The security industry: Britain's private army in Iraq

The British security guards taken hostage in Baghdad are just four among a foreign legion paid for by you. Yet as we grow more reliant on them, their future is perilous in a country without rules. By Andrew Johnson, Marie Woolf and Raymond Whitaker

Baghdad is a city where there is no safety and no law, but the five Britons - a computer consultant and his four-man security detail - would have been entitled to feel relatively secure inside the Finance Ministry.

The building was heavily guarded by uniformed Iraqi police and paramilitaries. It was a Tuesday morning, and Palestine Street was busy, with more people venturing out since the US-led security "surge" damped down the violence in the centre of the Iraqi capital.

Yet in broad daylight, a convoy of vehicles with up to 40 men, some in the camouflage uniforms of special police commandos, was able to drive up to the ministry and pass through the gate. The men headed straight for where the Britons were working, took them without a struggle and drove off. Even by the standards of the most dangerous city in the world, it was an especially brazen kidnapping. Nothing has been heard of the victims since.

The search for them has focused on Sadr City, the giant Shia slum on the outskirts of Baghdad that is the stronghold of Moqtada al-Sadr's Mahdi Army. Not only did witnesses say that the convoy headed in that direction after leaving the ministry, but the militia is thought to be one of the few groups with the contacts inside the Iraqi government to carry out the operation.

Hoshyar Zebari, the foreign minister, said last week that the Palestine Street area was in the Mahdi Army's "field of operations", adding: "It has been known for some time that the Interior Ministry police, security units and forces are corrupt, are penetrated." According to British officials, the kidnappers would never have got through the gate if the guards had been Sunnis or Kurdish. A senior Mahdi Army figure has denied that the militia was involved.

But if the circumstances are mysterious, the abduction has cast light on the way Iraq's bloody chaos has given birth to an entire private security industry, one in which British companies are among the leaders. The irony is that a decreasing proportion of their employees, and clients, are British. If the kidnapping was aimed at Britain, as some believe, to avenge the death of a senior Mahdi Army commander in Basra recently at the hands of British troops, those who carried it out would have had to be especially well informed, because neither the consultant nor his protectors was working for British employers.

The IT consultant was hired by BearingPoint, a well-connected US management consultancy. The four security men worked for GardaWorld, a Canadian company which guards airports in its home country and recently branched out into the Iraq security business when it took over two US companies with operations there.

But GardaWorld is dwarfed by the largest private security operations, several of which - such as ArmorGroup, Aegis, Control Risks, Erinys and Olive Group - are British. Their executives argue that experience gained during the 1990s stood them in good stead when the Iraq invasion created a huge demand for security services. Tim Spicer, for example, operated in Sierra Leone with his former company Sandline. A former lieutenant colonel, he is now chief executive of Aegis.

Former SAS members, as well as British ex-soldiers and policemen, are in demand, the companies say, because they are less trigger-happy and trained to work to far tighter rules of engagement than their US counterparts. But given that the torrent of reconstruction money poured into Iraq was mainly American, US companies have come into the business. "The Americans never had a private security industry previously, but they do now, thanks to Iraq," said one British executive.

Estimates suggest that there are roughly 40,000 private security employees in Iraq carrying out a variety of duties, from close protection work to "static protection" of premises such as embassies, and escorting supply convoys. But the vast majority of those are Iraqis: there are reckoned to be only 5,000 "First World" nationals - Britons, Americans and Commonwealth citizens - and about twice that number of "third country" nationals. Some are Gurkhas and Fijians trained in the British Army, but an increasing proportion comes from countries which were or are conflict zones, such as Colombia or Serbia.

"Third country" personnel, willing to accept lower pay and, in many cases, higher risks, are often replacing pricier British or American private security operators as competition gets tougher. Reconstruction has all but halted in the welter of violence and there has been a wave of consolidation. Some British employees of Control Risks in Iraq threatened to strike last year when their pay was cut by up to 20 per cent, but soon found that no one else was hiring. Mr Spicer recently said that business in Iraq was like "a slowly deflating balloon".

Many critics believe that is a good thing. They accuse some security companies of being little more than mercenaries - private armies that can operate with virtual impunity in Iraq. A notorious video posted on the web last year appeared to show Aegis employees shooting up civilian cars, with Elvis Presley's "Mystery Train" on the soundtrack. "We know of hundreds of cases reported of random shooting at civilians in cars," John Hilary, director of campaigns and policy at War on Want, told MPs last month.

Anecdotes circulate, including one of a South African machine gunner at the back of an escort vehicle who fell asleep. He woke up with a start, found a car close behind and opened fire, killing the driver and the rest of his family. The security men stopped, but on finding all the occupants of the car were dead, they drove off.

Some security men are accused of failing even to protect their colleagues. According to another story, when one vehicle in a convoy was immobilised by an insurgent attack, the other escorts swerved around it, leaving the occupants to their fate.

Mr Hilary complained that the industry was "operating effectively outside the law". The Government has come under pressure to regulate private military and security companies, but despite conducting an extensive review of how they operate, it has so far failed to act.

In Iraq, private security companies are regulated by a memo drawn up by the Coalition Provisional Authority which is still legally binding. They include "binding rules on the use of force" and guidelines which say guns and mortars must only be fired using "aimed shots".

The rules allow employees to "use deadly force" in self-defence and in defending people they are hired to protect. They are also given the right to "stop, detain search, and disarm civilian persons" if the contract says they should. They must co-operate with coalition and Iraqi security forces but not join them in combat operations, unless it is to protect their clients. But the document adds: "Nothing in these rules limits your inherent right to take action necessary to defend yourself."

MPs argue that even these scant guidelines are unenforceable. "The controls over private military companies are rather thin. They are outside the norms of international law, yet together they are the second biggest force in Iraq behind the Americans," said Norman Baker, Liberal Democrat MP for Lewes. "The Government promised to regulate mercenaries in 2002, but clearly finds their presence in Iraq in an unregulated fashion rather convenient."

Indeed, with few business people venturing into Iraq, governments - including Britain's - are among the main clients of private security companies. Britain has awarded contracts worth £200m in Iraq, with most of the money spent by the Foreign Office on security personnel. Hilary Benn, the International Development Secretary, admitted in a parliamentary reply that "DFID engages private security companies to provide security of our staff in high threat environments". Mr Spicer told a conference: "The Government needs PSCs [private security companies] because we have the capability to act with speed and are comparatively cheap. We can also go places where a uniform would be unacceptable."

Concerned at the poor image created by the behaviour of some personnel, larger companies have formed the British Association of Private Security Companies (BAPSC). Its director, Andrew Bearpark, told a parliamentary committee his members were "part of the architecture of state building" in Iraq, adding: "I have no interest in defending abuses in Iraq or Afghanistan ... But I'm proud ... that police training has taken 50 times quicker than the British Government would have been able to do it."

Mr Hilary takes a less favourable view, arguing that "there is an increasing trend to privatise traditional activities of the military - intelligence gathering, interrogation, training of police and military forces, border patrols, protection for convoys, protection for individuals". He added: "They have become military roles; within Iraq itself these PSCs are seen as part of the occupying forces."

The War on Want campaigner said there were still large amounts of money to be made in Iraq. There will also be a constant stream of British former military and special forces personnel willing to risk the dangers there for tax-free salaries which can reach up to £1,000 a day in some cases, though there are far fewer such jobs available than those qualified to fill them.

But last week's kidnapping demonstrates that there are some fates for which no amount of money can compensate.

Further reading: 'Making a Killing: the explosive story of a hired gun in Iraq' by Captain James Ashcroft, £16.99

A MERCENARY'S TALE

By an anonymous British mercenary...

Tony James (not his real name) was part of an armed convoy escorting a client of an American engineering firm to Baghdad when his four-wheel drive was raked with gunfire from Iraqi insurgents. The former marine and Falklands veteran returned fire with his AK-47, standard issue for private security guards in Iraq.

James had had his nose shot off and a bullet fragment was stuck in his eye, threatening his sight. "It never was much of a nose," he said. "And now I'll get a new one."

James, then 44, had travelled to Iraq in 2004 to try his luck in the burgeoning private security guard market. He found a job with a small firm that had just won a lucrative contract to protect an American engineering firm. He was to be paid up to $12,000 a month.

Two months into his new life James had to collect an executive from Mosul. Three vehicles are needed for this kind of job, two 4x4s and an armoured car for the client.

Fortunately an American medical team passed shortly after the car was attacked. James was taken by ambulance to a nearby field hospital. It would be normal to airlift such a serious casualty to Germany but his company had no plans to deal with badly injured employees. The American surgeon operated, rebuilding his nose.

As James recuperated, his company finished its contract, but folded when further contracts fell down. He flew home at his mother's expense in 2005, owed $50,000.

Andrew Johnson

British security companies in Iraq

Aegis Defence Services (UK)

Founded: 2002

Key Contracts: a $293mreconstruction project.

Key Player: Tim Spicer operated in Sierra Leone in 1997

ArmorGroup (UK)

Founded: 1981

Key Contracts: Foreign Office, International Development.

Key Players: Malcolm Rifkind is non-executive chairman

Blue Hackle

Founded: 2004

Key Contracts: low-key security work in Iraq.

Key Players: former head of security consulting at Kroll, one of the biggest US firms

BritAm Defence

Founded: 1997

Key Contracts: close security for private companies

Key Players: General Sir Malcolm Wilkes is the chairman

Centurion

Founded: 1995

Key Contracts: security for media crews

Key Players: staffed mainly by former Royal Marines

Control Risks Group (UK)

Founded: 1975

Key Contracts: US Office of Reconstruction.

Key Players: non-executive chairman is General Sir Michael Rose

Erinys International Ltd (UK)

Founded: 2001

Key Contracts: defends 282 oil pipelines.

Key Players: Major-General John Holmes is a director

Janusian

Founded: 1997

Key Contracts: claims to be only western security company with independent office and manager in Iraq

Key Players: founded by ex-SAS soldier Arish Turle

Olive

Founded: 2001

Key Contracts: protection for wealthy individuals, news teams, USAid's Iraq Reconstruction Program

Key Players: Lt Gen Sir Cedric Delves is a director

Pilgrims Group

Founded: 1998

Key Contracts: protection for media, oil and gas industries.

Key Players: employs 60 former SAS soldiers.

Global Strategies Group

Founded: 1998

Key Contracts: Baghdad International Airport.

Key Players: Founded by former marine Damien Perl and Scots Guard Charlie Andrews. Mainly Fijian staff