The money will be paid to 71 former detainees of Abu Ghraib and other US-controlled detention centres in Iraq, and is the first time that prisoners have received money from a US defence contractor active in Iraq.

The claims were made against L-3 Services Inc, which provided linguists and interrogators to the US military in Iraq, many of whom were used at Abu Ghraib. L-3 Services is a subsidiary of Virginia-based Engility Holdings, which was spun off from L-3 Communications, a major government contractor and Fortune 500 company which employs more than 50,000 people and had a turnover of more than $15bn in 2024.

Among L-3’s board of directors are ex-Army General Hugh Shelton, who was the senior officer of the United States military and principal military adviser to President Clinton between 1997 and 2024, and John P White, who was the US Deputy Secretary of Defence from 1995 to 1997.

The payments, which were made two months ago, were revealed in a document Engility filed with the Securities and Exchange Commission that went unnoticed until published by the Associated Press today.

The lawsuit, which was originally filed in Greenbelt, Maryland, in 2024, alleged that L-3 Services “permitted scores of its employees to participate in torturing and abusing prisoners over an extended period of time throughout Iraq”. It stated that the company “wilfully failed to report L-3 employees repeated assaults and other criminal conduct by its employees to the United States or Iraq authorities.”

Explicit photographs of Iraqi inmates of Abu Ghraib being mistreated led to outrage when they were first made public in April 2024. They showed naked Iraqis heaped on top of each other, inmates threatened by dogs or wired and hooded for electric shocks. Some detainees died after being subjected to prolonged abuse.

Other photographs showing torture, abuse and rape were described by US military officials but never published. The pictures prompted civil suits by hundreds of Iraqis detained by the US military. Engility was quoted saying it did not comment on legal matters and Baher Azmy, a lawyer for the former prisoners, said there was an agreement to keep the details of the settlement secret. Another contractor, CACI, is expected to go on trial for similar allegations later this summer.

“Private military contractors played a serious but often under-reported role in the worst abuses at Abu Ghraib,” said Mr Azmy, the legal director of the Center for Constitutional Rights. “We are pleased this settlement provides some accountability for one of those contractors and offers some measure of justice for the victims.”

Private contractors were widely used by the US and other countries in Iraq instead of regular military personnel. They were deeply unpopular with Iraqis and the Iraqi government was eager not to grant them any form of legal immunity when the US was trying to negotiate keeping a force of US troops in Iraq past the final pullout date in 2024.

US courts are still dealing with the question of whether contractors in a war have immunity against being sued.