All three governments have publicly denied paying ransom money. But according to the documents, held by security officials in Baghdad who have played a crucial role in hostage negotiations, sums from $2.5 million to $10 million per person have been paid over the past 21 months. Among those said to have received cash ransoms was the gang responsible for seizing British hostages including Kenneth Bigley, the murdered Liverpool engineer.

The list of payments has also been seen by Western diplomats, who are angered at the behaviour of the three governments, arguing that it encourages organised crime gangs to grab more foreign captives.

“In theory we stand together in not rewarding kidnappers, but in practice it seems some administrations have parted with cash and so it puts other foreign nationals at risk from gangs who are confident that some governments do pay,” one senior envoy in the Iraqi capital said.

More than 250 foreigners have been abducted since the US-led invasion in 2003. At least 44 have been killed; 135 were released, three escaped, six were rescued and the fate of the others remains unknown.

A number of other governments, including those of Turkey, Romania, Sweden and Jordan, are said to have paid for their hostages to be freed, as have some US companies with lucrative reconstruction contracts in Iraq. At least four businessmen with dual US and Iraqi nationality have been returned, allegedly in exchange for payments by their employers. This money is often disguised as “ expenses” paid to trusted go-betweens for costs that they claim to incur.

The release this month of Rene Braunlich and Thomas Nitzschke, two German engineers, for a reported $5 million payment prompted senior Iraqi security officials to seek talks with leading Western diplomats in the capital on how to handle hostage release.

When the men returned home, Alaa al-Hashimi, the Iraqi Ambassador to Germany, revealed that the German Government handed over “a large amount” to free the pair after 99 days in captivity. The kidnappers are understood to have asked for $10 million.

Liam Fox, the Shadow Defence Secretary, called last night for an immediate end to the practice. “The idea that Western governments would have paid ransoms is extremely disturbing,” he said. “It is essential that governments never give in to blackmail from terrorists or criminals if security is ever to be maintained.”

Michael Moore, a Liberal Democrat foreign affairs spokesman, said: “These governments have created a kidnappers’ charter. Everyone from outside Iraq working in the country becomes more vulnerable as a result.”

Police say that about 30 people a day are abducted in Baghdad. Most Iraqis taken are returned once their families pay a ransom. An Iraqi counter-terrorism official, who asked not to be named, said that local experts are usually excluded from negotiations involving Westerners. He said: “Too often governments and their military keep secrets from each other , and certainly from us, and do what they want including paying out millions, no matter what their stated policy on ransoms.”

Western diplomats claim that the reason for their secrecy is the suspicion that some in the Iraqi security apparatus are too closely associated with militias and some of the criminal gangs to be trusted.

The family of Bayan Solagh Jabr, who was Interior Minister until the announcement on Saturday of a provisional government, was among the victims of the kidnap gangs when his sister, Eman, was abducted in January. She is said to have been freed a fortnight later after a ransom was agreed. Mr Jabr is now Finance Minister.

The mutual distrust is hindering efforts to wage an effective war against the underworld gangs responsible for most of the abuctions of Westerners, the Baghdad official said.

At least two crime gangs are alleged to have sold on some of their foreign captives to militant groups who use the hostages for propaganda purposes rather than obtaining ransoms.

Britain has never paid to free its citizens, despite pressure from the employees of some hostages, but is understood to have paid intermediaries “expenses” for their efforts to make contact with the kidnappers.

British officials have been criticised for giving the kidnappers of the peace activist Norman Kember time to escape to avoid the risk of a gun battle with Special Forces troops sent to rescue him and his two fellow captives from a house in central Baghdad in March.

Only when Jill Carroll, an American journalist, was freed eight days later did intelligence experts discover that she had been held by the same notorious crime family, who were working with Abu Musab al-Zarqawi, the wanted al-Qaeda leader in Iraq. That revelation infuriated US officials in Baghdad, who had let Britain take the lead in tracing and freeing Professor Kember, 74, and his two Canadian colleagues.

FBI agents are investigating claims that this gang sold some of its hostages, including American contractors and aid workers, to militant Islamic groups. The gang is reported to have had a hand in organising the abduction of three British hostages, Margaret Hassan, Mr Bigley and Professor Kember, and three Italian journalists.

Figures involved in secret talks to resolve hostage cases told The Times that Mrs Hassan, an aid worker who had converted to Islam and taken Iraqi citizenship, was murdered soon after Tony Blair made it clear in a television broadcast seen on an Arab satellite channel that the Government would not pay a ransom. Wealthy benefactors had signalled their readiness to pay for her release.

A key figure in brokering some of the deals has been Sheikh Abdel Salam al-Qubaisi, a militant Sunni cleric and senior figure in the Association of Muslim Scholars. Professor Kember and his party had just visited the group when he was abducted last November.

WHAT THEY SAID

FRANCE

• When Florence Aubenas was freed in June 2005 a government spokesman, Jean-François Cope, said: “There was absolutely no demand for money. No ransom was paid”

  ITALY

• On January 30 this year Gianfranco Fini, then Italian Foreign Minister, denied that Italy paid between $6m and S10m to free Giuliana Sgrena. “Italy did not pay any ransom to obtain the freedom of Giuliana Sgrena in Iraq or any other hostage. There is never a quid pro quo”

  GERMANY

  WHAT THEY PAID

  FRANCE $25 million

• Florence Aubenas: held for 157 days, freed June 2005. Ransom $10 million
• Christian Chesnot and Georges Malbrunot: freed December 2004. Ransom $15 million

  ITALY $11 million

• Giuliana Segrena: taken February 2005, freed March 2005. Ransom $6 million
• Simona Pari and Simona Torretta: taken September 2004, freed 20 days later. Ransom $5 million.

  GERMANY $8 million

• Rene Braunlich and Thomas Nitzschke: taken January 24, 2006, and freed on May 2. Ransom $5 million.

  BRITAIN No ransom paid

• Margaret Hassan: abducted October 19, 2004; murdered on November 16

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