IRAQ: Dog of War Builds £62m Business

THE private security company run by Tim Spicer, the former Guards officer at the centre of an arms-running controversy in the 1990s, is to announce financial results that put it among the big winners of the Iraq war.

Aegis Defence Services has seen turnover rise more than 100-fold in three years thanks to contracts for overseeing the safety of thousands of civilian contractors working in Iraq on behalf of the Pentagon.

According to Spicer, Aegis's chief executive, turnover last year was £62m, of which three-quarters came from work in Iraq. The official figures will be posted at Companies House shortly.

In 2003, the firm's first full year of operation, turnover was £554,000. "We have expanded a great deal and will continue to expand," said Spicer.

Aegis's financial success also marks a personal rebound for Spicer, 53, who fought in the Falklands war with the Scots Guards but has had a chequered career since leaving the army.

In 1997 he led a private military team hired by Sir Julius Chan, prime minister of Papua New Guinea, as part of a botched attempt to put down a rebellion on the island of Bougainville.

The following year he was embroiled in the arms-to-Africa affair, for which he was labelled a mercenary by the media. Sandline, a company of which he was a director, had shipped weapons to Ahmad Tejan Kabbah, the deposed president of Sierra Leone, in apparent breach of a United Nations embargo.

Spicer maintained that the British government had approved the shipments and that he was vindicated by a parliamentary inquiry.

One of Spicer's colleagues in Sandline was Simon Mann, another former army officer.

Mann was arrested in Zimbabwe in 2004 for his role in a failed attempt to overthrow the government of Equatorial Guinea. Spicer was not implicated in this affair.

His business breakthrough came in 2004 when Aegis, which started out as a small consultancy assessing war risk for insurance firms, clinched its multi-million-pound deal with the US defence department for sensitive and dangerous contracts in Iraq.

Aegis co-ordinates communications between coalition forces, civilian contractors and their private guards. There are estimated to be between 25,000 and 35,000 private security personnel in Iraq.

Staff pass on information on the activity of insurgents, providing a daily intelligence service to contractors, and track the position of their vehicles.

Private security firms are a vital part of the strategy for stabilising Iraq and estimates for the value of Aegis's contract range up to £230m. The Pentagon deal surprised its American rivals, who made a formal complaint to the government, which is believed to have cited the Sandline affair.

The deal helped Aegis's revenue leap to £15m for 2004. In the same year the firm, in which Spicer's shareholding is just over a third, managed to turn in a £772,000 profit, reversing a previous loss.

Last year Aegis, which employs 900 staff in Iraq, was awarded a deal with the UN to provide security for the constitutional referendum and elections. It hired hundreds of expatriate and Iraqi bodyguards.

Aegis's work in Iraq has attracted controversy. A report by the office of the Special Inspector General for Iraq Reconstruction, an American auditor, found the company had failed to show the correct documents certifying its staff were qualified to use weapons, and that many Iraqi staff had not been properly vetted.

Spicer said at the time that such shortcomings had been addressed even before the American report was issued.

He is now looking for new contracts in locations including Russia and China.

"Increasingly in other areas (outside Iraq), wherever people operate - in extractive industries, shipping, aviation - anywhere where there is a threat, there has to be an interface between the forces of law and order and commercial operations," he said. "That is something that we have developed."

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