[Media-watch] BBC Governor under fire for Iraq Contracts - Media Guardian - 3/10/2004

[Julie-ann Davies]

BBC governor under fire for Iraq contracts

Antony Barnett, public affairs editor
Sunday October 3, 2004
The Observer

http://media.guardian.co.uk/site/story/0,14173,1318659,00.html

The BBC chief who played a pivotal role in how the corporation covered
the Iraq war and the David Kelly affair, stands to profit out of a
firm with lucrative military contracts in Iraq.

Dame Pauline Neville-Jones, a BBC governor,
emerged as one of the main figures in the feud between the BBC and the
government in the fallout of the Hutton inquiry into the death of
weapons scientist Dr David Kelly, being blamed personally by
former-director general Greg Dyke for his sacking.

Neville-Jones, a former chairman of the Joint Intelligence Committee,
took an unusually active role in the Kelly affair, criticising Andrew
Gilligan's reporting and also expressing unease about Kelly's
expertise.

Now it has emerged that Neville-Jones chairs a company providing
military equipment for US Humvees and Black Hawk helicopters, both of
which are used in Iraq, leading to calls for her to reconsider her
position as a governor.

Documents from Companies House reveal that Neville-Jones earned
£133,000 last year as chairman of Qinetiq, the privatised research arm
of the MoD.

The company recently bought two US defence firms that have intimate
ties to the Pentagon and multi-million-dollar contracts supplying the
US forces in Iraq.

The company's accounts also disclose that Neville-Jones owns £50,000
worth of shares in Qinetiq which are held through the controversial US
fund the Carlyle Group.

The fund is known as the 'Ex-Presidents Club' because of the number of
former world leaders it has employed, including President Bush's
father and former Tory Prime Minister John Major.

Following Qinetiq's move into the US defence market, the company hopes
to float on the stock market, a move that would probably see the value
of Neville-Jones's shares rise.

Neville-Jones, who sits on the BBC's programme complaint committee,
has always declared her chairmanship of Qinetiq, but backbench MPs are
now calling on her to consider her position as governor.

Former defence minister Peter Kilfoyle said: 'The fact that she has
such a financial interest in the armaments industry and firms involved
in Iraq appears to be a real conflict of interest. She should have
stepped aside when it came to discussing military issues.'

Labour MP Llew Smith, Labour MP said: 'It is completely inappropriate
that someone so senior in the BBC should be leading a firm making huge
profits from the misery caused by the invasion of Iraq.'

Neville-Jones was personally blamed by Dyke for leading the boardroom
revolt against him after Hutton criticised the corporation for failing
to correct its reporting over the WMD dossier.

It emerged in the Hutton inquiry that Neville-Jones sent BBC chairman
Gavin Davies a note expressing her unease that Gilligan may have
exaggerated the status of Kelly, who killed himself over the scandal.

Qinetiq was formed out of the part-privatisation of the MoD's military
research arm. The MoD still owns 51 per cent of the company, which
announced last month that it paid £160 million to buy US firms
Foster-Miller and Westar.

Foster-Miller makes bomb-disposal equipment and armour for military
vehicles and aircraft. This year it boasted record profits, thanks to
a $7m contract with the US Marines to provide armour for Marine
Humvees in Iraq .

Westar works closely with the Pentagon on many US military operations.
It made components for US Black Hawk and Apache military helicopter
that allowed them to fly through sandstorms in Iraq and Afghanistan.

Qinetiq admits its success in buying the US firms was helped by the
British decision to stand by Bush. Qinetiq's chief executive Sir John
Chisholm said: 'It is an undeniable fact the US and UK find themselves
shoulder to shoulder in Iraq which creates a halo effect that is
beneficial to UK companies seeking to enter the US market.'

It is not the first time that Neville-Jones has faced criticism over
her commercial interests. After leaving the Foreign Office, she joined
former Tory Foreign Secretary Douglas Hurd at National Westminster.
The bank's investment arm worked with Serbian dictator Slobodan
Milosevic to privatise the country's telecoms industry. Both had
meetings with Milosevic in Belgrade in 1996 on Serbia 's foreign debt
and the privatisation of state assets.

Although there is no suggestion of wrongdoing in the deal, it was
attacked for presenting Milosevic with a £625m windfall a year before
his campaign to drive Kosovan Albanians from their homes. At the time,
the Serbian leader was facing down huge protest demonstrations in
Belgrade.

A spokeswoman for the BBC said: 'The board of governors is responsible
for ensuring the BBC acts only in the public interest and is impartial
in its news coverage. The board operates a well-established conflicts
of interests process. It is a matter of public record that Pauline
Neville-Jones is chairman of Qinetiq.'

She said governors only have to declare shareholdings in firms with
which the BBC trades.

· Additional reporting: Solomon Hughes