More than just tea with Thatcher

Sue Lukes reviews the information from the Latin American press.

Pinochet did not come to London because he was sick, but because he had business here. Multimillion pound business, involving arms deals, the Chilean military, and Buckingham Palace. Reports in the Latin American press have exposed a tangle of business relationships, and more reason to be here than just tea time with Thatcher.

Pinochet had a hernia for some time, but he came to England to open a cycle of negotiations for the purchase of three British warships for the Chilean Navy at a price of $277 million, with a further option on two frigates for $166 million. The ships are currently in the British Royal Navy under the names of Brave, London and Coventry. The destroyer Cardiff was also part of the package.

This was, however, an unusual arms sale, because the Chilean military high command chooses what arms to buy, independently of the government, and also negotiates the price and the conditions of sale, including commissions. This is because all defence funds in Chile are guaranteed by law as a proportion of copper export profits.

The sale of used warships is a huge business, especially for the middlemen who arrange it, and commissions for these sales were paid to military personnel via secret accounts. Experts in arms trafficking in Latin America reckon that the sale that Pinochet was negotiating would attract a commission of 1% of the price: a cool $4.4 million dollars for the General.

Pinochet's role was essential because he had the backing of the Chilean forces chiefs and also chairs the Defence Commission in the Senate, which gives final approval. His arrest stopped the sale, but he will not be poor: he has already organised the transfer of 16 British Aerospace combat planes for $600 million.

It was BAe, whose largest shareholder is the British Royal Family, which invited Pinochet to London, allowed him to land in their reserved section at Heathrow, and is funding the hospital and legal charges. It is also paying for the relevant percentages on their various deals. He has already acted as adviser for them in the part-purchase of a Swedish competitor. BAe is not his only paymaster: he also promoted the formation of Famae-Ordnance, a joint venture between the Chilean state owned army company and the British Royal Ordnance to sell missiles and other arms worldwide.

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