'Prince of Mercenaries' who wreaked havoc in Iraq turns up in Somalia

Erik Prince, the American founder of the private security firm Blackwater Worldwide, has cropped up at the centre of a controversial scheme to establish a new mercenary force to crack down on piracy and terrorism in the war-torn East African country of Somalia.

The project, which emerged yesterday when an intelligence report was leaked to media in the United States, requires Mr Prince to help train a private army of 2,000 Somali troops that will be loyal to the country's United Nations-backed government. Several neighbouring states, including the United Arab Emirates, will pay the bills.

Mr Prince is working in Somalia alongside Saracen International, a murky South African firm which is run by a former officer from the Civil Co-operation Bureau, an apartheid-era force notorious for killing opponents of the white minority government.

News of his latest project has alarmed, though hardly surprised, critics of Blackwater. The firm made hundreds of millions of dollars from the "war on terror", but was severely tarnished by a string of incidents in post-invasion Iraq, in which its employees were accused of committing dozens of unlawful killings.

Mr Prince, a 41-year-old former US Navy Seal with links to the Bush administration, subsequently rebranded the company "Xe Services" and sold his stake in it. But he remains entangled in a string of lawsuits pertaining to the alleged recklessness of the firm.

For most of the past year, he has been living in Abu Dhabi, where he has close relations with the government and feels better positioned to dodge lawsuits. In an interview with a men's magazine, he recently declared that the UAE's opaque legal system will make it "harder for the jackals to get my money".

The exact nature of his sudden presence in Somalia remains unclear. The Associated Press said yesterday that the army Mr Prince is training will focus on fighting pirates and Islamic rebels.

The leaked intelligence report which prompted the news agency's story was compiled by the African Union, an organisation of African nations. It claimed that Mr Prince's money had enabled Saracen International to gain the contract to train and run the private militia. But that element of the report was flatly contradicted by a spokesman for the Blackwater founder, who claimed that Mr Prince had "no financial role of any kind in this matter".

In a written statement, the spokesman, Mark Corallo, added: "it is well known that he has long been interested in helping Somalia overcome the scourge of piracy. To that end, he has at times provided advice to many different anti-piracy efforts." He declined to answer any further questions.

Whatever the exact details of Mr Prince's role, his presence in Somalia will inevitably lead to renewed soul-searching about the growing privatisation of warfare. Critics of mercenary organisations, which are often prepared to operate where traditional armies fear to tread, claim they are often trigger-happy and lack proper accountability. In Iraq, Blackwater employees shot dead dozens of civilians; 17 people were killed in one incident alone in Nisour Square, Baghdad.

Criminal charges were eventually brought in the US against five Blackwater employees. However, they were dropped in 2009 after a federal judge ruled that the defendants' rights had been violated during the gathering of evidence. Iraq's Interior Ministry subsequently expelled all contractors who had worked with the firm at the time of the Nisour Square shooting.

Somalia, where the country's UN-backed regime is fighting a civil war against al-Shabaab, a group of Islamic insurgents with links to al-Qa'ida, is, if anything, a more volatile country than post-invasion Iraq.

The government controls only a small portion of the capital, Mogadishu, where it has the support of 8,000 UN troops from Uganda and Burundi. It is training an army to extend its reach, but observers fear that its ranks will be weakened by the arrival of Mr Prince – who will pay his troops a far better wage.

Saracen's shady corporate structure has not inspired confidence in its accountability. In 2002, the UN accused its Ugandan subsidiary of training rebel paramilitaries in the Congo. Recently, the firm has claimed to be registered to addresses in Lebanon, Liberia, Uganda and the UAE, some of which seemed not to exist when reporters tried visiting.