Spicer's security firm berated by American auditors for lapses in $293m Iraq contract

Staff not trained to use weapons, Iraqi employees not vetted - investigators round on British company. Paul Lashmar reports

Aegis, the UK security firm run by the controversial former British Army colonel Tim Spicer, has been criticised by US government investigators for its handling of a $293m (£154m) security contract in Iraq.

Aegis, the UK security firm run by the controversial former British Army colonel Tim Spicer, has been criticised by US government investigators for its handling of a $293m (£154m) security contract in Iraq.

The investigators say it failed to verify that employees were properly qualified for the job.

Aegis won the US-financed contract last May to help co-ordinate security for businesses involved in the reconstruction of Iraq and, among other tasks, provide anti-terrorism support, escorts and close personal protection. It is the largest deal awarded to a non-US firm.

But in an audit report last week, the Office of the Special Inspector General for Iraq Reconstruction said Aegis had not complied with several areas of its contract. Among the problems cited were that it could not provide the correct documents to show its staff were qualified to use weapons, and that many Iraqi employees were not properly vetted to ensure they were not a security threat. "As a result, there is no assurance Aegis is providing the best possible safety and security for government and contractor personnel and facilities."

The auditors said the US Project and Contracting Office in Iraq, which oversees billions of dollars in rebuilding work, should ensure that Aegis complies with the terms of its contract.

Mr Spicer, the chief executive of Aegis, said the audit was undertaken in October and November 2004, at the end of the setting-up phase of the contract. "It does not reflect current operating conditions," he said.

"With a contract of this complexity, there was always likely to be a need for some refinement after the initial set-up. Once an area was identified, this was undertaken swiftly and our work is progressing according to contract," he said.

"The report records that Aegis is generally in compliance but noted five areas of concern - two of which, weapons qualification and vetting of Iraq employees, have subsequently been corrected. The other three relate to areas of requirement that were never intended to be part of the contract."

He added: "We are delighted we have been given a mandate to continue."

The awarding of the contract last year came as a surprise, partly because Aegis had little experience in the Middle East. Additionally, Mr Spicer, a veteran of the Falklands War, had been at the centre of several controversies, including the Sandline affair in Sierra Leone that broke a UN embargo in 1998. He was also involved in a botched mercenary operation in Papua New Guinea in 1997. The US security services firm DynCorp International unsuccessfully protested over the award of the contract.

The US audit team sampled records for 20 contractor staff issued with 30 weapons. Aegis documentation showed that fewer than half its employees were trained to use these weapons. In a sample of 20 records of 125 Iraqis employed by Aegis, six had not been interviewed, 18 had not had police checks and no records existed at all for two of them.

"According to Aegis managers, police checks are difficult to obtain and largely irrelevant to the vetting process, because of the current dysfunctional state of the Iraqi government," the audit said.

Aegis also did not perform the responsibilities required in the contract for "personal security detail", security escorts and movement control, the audit said.

"Personal security detail" teams did not have all the qualifications and experience needed for hostage-rescue incidents - a task the company told auditors was beyond the scope of its work.

More than 270 contractors have been killed in Iraq while working on American-funded reconstruction projects. The US government had hoped that better co-ordination would make contractors more secure and enable more reconstruction work to be done.

The British Government plans to introduce rules to license all UK-based security companies in the next few months.