Whitehall and Washington clashed over how to deal with Tehran after Moore kidnap

US took 'a hard line', the UK a softer one. But Foreign Office now concedes that IT specialist may have been held in Iran
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British and US officials could not agree on how to deal with Iran after British hostage Peter Moore was kidnapped in Iraq in 2007, a senior British source based in Baghdad at the time told The Independent on Sunday yesterday.

He added that at the time there was an "assumption" that Iran was involved in some way in the kidnapping of Mr Moore and his four British bodyguards. The Americans wanted to take a hard line, but the British favoured a softly-softly approach.

The Foreign Office has said "there is no evidence" to substantiate the claims that Mr Moore was held in Iran, or that Tehran was involved in the kidnapping. It conceded yesterday, however, that it could not rule out the possibility the Britons were held in Iran. "We are not in a position to say with any certainty where they were held during each and every single day," a spokesman said.

Mr Moore, a 36-year-old computer consultant from Lincoln, arrived at RAF Brize Norton on New Year's Day. He was released last Wednesday after 31 months in captivity. Yesterday he was recovering with his family at a secret location.

Allegations that the kidnap was orchestrated by Iran's Revolutionary Guards have also been fiercely denied by Tehran.

There is strong evidence to suggest that Mr Moore and his fellow captives – Alec MacLachlan, 30, from Llanelli, South Wales, Jason Swindlehurst, 38, from Skelmersdale, Jason Creswell, 39, and Alan McMenemy, 34, both from Glasgow – were taken to Iran almost as soon as they were kidnapped. The convoy was allegedly followed by two members of the Iraqi security forces who watched it cross the border.

The kidnap is believed to have been a direct response to the arrest of Qais al-Khazali, a former follower of the influential Shia cleric and leader of the Mahdi army militia, Muqtada al Sadr. Khazali had gone on to lead the Iranian-backed Righteous League militant group and was arrested in March 2007 by the Americans. It is believed the kidnap of the Britons two months later was intended to provide a bargaining chip to secure Khazali's release. He was transferred from US to Iraqi custody on the same day Mr Moore was released.

The Foreign Office denies a deal was done but a security source said yesterday: "The hostage takers wanted one thing and one thing only, the release of Khazali. When they got that they kept their word and handed over Peter Moore. So was there a prisoner exchange deal? Yes, obviously."

The Iraqis are likely to release Khazali before elections in March in order to continue the process of bringing Iraq's warring factions into the political process.

At the time of the kidnapping, the US, already concerned that Iranian-manufactured munitions were being used in Iraq, wanted to take a tough stance against Tehran. The British, however, were keen to play down the Iranian connection, according to a senior British source. "There was a lot of debate going on between the Americans and the British over how tough to be in 2007 – on how hard they should be with Iran," he said. "There were other things going on at the time. There was an assumption the Iranians were involved in some way."

Those "other things" included the holding by Iran of 15 Royal Navy personnel who were accused by Tehran of straying into Iranian waters; and the secret deal in 2007 between the British in Basra and the Mahdi army, under which members of the militia group were released from prison in return for a suspension of attacks on British soldiers.

The source added that the British had a lot on their plate at the time and the five kidnapped Britons may not have initially been given top priority.

There has been speculation that one of the reasons for Mr Moore's kidnap was to prevent him preparing software that would stop the aid flooding into Iraq being siphoned into the coffers of Iranian-backed militias.

The remains of three of the four bodyguards kidnapped with him in a highly organised operation, were returned to Britain earlier this year. The men were taken from the Iraqi finance ministry, in one of the most secure areas of Baghdad, by up to 40 men wearing Iraqi police force uniforms.

The fate of the fourth, Alan McMenemy, is still unknown, although the Foreign Office said yesterday it does not believe he is still alive. A spokesman added that negotiations were continuing through the Iraqi authorities for the release of his remains. There has been speculation that this request will be met once Khazali has been freed.

The Foreign Office said yesterday that its priority was not finding where Mr Moore was held but in his continuing welfare now he was home and the repatriation of Mr McMenemy's remains. "Iran of course has an influence in Iraq, but we have no evidence to substantiate claims of direct involvement in the kidnapping," a spokesman said.

"We have no evidence that the British hostages, including Peter Moore, were held in Iran. We believe that Mr McMenemy is dead and are redoubling our efforts to get his body returned. We are working with the Iraqi authorities and hope that it happens sooner rather than later."

Mr Moore's father Graeme, 60, of Wigston, Leicestershire, said that he had yet to speak to his son. "I was overjoyed for the lad when we heard on the telly he had been released," he said. "When I see him he'll get a big hug for a start ... and then we'll get him to his friends."

The former hostage Terry Waite, who spent nearly five years in captivity in Lebanon between 1987 and 1991 said yesterday that Mr Moore would recover from his ordeal.

"The best advice is to tell your story so it can be managed rather than burying it and being managed by it at a later stage," he said.

"If he tells his story and gets it out of his system, he can get some sort of balance back after living in such an extraordinary way for two and a half years.

"There's no reason at all, with the proper help and advice, he shouldn't deal with it quickly."

A battle of nerves: Iran and Iraq square up to Britain and US

Nov 2006 US says it has evidence of Iranian munitions being used by Iraqi insurgents.

Jan 2007 US forces take five Iranian diplomats prisoner during a raid on the Iranian liaison office in the northern Iraqi city of Arbil.

Feb 2007 British intelligence in Basra secretly agree to release Mahdi Army militia prisoners in return for an end on attacks on UK forces.

March 2007 Iran holds 15 Royal Navy personnel, claiming they strayed into Iranian waters.

March 2007 Qais al-Khazali is arrested by coalition forces.

April 2007 Iran releases the 15 British sailors after 13 days.

May 2007 Peter Moore and four bodyguards are kidnapped from the Iraqi finance ministry.

June 2009 The bodies of Jason Swindlehurst and Jason Creswell, two of the bodyguards, are repatriated. Both have been shot.

July 2009 America releases the five Iranian diplomats.

Sept 2009 The body of Alec MacLachlan, who was kidnapped with Mr Moore, is repatriated.

Dec 2009 Peter Moore is released.

Dec 2009 Khazali is moved from US to Iraqi custody.