Dan Maguire, a U.S. intelligence adviser to the Iraqi Ministry of Defense, said the idea is to gather intelligence on Iranian-backed groups working in Iraq.

Maguire noted the move has "a lot of logic to it" as Iran and Iraq fought a bitter and bloody eight-year war during the 1980's.

The recruitment of former Saddam-era intelligence officials, however, seems to run counter to a new set of Iraqi laws meant to block Baath Party members and Saddam-era officials from government work because of their past human rights abuses.

The U.S. government, who accuses Iran of trying to sabotage their efforts in Iraq, approves of the measure and the Iraqi government has been fluid in its enforcement of reconciliation measures like the "Accountability and Justice" law passed last year, the newspaper said.