UK acknowledges debt owed to Iran

September 5, 2020 - 18:5

TEHRAN - British Defense Secretary Ben Wallace has acknowledged for the first time that he is actively seeking to pay a debt to the Iranian government owed over a decades-old arms deal.

The admission came in a letter seen by The Guardian.

The UK is thought to owe as much as £400m to the Iranian government arising from the non-delivery of Chieftain tanks ordered by the late Iranian Shah Mohammad Reza Pahlavi before the 1979 Islamic Revolution.

International arbitration in 2008 ruled the UK owed the debt, but in subsequent protracted court battles, lawyers acting for International Military Services, the Ministry of Defense’s now-defunct arms sales agency, have questioned not only the debt’s size but at times whether any debt was payable.

In his letter, Wallace writes, “With regard to IMS Ltd and the outstanding legal dispute the government acknowledges there is a debt to be paid and continues to explore every legal avenue for the lawful discharge of that debt.”

Wallace, as defense secretary, is the 99% shareholder of IMS and so the lead decision-maker.

As a backbencher and before becoming defense secretary, Wallace had been sharply critical of the delay over the payment of the debt, saying it was a stain on the UK. He adds in his letter: “I have previously stated my personal position and I remain committed to its resolution, but it would not be appropriate for me to comment further at this time.”

Iran’s Ambassador to London, Hamid Baeidinejad, had criticized Britain’s Defense Ministry for its delays in paying Iran’s debt.

“The legal counsel of the UK Defense Ministry subsidiary company resorts to all possible procedural tactics and lawyerism to delay the payment of Iran’s debt,” he said in a tweet in October 2019.


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