A consultancy firm based in Cambridge, Massachusetts, has admitted it had made serious mistakes in entering into a multimillion dollar contract with the Libyan regime to portray Muammar Gaddafi to the west in a positive light.

The Monitor Group, which has 30 offices around the world, has become the focal point of a billowing controversy over the engagement of western individuals and institutions with the discredited Gaddafi regime.

Between 2006 and 2008, the firm entered into a contract with the regime that was worth at least $3m (£1.8m), according to confidential documents obtained by the Libyan opposition.

An undisclosed portion of that money was passed on by Monitor to leading academics and policymakers in the US in the form of honorariums, consultancy fees and travel expenses.

Experts were encouraged to travel to Tripoli to meet a range of senior regime figures, including Gaddafi himself and his son Saif al-Islam, both of whom are now on the UN’s sanctions list designed to prevent Gaddafi’s assault on his own people.

The individuals who were engaged in the Monitor project included Francis Fukuyama, author of The End of History; Richard Perle, a prominent neocon who advised President George W Bush in the buildup to the Iraq invasion; and American academics such as Benjamin Barber, Joseph Nye and Robert Putnam.

Monitor promised the Libyan regime that it would secure a “regular flow of high quality visitors” to Tripoli who would be selected for the appeal of their ideas and for “the strength of their influence in guiding US foreign policy”.

Monitor proposed to write a book about Gaddafi’s philosophy that would include transcripts of conversations between those western experts and the Libyan leader. It would show the world that he was “a man of action and a man of ideas … Gaddafi is well known but poorly understood, particularly in the west”.

The book would be a “signature text on Muammar Gaddafi and his ideas”.

In its statement, Monitor admitted the abortive book project had been a “serious mistake on our part”. It also regretted having helped Gaddafi’s son prepare an ill-fated dissertation at the London School of Economics. But the company insisted its intentions had been benign in seeking to encourage “accelerated modernisation and increased openness of government institutions”.

However, this is not how some US experts who were approached by Monitor as part of its Libyan campaign remember the dialogue.

Danielle Pletka, vice president of the American Enterprise Institute, was invited to visit Gaddafi in Tripoli after her name was suggested by the Libyans themselves. She decided not to participate in the programme. “I did not have any desire to aid and abet Gaddafi’s PR effort. It was clear that was what was intended – the person from the Monitor Group spent quite a lot of time on the phone telling me all about how Libya had changed for the better and how they wanted the world to see them. That’s PR in my book.”

Fukuyama, the most celebrated name among those enticed to visit Tripoli, did not respond to a request for comment, but others on the list did give their recollection of events.

Putnam, a Harvard professor of public policy, described in the Wall Street Journal last week his meeting with Gaddafi in January 2007, but he did not mention in the article that the trip had been organised as part of Monitor’s campaign.

He said he had used the trip as an opportunity to plead with the Libyan leader on behalf of Bulgarian nurses who were at the time being held in the country. “I handed to him a letter objecting to the treatment of the nurses,” he said.

Nye said he had accepted his “usual consulting fee plus expenses” having been invited by Monitor to go to Libya to meet Gaddafi in 2007. “As someone who writes on international politics and leaders, I was curious to see what he was like.”

He spent several hours with the dictator and wrote an article for The New Republic in which he said he had been invited to Libya by Monitor but did not disclose that he was actually a paid consultant to the firm. That was revealed by Mother Jones magazine last month.

Nye wrote “there is no doubt [Gaddafi] acts differently on the world stage today than he did in decades past. The fact that he took so much time to discuss ideas with a visiting professor suggests that he is actively seeking a new strategy.”

A Guardian correspondent attended a 2007 debate discussion between Anthony Giddens and Muammar Gaddafi as a guest of the Monitor Group.