of Man either.

ISLE OF MAN INQUIRIES AND SUBSEQUENT QUESTIONS

Over the years a number of enquiries were fielded by the Isle of Man authorities, and one in 2015, where the response was made public, provided a succinct summary of the authorities’ position.

In 2015, in a letter responding to questions raised by the Celtic League (a Celtic nationalist organisation), the Chief Minister of the Isle of Man confirmed that “following the allegation regarding the company’s activities made in late 1996, the Customs and Excise Division of Treasury[11] did conduct enquiries and these established that as the Sanctions Orders were not introduced in the Island until 21st December 1996[12], the company could not be charged in relation to its alleged supply of ammunition to Rwanda in 1993 and 1994”[13].

The Chief Minister went on to say that “as no further investigation or proceedings were possible, the…records [of the investigation] …were retained in accordance with the Customs and Excise Division’s document retention policy for 10 years and were then destroyed”.  The Celtic League expressed its concerns at the news (and it does seem shortsighted for the authorities to dispose of documents that could have assisted them in refuting future allegations of ineptitude or worse).

The Isle of Man Government also submitted evidence to the Parliamentary committee, setting out the position as it saw it.

COULD IT HAPPEN AGAIN?

The Isle of Man now takes a more proactive approach to sanctions matters – UN and EU, trade and financial[14].  Concerned by delays that could occur in the UK making the necessary order to implement UN sanctions in the Island, it shifted reliance to EU sanctions regulations – which it could apply and implement using its own domestic legislation and without waiting for the UK to act.  More recent changes allow for the temporary imposition of new UN sanctions measures pending the necessary EU regulation.

Thus, there should not be the same problem arising from a breakdown in communications between UK Government Departments and, to be fair, the Island has been highly diligent in implementing and keeping up to date the various UN and EU sanctions regimes.

In addition, export control legislation now imposes licensing controls on the involvement of activity in the Island, or of “Island persons”, in the movement of certain goods between two (or more) third countries, i.e. goods that are not exported from, or via, the Isle of Man.  Some of these controls are extra-territorial, i.e. they capture activities that take place outside the Isle of Man[15].  The goods covered include most military and paramilitary goods, certain riot control devices using incapacitating chemical substances, certain security and paramilitary police equipment (including “torture” and restraint equipment), combat aircraft etc.

Thus, the activities of Mil-Tec would probably now be caught by export control legislation, whether the activity involved had taken place in the Isle of Man or (as seems more likely to have been the case) in the UK.  The extra-territorial provisions of the legislation would probably not have been relevant, given the types of goods involved[16] – so that, if those involved had undertaken all their activities outside the UK and the Isle of Man, they may still not have committed any offence.  However, the guidance issued in the Isle of Man makes clear that even “a single email, fax or telephone call could constitute sufficient activity[17]” if made in or from the Island (and presumably the same would apply under the corresponding UK legislation).

Furthermore, it should be noted that trust and corporate service providers (or TCSP) are regulated in the Isle of Man and licensed by its Financial Services Authority (FSA)[18].  The FSA supervision includes anti-money laundering and countering terrorist financing issues but would also take into account how such TCSP deal with other matters, including sanctions and export control issues, as well as how they question the beneficial ownership and uses of the corporate vehicles they supply and administer.

Just creating new laws and rules cannot eliminate the risk of a Mil-Tec type of situation arising again and improved awareness of potential risks in law enforcement and regulators can only play a part in preventing or detecting such cases.  Constant vigilance on the part of all those who may be involved, including in the TCSP, banking, legal and insurance sectors is required.  All need to be aware that not only could bad things happen, but bad things have happened and could happen again and, if they do, as in the Mil-Tec case, they could continue to haunt you for many years into the future.

 

R Todd

12th July 2018

————————————————————————————————————————————-

[1]  For example, see https://www.independent.co.uk/voices/islands-of-uncertainty-1353627.html

[2]  Incorporated in 1993 and dissolved in 1998: see https://opencorporates.com/companies/im/061586C

[3]  https://www.britannica.com/event/Rwanda-genocide-of-1994

[4]  For more detailed information, see “The Arms Fixers” (Norwegian Initiative on Small Arms Transfers): http://francegenocidetutsi.org/TheArmsFixers.pdf That report lists the shipments arranged by Mil-Tec as being – 6th June 1993 ($549,503 of ammunition from Tel Aviv to Kigali); 17th–18th April 1994 ($853,731 of

ammunition from Tel Aviv to Goma); 22nd–25th April 1994 ($681,200 of ammunition and grenades from Tel Aviv to Goma); 29th April–3rd May 1994 ($942,680 of ammunition, grenades, mortars and rifles from Tirana to Goma); 9th May 1994 ($1,023,840 of rifles, ammunition, mortars and other items from Tirana to Goma); 18th -20th  May 1994 ($1,074,549 of rifles, ammunition, mortars, RPG rockets and other items from Tirana to Goma); 13th–18th July 1994 ($753,645 of ammunition and rockets from Tirana to Kinshasa) – the date on the air waybill appears first, and the invoice second.

[5] https://www.hrw.org/reports/1999/rwanda/Geno15-8-02.htm#P414_131702

[6]  UN Security Council Resolutions 918 (1994) of 17th May 1994, 997 (1995) of 9th June 1995 and 1011 (1995) of 16th August 1995 provided for States to prohibit the sale and supply of arms and related materiel to persons in the States neighbouring Rwanda if such sale or supply is for the purpose of the use of such arms or materiel in Rwanda.

[7]  For more details of example shipments, see “Under the Counter and Over the Border: Aspects of the Contemporary Trade in Illicit Arms” by Mark Phythian (Springer Science & Business Media, 2013)..

[8]  The Isle of Man status is that of a Crown Dependency (along with the Channel Islands).

[9]  Now, in addition to any UN or EU sanctions controls, such shipments between two third countries and involving someone in or from the UK (or Isle of Man) can require a trade control licence – see Notice 279T at https://www.gov.im/media/814275/notice-279t-man-trade-control-licensing-2-jul-18.pdf – as originally proposed in the 1998 UK White Paper on Strategic Export Controls.

[10]  The sanctions legislation was subsequently amended to deal with this, an amendment extending the embargo’s controls “to any person in Burundi, Tanzania, Uganda or Zaire, knowing or suspecting that the goods in question are intended for use within Rwanda” – see the United Nations Arms Embargoes (Somalia, Liberia and Rwanda) (Isle of Man) (Amendment) Order 1997.

[11]  The Division had (and has) responsibility for investigation of customs, export and trade sanctions offences.

[12]  The United Nations Arms Embargoes (Somalia, Liberia and Rwanda) (Isle of Man) Order 1996.

[13]  https://www.celticleague.net/news/records-of-genocide-arms-dealings-destroyed/

[14]  Until 2000, the Bank of England was responsible for the implementation of financial sanctions in the Isle of Man and Channel Islands.  The role was then devolved to the islands’ own authorities.

[15]  These extra-territorial provisions apply to “Category A” goods which comprise certain security and paramilitary police equipment (i.e. goods for internal repression or torture such as electric shock batons and belts, leg-irons etc), types of cluster munitions, attack helicopters and combat aircraft.  The requirements apply to the activities of bodies incorporated under the law of the Island and LLC (or other corporate bodies) registered in the Island, or various types of British citizen (including “Manx” persons) and British protected person who are resident in the Isle of Man when undertaken anywhere in the world.

[16]  Unless the goods came into the category of goods intended or used for internal repression or torture, they would likely not have been considered “Category A” goods – see above.

[17]  Paragraph 17 of Notice 279T.

[18]  https://www.iomfsa.im/regulated-sectors/trust-and-corporate-service-providers-tcsps/

Author: raytodd2017

Chartered Legal Executive and former senior manager with Isle of Man Customs and Excise, where I was (amongst other things) Sanctions Officer (for UN/EU sanctions), Export Licensing Officer and Manager of the Legal-Library & Collectorate Support Section

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