MAGPET, Philippines - Shortly after 6 p.m. on July 26, 50 guerrillas from
the New People's Army moved into town, set up roadblocks and surrounded the
police station. Eight police officers were held at gunpoint as the Communist
rebels helped themselves to a couple dozen high-powered weapons. The
incident made clear just who was in charge of this mountainous area of the
troubled and dangerous island of Mindanao.

The next day Magpet's mayor was on the phone to "the Canadian." Mayor Efren
Pinol issued the former soldier simple instructions: Create, train and lead
a private strike force to hunt and kill the Communist rebels.

Several months later, Mr. Pinol was still angry. What upset him most was the
ineffectiveness of the Philippine army. After learning the guerrillas had
stopped after the attack to rest in a nearby village, the mayor notified
local army commanders so they could launch an attack.

He was told troops could not leave their barracks without the approval of
senior officers. By then, the guerrillas had returned to their jungle
hideout.

"I'm sick of this bullshit," said Mr. Pinol, explaining why he turned to a
hired gun to protect his town of 40,000. "We can't just sit here and do
nothing."

As Mr. Pinol studied a map, the Canadian soldier, William, reviewed his
plans for a force of 12 to 15 private soldiers, some the mayor's bodyguards,
others ex-Filipino army troops. They'd be outfitted with M-16s and grenade
launchers, readily available on the local weapon market.

The setup would be similar to the teams the 38-year-old had trained and led
for Grayworks Security, a private military company in the Philippines. Those
troops were used on search-and-destroy missions against guerrillas who had
been attacking U.S.-owned banana plantations.

"The key is to hunt the NPA down and wipe out their camps," said the
Canadian, who asked that his full name not be published for security
reasons. "You have to go after these guys instead of waiting for them to
make their move."

William is more than qualified for battle. The Canadian army gave him the
best possible training in war zones from Kosovo to Afghanistan. Now based in
the Philippines as a freelance military adviser, the police, government and
companies seek out his skills.

He's a new kind of export. Once known for its peacekeepers, Canada is
earning a reputation in the international security industry as a source for
highly skilled guns for hire.

Critics say they are mercenaries, a potential black eye for Canada if their
skills are used by the wrong type of governments or groups. Few, if any,
laws control their actions. Several countries, but not Canada, restrict or
regulate citizen involvement with private military companies.

The industry has been booming for three years, but Foreign Affairs officials
say the issue is not on their radar. Although Canadian Forces reports
obtained by the Citizen warn that private firms are actively recruiting
members of the elite Joint Task Force 2 special forces unit, military
officials say they have no idea how many commandos have left to work as
hired guns.

The corporate soldiers -- former Canadian Forces personnel and a few retired
RCMP -- have a different view of their work. Governments, standing armies
and official organizations such as the United Nations are too bureaucratic
to cope with the lawless reality of the post-Cold War world. Private
soldiers and companies are cheaper, they argue, and can react faster and
more efficiently to the world's security problems.

The men, who prefer to be called private security contractors, are employed
overseas by mining companies and other large corporations to protect key
installations or to advise on potential threats. Aid agencies and
governments use them to guard officials in dangerous places such as Iraq.
Smaller countries employ the men to train armies. In Saudi Arabia, retired
Canadian Forces officers have instructed personnel in tank and light
armoured vehicle tactics.

Some, like William, go into combat with the units they train. Former
Canadian Forces combat engineers have become a major presence in the private
industry created to clear the millions of landmines left around the world in
the aftermath of wars.

William is not the lone Canadian in his profession in the Philippines. At
Subic Bay near Manila, a former Canadian Forces soldier and a retired RCMP
officer are training bodyguards. The Citizen has also found Canadians
working for private military firms in Iraq, Saudi Arabia, Ecuador,
Afghanistan and various nations in Asia and Africa. The employment offers
adventure, money and a chance to use their military skills.

The work is secretive, so exact numbers are difficult to determine, but they
are growing.

Three Canadian security contractors have been killed in action in Iraq.
Richard

Flynn, a retired RCMP officer who was working as a security guard, died last
year when the vehicle he was riding in was destroyed by a bomb. Separate
ambushes killed Andy Bradsell of Victoria and Stefan Surette of
Saint-Anne-du-Ruisseau, N.S.

Mr. Surette, a former member of the Canadian Forces who served in Croatia
and later joined the British army, was killed in April during a firefight
near Baghdad's airport.

Mr. Bradsell, who grew up in Edmonton, also served in the British military.
He died last year trying to protect an American engineer ambushed by
insurgents.

There may be other Canadian deaths, but they have not been reported by
families or individual firms.

Mike, a former Canadian Forces officer in charge of 300 private soldiers in
Iraq, says he has come across nine countrymen working as security
contractors in the Baghdad area. Three are ex-JTF2 and the rest are regular
soldiers, said Mike, who also asked that his last name not be published for
security reasons.

"It is a known fact that many of the major positions throughout the world
are filled by Canadians," adds Sam Dow, a former Canadian soldier also
working in Iraq as a security contractor. Mr. Dow, who retired after 21
years in the army, was one of the first private security contractors in Iraq
after the end of the U.S.-led invasion. He now leads a team for
British-based company, Olive Security. "(Canadians) were not considered a
major factor in the security world, but that is changing quickly as I see
more and more working."

In other cases, Canadian-linked companies play a support role. In April,
eight freelance soldiers from the U.S. and Fiji were killed when a Bulgarian
helicopter, chartered by a company affiliated with the Toronto-based SkyLink
Aviation, was shot down 20 kilometres north of Baghdad. Insurgents claimed
the chopper was downed by one of their missiles.

"At this stage, Canada is much more of a feeder (of personnel) than
developing its own industry," says Christopher Spearin, a professor at the
Canadian Forces College in Toronto and one of the few specialists in the
country on private military companies.

The recruiting pool includes the Ottawa-based JTF2. Soldiers say during the
past several years a wave of commandos has resigned to take corporate
security jobs.

Documents obtained by the Citizen under the Access to Information Act
confirm companies are targeting the unit. "The world-renowned reputation of
JTF2 as a SOF (Special Operations Force) unit has drawn attention from many
of these security firms," warns one document.

According to a Defence Department spokesman, the unit's operations have not
been affected. But even the loss of small numbers can have negative effects,
defence analysts note.

The loss of regular Canadian military personnel to private industry is also
a blow when the military needs to significantly expand its ranks to deliver
the Martin government's new defence policy.

IMAGE MAKEOVER

Soldiers for hire are as old as war. But there was a resurgence in the 1990s
when individuals shook off the mercenary label and reinvented themselves as
legitimate military companies. The companies, from Executive Outcomes in
South Africa to Sandline International in England, produced slick brochures
and promotional videos emphasizing their ability to offer private warfare.

The Pretoria-based Executive Outcomes boasted a 500-man army and its own air
force. The company, later forced by South Africa to disband, was hired by
Sierra Leone's government in the 1990s to defeat a guerrilla force.

In the former Yugoslavia, retired American generals employed by Military
Professional Resources Inc. of Virginia trained the Croatian army, giving it
the skills needed to launch Operation Storm, a 1995 offensive that pushed
back Serb forces in the contested region of the Krajina. Private companies
also started to deliver support services to standing armies, providing
training, logistics and aircraft.

Canadians arrived quietly on the scene in the mid-1990s, when retired combat
engineers were hired by companies with UN contracts to defuse landmines in
war-torn countries.

There was little controversy about such operations.

Some soldiers, such as Dave McCracken, became well-respected for their
expertise. Last year Mr. McCracken was in Iraq to oversee the training of
Iraqi de-mining personnel under a U.S.-sponsored program. Another 16 former
Canadian combat engineers, who jokingly dubbed themselves the "Canadian
mafia," were also involved.

Mr. McCracken now works in Thailand and Cambodia. Other former Canadian
soldiers, such as James Davis, found work in Africa as security consultants.
Some headed to South America, where Canadian mining firms were active.

Retired Canadian Brig.-Gen. Ian Douglas found himself in charge of a
mercenary army of 1,500, albeit with the sanction of the United Nations.
Made up of former Zairian president Mobutu Sese Seko's brutal palace guard,
the freelance army's job was to protect refugees who had fled the Rwandan
genocide.

Mr. Douglas says the Zairian soldiers were kept in check during the 1995
mission by regular cash payments, close monitoring and training by a team of
50 retired and serving soldiers and police from several nations.

"It did show me that you can take people who are seen as arch-criminals, who
don't have morals or ethics, who don't understand the term 'human rights,'
and you can in fact work with them in a reasonable environment if you set
the guidelines," says Mr. Douglas, now an Ottawa defence consultant.

The retired officer says his African experience convinced him private
soldiers have a place on future battlefields, particularly as western
countries continue to reduce their standing armies. Humanitarian missions
only succeed if they can ensure a secure environment, he notes. "I don't
throw up my hands and say, 'No to mercenaries.' If countries keep reducing
their militaries and you don't have the forces to project security, then how
can you contribute? You rent out, you hire out."

Renting out from military firms has extended to regular Canadian missions.
In the late 1990s, Canadian troops in Haiti were transported in helicopters
owned by International Charter Inc. of Oregon, a private company started by
a former U.S. special forces officer. The company's reputation in the
security industry was bolstered in 1996 after it defended the U.S. Embassy
when rebels overran the Liberian capital of Monrovia. The men held out
against rebel attacks until a U.S. special forces team could arrive.

Throughout the late-1990s, the industry developed at a steady pace with the
big U.S. companies, DynCorp and MPRI, both with strong Pentagon connections,
cornering much of the market.

Executive Outcomes fought wars in Africa. Meanwhile, the hiring of Sandline
International to battle rebels in Papua-New Guinea sparked a mutiny in the
country's armed forces. Some in the UN campaigned without success against
the organizations.

Other observers predicted there wouldn't be enough contracts to sustain more
than a few private military companies. But the 2003 invasion of Iraq opened
the floodgates.

FILLING THE GAP

In the aftermath of the war, the U.S. government failed to commit the
military forces needed to control the lawlessness that plagues Iraq. Private
companies eagerly filled the gap. Today about 70,000 civilian contractors
support military or security operations, the second-largest foreign force
inside Iraq. The majority do mundane jobs -- driving or repairing trucks,
stocking supplies, working in kitchens, laundries or constructing bases for
the Pentagon. But 20,000 are foreign hired guns, who guard VIPs and other
officials, protect oil pipelines and defend key infrastructure such as
hydro-electric stations.

U.S. officials estimate 10 per cent of the money spent rebuilding Iraq goes
to security. Paul Bremer, the former top American official in Iraq, puts
that number closer to 25 per cent. Either way, the predominantly U.S. and
British security firms are earning millions.

The cost in lives has been high. There's no official tally, but Iraq
Coalition Casualties has a partial fatality list of 272 private contractors
-- ranging from truck drivers to bodyguards -- who have died. Most were
killed in ambushes or by roadside bombs.

The security contractors are also a source of controversy. Iraqi officials
claim private soldiers have killed or wounded civilians. They want them
reigned in.

Corporate soldiers have also clashed with the U.S. military.

In May, U.S. marines detained 16 U.S. security contractors, claiming the
"rogue mercenary team" had shot at U.S. soldiers and Iraqi civilians in
Fallujah. The contractors, who denied the allegations, were eventually
released.

'NEGLIGENT ACTIONS'

There are also questions surrounding the qualifications of some security
contractors. Shortly before Canadian Stefan Surette and two other private
soldiers were killed in a shootout in April, a fellow employee of Edinburgh
Risk and Security Management warned company officials about lax training
standards.

Scott Traudt fired off a letter detailing "repeated failures and dangerously
negligent actions," poor equipment and drunkenness. He questioned the skills
of some of those leading the British company's security units. Mr. Surette
was highly skilled, with tours of duty in Afghanistan and Iraq. But his team
included a police officer with no military experience and a former military
medic who was in command of the unit. A company official says it dealt with
the issues.

Mike, the Canadian security contractor in charge of 300 private soldiers in
Baghdad, acknowledges problems, particularly with U.S. companies and
individuals. In some instances there were concerns about training. Other
cases involved drug and steroid abuse.

Mike says the industry has weeded out the "cowboys" who gave it a bad name
in the early days of the U.S. occupation in Iraq. He says his own men avoid
confrontation with civilians. "We don't want to exacerbate any problems with
the Iraqi people. The last thing we want to do is be firing weapons and have
a bullet hit some kid. My guys are not out there to get trigger time on
Iraqis."

But it's not only Iraq where problems have surfaced:

* David Hudak, a Vancouver explosives specialist and counter-terrorism
trainer, got caught in a legal nightmare after recruiting ex-U.S. special
forces veterans for his New Mexico-based company.

The firm had conducted courses for military personnel from Canada, Israel,
Singapore and Ireland before Mr. Hudak ran afoul of U.S. laws in 2002. He
was accused of setting up a $12-million deal to provide sniper and
explosives training to troops from the United Arab Emirates. Prosecutors
claimed Mr. Hudak was in possession of millions of dollars' worth of illegal
missiles when police swooped down on his New Mexico training centre. Mr.
Hudak was eventually found not guilty, but his business was left in tatters.

* In 1999, two whistleblowers at DynCorp recounted how 13 men, working in
support of the U.S. military operations, kept women as sex slaves in Bosnia
or were involved in prostitution-related activities. The U.S. military
determined it had no jurisdiction because the men worked for a private firm.

* Canadian officers have detailed war crimes committed during Croatia's
Operation Storm, with some alleging the Croatian military could not have
pulled off the well-planned offensive without the direct involvement of
retired U.S. officers working for MPRI. Hundreds of Serb civilians died and
another 200,000 were forced from their homes during that operation.

* Canadian mining companies have employed AirScan, a controversial U.S.
aviation firm whose employees have been linked to a bungled 1998 airstrike
on rebel forces in Colombia that killed 18 unarmed civilians, including nine
children.

Last year, NATO's International Security Assistance Force, led by Canadian
Gen. Rick Hillier, provided a U.S. soldier of fortune with bomb-disposal
teams to support the mercenary's raids on Afghan civilians homes. Officers
would later say they helped Jonathan Idema believing he was a U.S. special
forces soldier because he talked and dressed like one.

When Afghan police arrested Mr. Idema, they discovered several civilians
strung up by their feet in his makeshift Kabul prison. They testified they
were beaten and had boiling water poured over them. Mr. Idema, a convicted
criminal in the U.S., denied he was abusive and said he used "standard"
interrogation techniques."

Canadian Forces documents obtained by the Citizen show the mercenary's
arrest shocked the NATO establishment and legal staff questioned the
assistance he received from the alliance.

Pentagon and Canadian officers quickly tried to distance themselves from Mr.
Idema. Canadian officials noted that Gen. Hillier did not personally order
troops to support Mr. Idema's raids.

Mr. Idema was sentenced in September 2004 to 10 years in prison for
detaining and torturing Afghans. But such successful prosecutions are highly
unusual in the world of security contractors and likely occurred because Mr.
Idema was a lone operator without the protection of a large firm.

Such abuses and the potential for illegal activities should be the catalyst
to get the federal government to act on this issue, argues defence analyst
Steve Staples.

"Clearly the Canadian government has to get a handle on this industry," says
Mr. Staples, security programs director at the Polaris Institute in Ottawa.
"These former soldiers have been provided with training at the taxpayers'
expense, and they are for hire to any company who has enough money. Where is
the oversight?"

Mr. Staples says the Canadian government should be asking hard questions.
Are former Canadian soldiers working in the security industry involved in
combat roles? Are they taking prisoners? Just what type of work are they
doing for foreign governments and companies?

At least some of that work is being done for the Canadian government.
Foreign Affairs employs private military companies to handle security at
some of its embassies, says Mr. Spearin, the professor at the Canadian
Forces College.

The U.S. firm ArmorHoldings has guarded the Canadian Embassy and CIDA
offices in Democratic Republic of Congo. The Golan Group, a firm managed by
former Israeli special forces personnel, handles security for Canadian
diplomatic missions in Central America, according to Mr. Spearin.

Foreign Affairs spokesperson Kim Girtel said the department hopes in the
future to fund projects "to produce concrete policy prescriptions and
comprehensive research on regulations" for the private military industry.

But she acknowledged: "It's even difficult to define what are we trying to
control and what types of companies are out there and what do they do."

Mr. Spearin says few laws regulate Canadian private soldiers -- and those on
the books date from the 1930s, when an attempt was made to control the
number of Canadians volunteering to fight in the Spanish Civil War.
International law professor Michael Byers says Canadians working for
security companies overseas are operating in a legal grey zone.

Questions about legalities haven't stopped the flow of recruits, even as
salaries in the industry dip. Shortly after the end of the Iraq invasion,
some corporate soldiers were commanding fees of $1,000 U.S. a day. With
money like that, commandos and regular troops around the world began
tendering their resignations.

Last year, Canada's Defence Department tried to examine the "street value"
of its JTF2 personnel after a wave of resignations from commandos seeking
work in the private sector. In 2003, it noted that such soldiers could earn
a minimum of $500 to $700 a day for overseas security work. But those fees
are the exception. Salaries for a former western soldier working in Iraq
start at $120,000 U.S. a year. Those in management or doing short-term,
risky missions such as protecting high-profile government officials make
substantially more.

A more typical job, say Canadian soldiers, is similar to a position that
made the rounds last year on the Department of National Defence computer
system. The UN's directorate of peacekeeping operations was looking for a
security adviser for a six-month contract in Kosovo. The salary was $68,306
U.S., with an option of a six-month extension.

Mike, the former Canadian officer now in Iraq, says he regularly receives
inquiries from his former comrades. "I tell them it doesn't make any
economic sense to quit the army if you've been in 12 or 15 years because you
won't be able to make up the money you'll lose on your pension," he says.
"The guys getting out to work in the security industry already have their
pensions or figure they can get back into the CF later on."

Former soldiers interviewed by the Citizen say while salary was important,
they were attracted to the private sector because of the potential to use
their military skills.

"In the Canadian Army, even in Afghanistan, all we did was go out on
patrols, show our presence to the locals, the same old stuff that I did in
Kosovo," says William, now in the Philippines. "I had all this training but
I wasn't really using it. Here in the Philippines it's the real thing --
combat."

More Canadians could soon be entering the industry. During the next several
years, the Canadian Forces faces a wave of early retirements as officers and
senior soldiers reach 20 years' service and become eligible for pensions.
Most will still be young enough, in their early- to mid-40s, to have a
career with private companies, either in front-line activities or doing
support jobs such as maintenance of vehicles and aircraft.

The Martin government's plan to transform the Canadian Forces, which
includes a substantial increase in the number of special forces, could
further feed the private security industry with commandos.

Mr. Spearin notes military brass will have to monitor that plan and the
federal government will have to entice its special forces to stay rather
than put their services up for sale. He says bonuses for such highly skilled
individuals should be considered.

Defence officials say they are not contemplating any bonuses for JTF2
soldiers. However, a May 2004 military report obtained by the Citizen
discusses boosting JTF2 pay and allowances to entice the commandos to stay.

Other countries have reacted differently. The Bush administration has
activated legislation that prevents some special forces and other key
military personnel from leaving their jobs for several years. It has also
brought in bonuses of up to $150,000 to convince the most qualified
commandos to continue to serve.

In the United Kingdom, the British Special Air Service has allowed some of
its soldiers to take temporary leave while they work for private companies
in Iraq.

At the same time, the British military has told its troops that those who
leave permanently to become hired guns will be shunned. In a memo this past
summer, British commanders overseas were advised to close their bases to the
staff of private military companies. They were told to read the riot act to
soldiers who are considering joining such firms, highlighting the high
casualty rates and poor training and equipment, in addition to noting that
the armed forces are under no obligation to help freelance troops injured in
battle.

The Canadian military has taken little action on the issue. During the 2003
mission to Afghanistan, officers allowed a former sergeant, who had served
with the Royal Canadian Regiment, access to their base in Kabul so he could
recruit for his security company operating in the country. Interest in the
jobs was reportedly extremely high.

Mr. Staples believes Canada must take a harder line on the industry. Former
soldiers who hire out their services should be considered in the same
category as weapons of war and ammunition, the export of which are covered
by federal laws, he says.

Tasha Bradsell, whose husband Andy was killed in Iraq, agrees there must be
regulation, particularly for firms involved in combat. Citing the case of
private security contractors involved in the torture and beatings of
prisoners at Iraq's Abu Ghraib prison, she also argues governments have to
have a better idea of what companies are up to. "There needs to be
transparency, because otherwise it's out of the hands of civilians, out of
the hands of democracies, out of the hands of people who care."

The private soldiers themselves have mixed opinions. Some support more
oversight. Others wonder whether regulations, particularly those trying to
monitor individual Canadian soldiers for hire, would be practical.

Mr. Dow believes regulations would hinder private security companies, which
can put men and equipment into the field quickly and efficiently.

"Government regulations on our work would put us back in the dark ages," he
says. "We would turn into another United Nations flop."

Mr. Spearin believes Canada won't act until it is embarrassed by private
soldiers. A scandal, he says, could be similar to the one Britain found
itself in when a London-based military company was linked to illegal arms
deals in Africa. Or it could involve former Canadian soldiers linked to
human rights abuses or a coup.

"It's inevitable some will abuse the system," adds Mr. Byers, the University
of British Columbia international law specialist. "And the chances of that
are increased in the relatively chaotic situation one finds in places like
Iraq, with potential threats almost everywhere and a lot of people,
including Canadians, carrying guns. It's a recipe for bad things to happen."