Supplier to Iraq is let off pounds 1/2m tax bill

CHRIS BLACKHURST

Westminster Correspondent

A businessman named in the Scott report for exporting explosive equipment to Iraq who ran up debts of almost pounds 1m because Saddam Hussein refused to pay him when the Gulf war broke out, has had an unpaid tax bill of more than pounds 500,000 set aside by the Inland Revenue and is applying for government grants to fund his latest pounds 4m venture.

Mel Blackburn, who ran Global Technical & Management Services, a Scottish company which supplied Iraq with hi-tech equipment for clearing anti-personnel mines, is appealing to his creditors not to make him personally bankrupt. If they push him under, he argues, he will be unable to remain the driving force behind Tristan, a project to build ocean-going yachts to take deprived children from Liverpool on sailing trips.

Tristan is a charity but there is a bonus for Mr Blackburn if it takes off: it has contracted to buy the yachts from his boat-building company and the order should generate enough cash for him to pay off some of his Iraqi debts.

The IR has agreed to waive pounds 574,000 of his admitted total tax liability of pounds 659,000 and has allowed him to repay pounds 85,000 over two years. He will plead with the other creditors, who are owed pounds 265,000, next Wednesday, at a meeting in the Travellers Rest Hotel in Warrington, Cheshire. A copy of his letter to them has been sent to the Independent.

In it, Mr Blackburn admits that Global Technical Management Services was forced to cease trading as a result of the Gulf war. At that stage it was owed pounds 5m by Iraq for "engineering services", described in the Scott report as a contract to clear Iraqi waterways of mines and train Iraqis in removing mines.

Part of the contract, said Scott, included the supply of explosive detonator transponders, which required an export licence. No application for a licence was made and, said Scott, it should have been.

In his personal statement to creditors, Mr Blackburn says the "main thrust" of the company's business was in Iraq. At the outbreak of the Gulf war all contracts were suspended, the company stopped trading, all staff were laid-off and Global lay dormant.

For the first two years he lived off his savings and has since been receiving income support and picking up occasional consultancy work to get by. There is little chance, writes Mr Blackburn, of getting paid by Iraq.

He writes: "Following the Gulf war my financial affairs were investigated by the Inland Revenue and HM Customs & Excise particularly since I had failed to disclose income from abroad which had been paid into offshore bank accounts and VAT had been claimed on exports which HM Customs & Excise considered to be `outside the scope'."

Since 1991, says Mr Blackburn, he has been co-operating with the IR "and I agreed a final tax liability of pounds 659,000". The IR, he says, was willing to accept 12.5p in the pounds or pounds 85,000 to be paid over two years.

He also owes pounds 170,671 to Forward Trust Limited, the finance company which is now petitioning for his bankruptcy. In all, nine businesses and individuals are listed as creditors.

Tristan Sailing, his private company, has contracted to sell to Tristan Trust, the charity, six yachts worth pounds 4m, leaving Tristan Sailing with enough cash, he says, for him to pay all his creditors 12.5p in the pounds . But for that to happen, he says, it is vital he is not made bankrupt and is allowed to remain in charge.

Both the company and the trust, he writes, are receiving government cash from the Department of Trade and Industry and the Single Regeneration Budget.

"The company and the trust are formed as a result of my concept and it is vital that I retain full managerial responsibility and control ... for them to succeed."

The DTI's Liverpool office confirmed that Tristan had applied for funding. "They have applied for a regional grant," an official said.