IRAQ: British Companies Making a Fortune out of Iraq Conflict

The company roll-call of post-war profiteers includes some of the best known names in Britain's boardrooms as well many who would prefer to remain anonymous. They come from private security services, banks, PR consultancies, urban planning consortiums, oil companies, architects offices and energy advisory bodies.

Among the top earners is the construction firm Amec, which has made an estimated £500m from a series of contracts restoring electrical systems and maintaining power generation facilities during the past two years. Aegis, which provides private security has earned more than £246m from a three-year contract with the Pentagon to co-ordinate military and security companies in Iraq. Erinys, which specialises in the same area, has made more than £86m, a substantial portion from the protection of oilfields.

The evidence of massive investments and the promise of more multimillion-pound profits to come was discovered in a joint investigation by Corporate Watch, an independent watchdog, and The Independent.

The findings show how much is stake if Britain were to withdraw military protection from Iraq. British company involvement at the top of Iraq's new political and economic structures means Iraq will be forced to rely on British business for many years to come.

A total of 61 British companies are identified as benefiting from at least £1.1bn of contracts and investment in the new Iraq. But that figure is just the tip of the iceberg; Corporate Watch believes it could be as much as five times higher, because many companies prefer to keep their relationship secret.

The waters are further muddied by the Government's refusal to release the names of companies it has helped to win contracts in Iraq.

Many of the companies enjoy long-standing relationships with Labour and now have a financial stake in the reconstruction of Iraq in Britain's image. Of the total profits published in the report, the British taxpayer has had to meet a bill for £78m while the US taxpayer's contribution to UK corporate earnings in Iraq is nearly nine times that. Iraqis themselves have paid British company directors £150m.

The report acknowledges that British business still lags behind the huge profits paid to American companies. But, in two fields, Britain is playing a critical and leading role.

The threat from the Iraqi insurgency means British private security companies are in great demand. Corporate Watch estimates there are between 20,000 and 30,000 security personnel working in Iraq, half of whom are employed by companies run by retired senior British officers and at least two former defence ministers.

The biggest British player, Aegis - run by Tim Spicer, the former British army lieutenant colonel who founded the security company Sandline - has a workforce the size of a military division and may rank as the largest corporate military group ever assembled, according to the report. Other private security companies have sprung up overnight to protect British and American civilians.

Britain is also playing a leading role in advising on the creation of state institutions and the business of government. PA Consulting, which has also received a contract for advising on the Government's ID cards scheme, worth around £19m, is now a key adviser in Iraq.

Adam Smith International, a body closely linked to the right-wing think-tank used by Margaret Thatcher, has been heavily involved in the foundation of the Iraqi government and continues to influence its newly formed ministries. According to the Tory MP Quentin Davies, who visited Iraq, the advisers are "reordering Iraqi government operations at the most basic level, to help restructure some of the Iraqi ministries, in fact physically restructure them, even suggesting how the minister's office should be laid out".

Another favourite of the Thatcher governments, now involved in Iraq, is Tim Bell, who ran the Tories' election campaigns in 1979, 1983 and 1987. His PR firm Bell-Pottinger has been involved in advising on the 2004 elections and a strategic campaign to promote bigger concepts such as the return of sovereignty, reconstruction, support for the army and police, minority rights and public probity.

Loukas Christodoulou, of Corporate Watch, has been monitoring British business relations with Iraq since the invasion. He says in his conclusion to our joint report: "The presence of these consultants in Iraq is arguably a part of the UK government's policy to push British firms as lead providers of privatisation support. The Department for International Development has positioned itself as a champion of privatisation in developing countries. The central part UK firms are playing in reshaping Iraq's economy and society lays the ground for a shift towards a corporate-dominated economy. This will have repercussions lasting decades."

In five years, the £1.1bn of contracts identified in the report will be dwarfed by what Britain and the US hope to reap from investments. Highly lucrative oil contracts have yet to be handed out.