Ten Pakistani students, whose arrest on charges of planning bombings in Manchester triggered a diplomatic spat early this year, had been granted permission by the Home Office to work as security guards in Britain.
The Pakistani students, who were never charged for lack of evidence, were arrested by MI5 in multiple raids on charges of planning to blow up a shopping centre and a nightclub in Manchester, The Sunday Times reported today.
Police believed they had conducted "hostile reconnaissance" of the Arndale and Trafford shopping centres and the Birdcage nightclub in the industrial city Manchester.
It has now emerged that in the months before the alleged plot, the Security Industry Authority, a Home Office body that regulates the private security industry, the paper said, gave the men.
The 10 had passed a vetting programme designed to bar criminals and undesirables from taking up sensitive security posts protecting airports, ports and Whitehall buildings from terrorist attack.
When arrested, two of the students were working for a cargo firm which had access to secure areas at Manchester airport. Foreign migrants do not need to have their applications counter-signed by a British referee.
Officials privately admit they do not even attempt to make checks on applicants' address histories in Pakistan, the Sunday Times reported.
The suspects, aged 22 to 38, reportedly arrived in Britain on student visas in 2007 and 2008. Their visas allowed them to work in paid employment for up to 20 hours a week. Because they had successfully applied for SIA permits, they were able to get work as security guards.
MI5 was investigating the terror suspects for five months before the arrests. Police swooped in April, arresting 12 men in Manchester, Liverpool and Clitheroe, Lancashire, the report said.
One was released almost immediately but the remaining 11 - all Pakistanis - were held under the government's controversial 28-day terrorism laws.
But police uncovered no hard evidence and the Crown Prosecution Service said they could not be charged.
The 10 students were released without charge, but eight have been forced to leave Britain and two remain in jail fighting deportation.
The case had strained relations between Britain and Pakistan. Pakistani officials insisted the students were innocent and disputed British Prime Minister Brown's description of the case as a "very big terrorist plot."