One of the world’s largest private security contractors has set up a Swiss holding company, according to the Basler Zeitung newspaper.

Aegis Defence Services employs an estimated 20,000 soldiers, mostly in Iraq and Afghanistan. Many of them are on contract to the United States’ defence department.

The London-based company, led by a former British army officer, is now wholly owned by the holding company in Basel, the newspaper reported on Monday. This effectively moves the firm’s headquarters to Switzerland.

The newspaper cited confidential documents in its report.

A statement sent by a public relations company acting on behalf of Aegis, quoted on the AP news agency, confirmed the move but added that "no business activities will be conducted in or from Switzerland".

It said the decision was partly taken because of Switzerland's "geographic location, accounting transparency and stable system of taxation", as well as the presence of international organisations such as the International Committee of the Red Cross, which has worked to regulate the private security industry.

Founded in 2004, Aegis was awarded one of the biggest US security contracts in Iraq valued at more than $430 million (SFr447 million).

In 2005 controversy involving the firm erupted after some Aegis employees posted videos on the internet showing company guards firing automatic weapons at civilians from the back of a moving security vehicle.

Aegis claimed the shootings were legal and within rules established by the now-defunct Coalition Provisional Authority. US Army auditors, in their own investigation, agreed with Aegis.

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