James Woolsey, former CIA boss and influential adviser to President George Bush, is a director of a US firm aiming to make millions of dollars from the 'war on terror', The Observer can reveal.

Woolsey, one of the most high-profile hawks in the war against Iraq and a key member of the Pentagon's Defence Policy Board, is a director of the Washington-based private equity firm Paladin Capital.

The company was set up three months after the terrorist attacks on New York and sees the events and aftermath of September 11 as a business opportunity which 'offer[s] substantial promise for homeland security investment'.