Sir Malcolm, who served in John Major's government during the 1990s, is now the prospective parliamentary candidate for Michael Portillo's safe Tory seat of Kensington and Chelsea.

Today it was revealed that had become the chairman of AmorGroup, which has 650 employees in Iraq, as well as significant numbers in Afghanistan.

Sir Malcolm will be part-time and based in London. The US-owned company is not disclosing what his salary will be.

According to its website, ArmorGroup has 7,500 employees in 50 locations. It says its work is to " identify, reduce and resolve exceptional risks in complex, sometimes hostile, environments".

A fortnight ago, four American private security personnel employed by another US firm, Blackwater Security Consulting, were killed and their bodies desecrated in Falluja.

It is thought up to 10,000 "security consultants" - who critics say would be more accurately described as mercenaries - are working in Iraq, on salaries at anything between £600 and £3,000 a day.

ArmorGroup's spokesman said most of its British employees in Iraq were former soldiers "all of whom must have seen active service".

However, last week the company received unfavourable publicity when it was revealed that one of their employees was jailed for four years on 10 counts of soliciting murder.

Derek Adgey, a Belfast-born former Royal Marine, was found guilty in 1995 of helping the loyalist terrorist group the Ulster Freedom Fighters by passing them confidential military information. He was brought home from Iraq by the company.