Tim Spicer, whose home was raided after his "private military company" broke an arms embargo on Sierra Leone, makes the disclosure in his autobiography, which is published today.
He told The Independent he had incurred substantial legal expenses during a Customs and Excise investigation and two subsequent official inquiries into the affair. Lieutenant-Colonel Spicer's firm broke a United Nations embargo when it shipped 35 tonnes of weapons to the West African state's exiled government after a coup, but he was never charged with any offence. Customs officials concluded a trial would not be in the public interest after Sandline's solicitors revealed the Foreign Office had known what was happening.
The decision was followed first by an official investigation by Sir Thomas Legg and then by a select committee inquiry in the House of Commons, both of which questioned Lt-Col Spicer at length. In his book, An Unorthodox Soldier, he says the Foreign Office has refused to pay the expenses. He would not reveal the amount, but it is believed to be substantially more than pounds 100,000. Lt-Col Spicer said the bill covered his solicitors' costs during the investigations, which went on for almost a year.
Lt-Col Spicer's book describes how his firm's operation was funded by an arms-for- diamonds deal involving Rakesh Saxena, an Indian-born businessman based in Canada who wanted Sierra Leone's exiled president returned to power so he could exploit his mineral interests in Sierra Leone. In return for his help President Ahmad Kabbah offered Mr Saxena extra mineral concessions for both diamonds and bauxite - but the deal was complicated by the fact that Mr Saxena was on bail pending extradition to Thailand on embezzlement charges.
Although he promised pounds 6.6m, Mr Saxena only paid pounds 1m before being imprisoned for carrying a false Serb passport and the operation had to be scaled down. Lt-Col Spicer writes that the revelation of criminal proceedings against Mr Saxena "did not enhance my confidence, but we pressed on. You meet a lot of strange people in this business."
The book also describes how Lt-Col Spicer set up Sandline after being introduced to its "patron", Tony Buckingham, in 1995. Mr Buckingham is the multi-millionaire founder of a "military consultancy" called Executive Outcomes (EO), which has protected some of his mineral interests, including oil drilling equipment recovered from Unita rebels in Angola.
Mr Buckingham was looking for someone to start a new military company because of the "political baggage" EO carried - most of those involved in EO were members of the South African defence forces during the apartheid era.
Lt-Col Spicer, a former Scots Guardsman, fitted the bill. Over lunch at La Famiglia restaurant in Chelsea, the two men "hit it off at once". "He [Buckingham] is a solidly built individual, usually sporting a suntan, always with a twinkle in his eye, often chomping on a huge Havana cigar. He has a penchant for matters military and adventures generally and has been described as a pirate, but I would describe him as more of a buccaneer," Lt-Col Spicer writes.