Halliburton's senior executive in Iraq accused private security companies of operating a "mafia" to artifically inflate their "outrageous prices", according to a US cable.

Written by a senior diplomat in the US's Basra office, the confidential document discloses the tensions between private security firms, oil companies and the Iraqi government as coalition forces withdraw from protecting foreign business interests.

John Naland, head of the provincial reconstruction team in Basra, wrote in January this year that several oil company representatives complained of "unwarranted high prices" given an improving security situation since 2008.

"Halliburton Iraq country manager decried a 'mafia' of these companies and their 'outrageous' prices, and said that they also exaggerate the security threat.

"Apart from the high costs for routine trips, he claimed that Halliburton often receives what he says are 'questionable' reports of vulnerability of employees to kidnapping and ransom. He said that he recently saw an internal memo from their security company which tasked its employees to emphasize the persistent danger faced by IOCs [international oil companies]." Naland wrote.

The memo, written nine months after British troops handed over control of their base in Basra to the US army, does not name the Halliburton manager.

According to the cable, it cost around $6,000 (£3,900) to hire a security firm for four hours in Basra in January. A typical trip would include four security agents, drivers, and three or four armoured vehicles. A recent visit by a member of Iraq's government from Baghdad to Basra and back cost about $12,000 (£7,800), the cable claimed.

Tensions between private security companies and the Baghdad government had increased in Iraq following the decision by the US courts in December 2009 not to prosecute anyone for the Blackwater killings of 17 Iraqis in Baghdad in September 2007.

The source for this information was a British security company boss, whose name has been redacted.

"According to [the British national] a China National Petroleum Company (CNPC) security team was stopped in Basrah [sic] city by the Iraqi police in a 'clear attempt to disrupt and cause panic to the clients.' [The British national] said that the Iraqi police stopped the convoy and showed a letter from the Ministry of Interior (MOI) stating that as of January 12, personal security teams now faced a more restrictive weapons regime. The situation was eventually resolved, and the convoy was released, but [the British national] said that this episode could presage a more restrictive posture towards security firms 'in retaliation or the Blackwater verdict'," wrote Naland.

The cable also says that security companies are being encouraged by the Iraqi government and the oil companies to employ more Iraqis and less westerners in frontline jobs.

"According to XXXXXXXXXX, the GOI [government of Iraq] is anxious to 'get rid of all the white faces carrying guns' in their streets," it reads.

Afghan authorities last week arrested a British private security company employee and sentenced him to eight months in jail, the latest move in the government's crackdown on private security firms. Global Strategies Group consultant Michael Hearn was arrested last Wednesday for allegedly failing to register weapons with the government.