For years, 66-year-old Ian Kerr has run his business quietly in a first-floor office in the Worcestershire town of Droitwich. There was no nameplate for his premises, which was protected by a green door, and workers in the neighbouring shops either failed to notice him or thought he was a little mysterious.

"Oh yes, Ian," said one. "He has been there for years. We never really knew what he does - probably works for MI5 or something."

Kerr did not work for the security services, but the world he operated in was certainly a private one, and it can be exposed today because of an investigation by the office of the information commissioner, Richard Thomas.

Thomas, whose watchdog is entrusted with maintaining the public's privacy, believes Kerr has spent 15 years compiling and maintaining a huge database on 3,200 workers from around the country.

He alleges that Kerr, trading under the anodyne name of The Consulting Association, sold information from this database to construction companies who wanted to vet potential staff.

The end for Kerr's business came on Monday last week when Thomas sent his officials past the green door to raid the office. It caught Kerr unawares.

Thomas's officials took away the entire contents of the database, as well as invoices from companies in the construction industry which were paying Kerr.

The commissioner believes that these show the companies paid Kerr a flat fee of £3,000 a year and then a fixed fee for each name they wanted checked. He said invoices for up to £7,500 were discovered in the office.

Details of workers' trade union activities and past employment conduct were recorded on cards.

One individual was said to be a "poor timekeeper, will cause trouble, strong TU [trade union]". Another card referred to a member of the Union of Construction, Allied Trades and Technicians as "Ucatt ... very bad news".

A member of the Transport and General Workers Union was described as "a sleeper and should be watched". One entry on a worker simply said: "Do not touch !"

Sprinkled throughout the database were warnings of the confidentiality of the database; companies were told "do not divulge any of the above".

Kerr told the Guardian that he never gave advice or judgments to companies about whether to give a job to an individual as it was up to the firms to make the final decision.

He said prudent managers had a right to check who was being taken on and denied that it amounted to blacklisting. "There was nothing sinister about it. It was bona fide," he said.

It appears that Kerr has spent many years compiling databases on workers. He did not wish to comment on a report in the Guardian 15 years ago which said he had been working for the Economic League, a controversial vetting agency which accumulated files on thousands of people it considered subversive between 1919 and 1993.

The league disbanded after it was alleged that many of its files were inaccurate and so workers were unjustly being denied work.

Kerr's snooping career has been brought to an abrupt end by the information commissioner, who ordered him to stop. Kerr has agreed to wind up his business.

Yesterday David Smith, the deputy information commissioner, said: "This is a serious breach of the Data Protection Act.

"Not only was personal information held on individuals without their knowledge or consent, but the very existence of the database was repeatedly denied [by the industry].

"The covert system enabled Mr Kerr to unlawfully trade personal information for many years, helping the construction industry to vet prospective employees. Kerr held information on thousands of construction workers and profited by checking names against his database."

After closing down Kerr's business, the information commissioner is to prosecute him for breaking the Data Protection Act.

He has named more than 40 companies which he alleges bought "sensitive" personal data from Kerr and is considering further legal action to "stamp out this type of activity".

Many building firms did not wish to comment yesterday, but others did offer a reaction.

NG Bailey said: "We are taking these claims very seriously and an immediate and thorough investigation into the matter has been launched."

Laing O'Rourke said that, in recent years, it had bought up companies which had been paying Kerr. A spokesman said: "The relationship has now ceased. Laing O'Rourke has a very clear policy of solely hiring staff on merit and capabilities, irrespective of their background."

Morgan Est said it had also "inherited" Kerr's services. "This subscription has been terminated," it said.

Skanska said it had made payments to Kerr in the past, adding these services had not been used for blacklisting "to the best of our knowledge".

BAM Construct UK said it had been a "member of the Consulting Association", but "has never purchased or used 'blacklisting' data. We do not have a blacklist and we have never had a blacklist."

Commissioner's list: Companies allegedly involved

The information commissioner, Richard Thomas, alleges that the following companies have been making payments to a private investigator, Ian Kerr. Thomas said the use of brackets indicates where companies have undergone a change of name or where subsidiaries have been absorbed by parent companies. He added that the phrase "ex-member" next to a name means that company may no longer exist or no longer pay for Kerr's services.

Amec Building Ltd

Amec Construction Ltd

Amec Facilities Ltd

Amec Industrial Division

Amec Process & Energy Ltd

Amey Construction Ex-member

B Sunley & Sons Ex-member

Balfour Beatty

Balfour Kilpatrick

Ballast (Wiltshire) plc Ex-member

Bam Construction (HBC Construction)

Bam Nuttall (Edmund Nuttall Ltd)

C B & I

Cleveland Bridge UK Ltd

Costain UK Ltd

Crown House Technologies

(Carillion/Tarmac Construction)

Diamond (M & E) Services

Dudley Bower & Co Ltd Ex-member

Emcor (Drake & Scull) Ex ref

Emcor Rail

G Wimpey Ltd Ex-member

Haden Young

Kier Ltd

John Mowlem Ltd Ex-member

Laing O'Rourke (Laing Ltd)

Lovell Construction (UK) Ltd Ex-member

Miller Construction Ltd Ex-member

Morgan Ashurst

Morgan Est

Morrison Construction Group Ex-member

NG Bailey

Shepherd Engineering Services Ltd

Sias Building Services

Sir Robert McAlpine Ltd

Skanska (Kvaerner/Trafalgar

House plc)

SPIE (Matthew Hall) Ex-member

Taylor Woodrow Construction Ltd Ex-member

Turriff Construction Ltd Ex-member

Tysons Contractors Ex-member

Walter Llewellyn & Sons Ltd Ex-member

Whessoe Oil & Gas Ltd

Willmott Dixon Ex-member

Vinci plc (Norwest Holst Group)