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The bodies of two British hostages handed to the embassy in Baghdad were identified yesterday as those of two security guards, amid questions and recriminations about the way the issue of the kidnappings has been handled by the British Government.

The two victims were Jason Swindlehurst, from Skelmersdale, Lancashire, and Jason Creswell, from Glasgow. Their remains are believed to be several months old, and it is unclear at present how they met their death. Three others, including Peter Moore, an IT consultant, are still missing, their fate unknown.

The Foreign Secretary, David Miliband, stated that Britain had been working with the Iraqi authorities with the hope that all five of the men abducted more than two years ago would be released unharmed. "In this case, all of us have clearly failed to achieve that goal," he said, adding that the "Iraqi authorities passed to us the remains of the two bodies".

However the British Government's account was immediately contradicted by the Iraqi government, whose spokesman, Ali al-Dabbagh, said: "The kidnappers delivered the bodies directly to the British embassy in Baghdad... We are not part of the deal."

The Government also faced severe criticism from Graeme Moore, the father of Peter Moore. "They had deliberately given out as little news as possible about my son and the others and as a result the public had forgotten about them. Any attempt by us to launch a campaign about this has been discouraged," he said. "We were led to believe that every one of them was safe. We now know that is not the case.

"Why didn't the Foreign Office know about these deaths? Why did they have so little information after two years? We need some answers. I am glad that Peter is not among the dead, but I feel really, really sorry for the two boys who died and their families."

The Foreign Office stressed that efforts had been going on behind the scenes continuously to try to secure the release of the Britons and much of that could not have been made public because of security reasons. Diplomatic sources sought to distinguish between "negotiations" with the kidnappers as opposed to "concessions", insisting no deals had been struck.

However, the denial by the Iraqi government of being involved in the negotiation process highlighted the confusion surrounding the abductions. The group, which had taken the Britons away at gunpoint from a finance ministry building in Baghdad, Asaib Ahl al-Haq, was a breakaway from a faction of radical cleric Muqtada al-Sadr's Mehdi Army. A senior member of the organisation said: "The Iraqi government was on the sidelines and negotiations had been taking place directly between the British embassy and the kidnappers for five months."

Mr Creswell, Mr Swindlehurst, and two other bodyguards, known only as Alan and Alec, were guarding Mr Moore at a finance ministry building in Baghdad when they were abducted by up to 40 men in police uniform and driven to Sadr City. In the process they had to negotiate several Iraqi army checkpoints, leading to suspicion of official collusion. Over the intervening time, the kidnappers issued a number of videos of the hostages pleading to be brought home. Just over two weeks ago, there were hopes a deal had been struck after US forces released a senior member of Asaib Ahl al-Haq.

Mr Swindlehurst had served in the Army with the Royal Engineers based in Germany and Ripon in Yorkshire. His brother, Clint, is also serving with the British Army. His daughter Jaye posted a message on Facebook recently asking him to "hurry back".

At the two-year anniversary of the abduction in May, Mr Cresswell's seven-year-old daughter, Maddi, wrote a letter saying: "I miss you very much... We all want you to come home... We will not give up until you come home, we miss you very much."

The murders of the two hostages also brought into focus the activities of foreign security companies in Iraq. Following the kidnappings, GardaWorld, which employed Mr Swindlehurst and Mr Cresswell as well as two who were guarding Mr Moore at the time of the kidnapping, has hired a PR firm which is said to have been instrumental in the media policy for families of the hostages not to speak out. Friends of Mr Moore who have tried to launch a campaign on their behalf have received complaints from the company.

Gordon Brown said: "The families of Jason Creswell and Jason Swindlehurst have had the worst possible news after two years of very anxious waiting. I want to send the families our very sincere condolences." He said he was in close touch with Iraqi authorities.

n The death toll from Iraq's deadliest bombing in more than a year rose to 73, police said yesterday, a day after a suicide bomber detonated a truck packed with explosives outside a mosque in the northern city of Kirkuk.