Dogs of war to face new curbs in Foreign Office crackdown

The Foreign Office is to introduce a clampdown on hundreds of private security companies operating in the world's danger zones, with plans for a tough licensing system and new regulations.

The proposals will be contained in a White Paper, expected to be published after the general election, which officials hope will force the industry to clean up its act.

The use of private security firms has mushroomed in the past three years as companies have attempted to do business in bombed-out countries such as Iraq and as military budgets have been stretched.

It is estimated that there are around 20,000 mainly US and British security operators working in Iraq - most of them employed as armed bodyguards and involved in military training. Last year the Foreign Office spent £20.2m on security companies, £14.2m of it in Iraq.

But there are fears that private security personnel - sometimes denigrated as mercenaries - are taking advantage of unstable political regimes by disregarding humanitarian and ethical codes. In particular, there has been a string of allegations that they have been involved in the abuse of Iraqis.

The new proposals are being drawn up by a special unit within the Foreign Office, which for the past six months has been consulting with government departments, the military and the security industry on how to regulate the sector. The final report on the way forward is due to be passed to ministers in the next few weeks. A Foreign Office spokeswoman said: "The review is on-going. There is a lot of information to collate."

However, a well-placed source said the review would recommend new laws to regulate the industry, either with amendments to the Private Security Industry Act 2001 and the Export Control Act 2002 or the introduction of a standalone Bill.

Whichever route the Foreign Office takes, the new laws are likely to lead to the creation of a new regulatory body to keep tabs on British security companies operating abroad. This will be modelled on the Security Industry Authority (SIA), which was set up in 2001 to regulate bouncers, private detectives and bodyguards operating in Britain.

There have been some calls for the SIA, which reports to the Home Office, to take on extra powers to regulate firms working abroad. However, it is understood that this has been rejected, as it is feared that the authority would be overloaded with work.

Many in the private security industry will welcome the Foreign Office proposals. The reputable end of the industry is concerned that the actions of shady operators are casting a cloud over the whole sector.

Late last year Armor Group, a security firm chaired by the former Conservative foreign secretary Sir Malcolm Rifkind, submitted its own "white paper" to the Government calling for new regulations. It argued that the Government should create barriers to prevent fly-by-night companies working abroad; that new ethical standards should be established; and that reputable firms needed to be more transparent about their activities. It also called for the SIA to regulate the security companies working abroad.

A spokesman for Armor Group said: "We are demanding regulation. It is extraordinary that door supervisors have to be licensed but any Joe Public can get a Kalashnikov and work with a security company abroad. This is an issue of accountability, as these companies can be set up so quickly."

Other companies that have argued for regulation include Olive Security, headed by Harry Legge-Bourke, a former Welsh Guard and brother of the one-time royal nanny, Tiggy; and Aegis Defence, run by Lieutenant Colonel Tim Spicer, formerly of the Scots Guards. Col. Spicer's call for regulation has raised some eyebrows in the security industry. As head of Sandline International in 1998, he was at the centre of the arms-to-Africa affair.

The publication of the Foreign Office's proposals will be the second attempt at regulating the industry. In 2002, the Government published a Green Paper on regulation, but the proposals were eventually dropped to the anger of many Labour MPs.