Sunday, August 22, 2010

Blackwater Founder Moves to Abu Dhabi

August 17, 2010


By JAMES RISEN

WASHINGTON — Erik Prince, whose company, Blackwater Worldwide, is for sale and whose former top managers are facing criminal charges, has left the United States and moved to Abu Dhabi, according to court documents.
Mr. Prince, a former member of the Navy Seals and an heir to a Michigan auto parts fortune, left the country after a series of civil lawsuits, criminal charges and Congressional investigations singled out Blackwater or its former executives and other personnel. His company, now called Xe Services, has collected hundreds of millions of dollars from the United States government since 2001.
Current and former colleagues said Mr. Prince hoped to focus on security work from governments in Africa and the Middle East. They also said he was bitter about the legal scrutiny and negative publicity his company had received.
“He needs a break from America,” said one colleague, speaking only on the condition of anonymity about Mr. Prince’s long-rumored move.
Mr. Prince does not face any criminal charges, but five former top company executives have been indicted on federal weapons, conspiracy and obstruction charges. Two guards who worked for a Blackwater-affiliated company face murder charges from a 2009 shooting in Afghanistan, and the Justice Department is trying to revive its prosecution of five former Blackwater guards accused of killing 17 Iraqi civilians in 2007.
Over the past several years, Congress has also conducted a series of investigations of Blackwater’s activities in Iraq and Afghanistan, including an inquiry by the House Intelligence Committee into the company’s involvement in a proposed Central Intelligence Agencyassassination program.
Mark Corallo, a spokesman for Mr. Prince, declined to comment about Mr. Prince’s move. Richard L. Beizer, a Washington lawyer representing Mr. Prince in a civil case, did not respond to requests for comment.
In documents filed last week in a civil lawsuit brought by former Blackwater employees accusing Mr. Prince of defrauding the government, Mr. Prince sought to avoid giving a deposition by stating that he had moved to Abu Dhabi in time for his children to enter school there Aug. 15. In the documents filed in federal court in Virginia, Mr. Prince’s lawyers describe Abu Dhabi as Mr. Prince’s place of residence. His deposition is now scheduled to take place there next week, lawyers involved in the case said.
Mr. Prince made a name for himself during the height of the war in Iraq, when Blackwater became the most recognizable brand name in the booming field of private security contracting. The company, which Mr. Prince founded in 1997, expanded rapidly, winning a series of contracts with the State Department, the C.I.A. and the Defense Department.
But Blackwater personnel in Iraq soon gained a reputation for cowboy tactics and the use of excessive force while guarding convoys of United States diplomats, leading to complaints from Iraqis and friction with the United States military.
Blackwater’s biggest public crisis came in September 2007, when its guards on a convoy in Nisour Square in Baghdad opened fire with machine guns, grenade launchers and other weapons, killing 17 Iraqi civilians. Five guards were indicted in the United States on manslaughter charges, but the charges were dismissed late last year by a federal judge. The Justice Department is appealing that ruling.
The Nisour Square killings ultimately led the State Department to drop Blackwater from its diplomatic security contract in Iraq. But the Justice Department has been investigating whether Blackwater sought to bribe Iraqi government officials to allow the firm to operate in the country after the Nisour Square killings.
In 2009, with scrutiny of Blackwater’s activities intensifying, Mr. Prince changed the company’s name and overhauled the management. He sold the company’s aviation arm early this year, and finally placed the whole company, including its huge headquarters and training complex in Moyock, N.C., up for sale in June.

Blackwater Reaches Deal on U.S. Export Violations

By JAMES RISEN

WASHINGTON — The private security company formerly called Blackwater Worldwide, long plagued by accusations of impropriety, has reached an agreement with the State Department for the company to pay $42 million in fines for hundreds of violations of United States export control regulations.
The violations included illegal weapons exports to Afghanistan, making unauthorized proposals to train troops in south Sudan and providing sniper training for Taiwanese police officers, according to company and government officials familiar with the deal.
The settlement, which has not yet been publicly announced, follows lengthy talks between Blackwater, now called Xe Services, and the State Department that dealt with the violations as an administrative matter, allowing the firm to avoid criminal charges. A company spokeswoman confirmed Friday that a settlement had been reached. The State Department spokesman, Philip J. Crowley, said he could not immediately comment.
The settlement with the State Department does not resolve other legal troubles still facing Blackwater and its former executives and other personnel. Those include the indictments of five former executives, including Blackwater’s former president, on weapons and obstruction charges; a federal investigation into evidence that Blackwater officials sought to bribe Iraqi government officials; and the arrest of two former Blackwater guards on federal murder charges stemming from the killing of two Afghans last year.
But by paying fines rather than facing criminal charges on the export violations, Blackwater will be able to continue to obtain government contracts. While the company lost its largest federal contract last year to provide diplomatic security for United States Embassy personnel in Baghdad, where the Iraqi government was incensed by killings of Iraqis in one highly publicized case, it still has contracts to provide security for the State Department and the C.I.A. in Afghanistan.
Blackwater, its reputation tainted in part because of the excessive use of force by some of its personnel in Baghdad, sought for years to extend its reach far beyond the war zones of Iraq and Afghanistan.
For a time, the company’s founder, Erik Prince, had ambitions to turn Blackwater into an informal arm of the American foreign policy and national security apparatus, and proposed to the C.I.A. to create a “quick reaction force” that could handle paramilitary operations for the spy agency around the world. He had hopes that Blackwater’s military prowess could be an influential force in regional conflicts around the world.
Mr. Prince, a former Navy Seals member and the heir to an auto parts fortune, took an interest in Africa, particularly Sudan, and he is said to have wanted Blackwater to step in to help the rebels in southern Sudan, which is predominantly Christian and animist, fight the Sudanese government and the Muslim north, despite United States economic sanctions.
Blackwater’s ambitions in Sudan were described in detail by McClatchy newspapers in June.
The settlement with the State Department, involving practices from the days before Blackwater was rebranded as Xe Services, comes as Mr. Prince is trying to shed his ties to Blackwater and its past activities.
He overhauled the company’s management in 2009, changed its name, and has now put the privately held company up for sale. He has just moved with his family to Abu Dhabi from the United States, a move that colleagues say was a result of his deep anger and frustration over the intense scrutiny he and his firm have received in recent years.
The State Department export controls require government approval for the transfer of certain types of military technology or knowledge from the United States to other countries. But Blackwater began to seek training contracts from foreign governments and other foreign organizations without adhering closely to American regulations.
The company also shipped automatic weapons and other military equipment for use by its personnel in Iraq and Afghanistan in violation of export controls, and in some cases sought to hide its actions, according to the government. In one incident, Blackwater shipped weapons to Iraq hidden inside containers of dog food.
A federal investigation into the company’s weapons shipments to Iraq led to guilty pleas on criminal charges by two former Blackwater employees who are believed to have cooperated with a broader federal inquiry.
Investigators reportedly looked into whether some of the weapons that were shipped to Iraq were sold on the black market and ended up in the hands of a Kurdish rebel group, the Kurdistan Workers’ Party, or P.K.K., which Turkey considers a terrorist organization. Turkish officials reportedly complained to the United States about American weapons seized from the group.
In 2008, after a federal investigation of Blackwater’s actions was begun, the company admitted “numerous mistakes” in its adherence to export laws and created an outside board of experts to supervise the firm’s compliance.
Current and former government officials say that the government’s inquiry into some of Blackwater’s export control violations began as part of a federal grand jury investigation in North Carolina, where Blackwater is based. But the matter was apparently shifted to the State Department when the criminal investigation in North Carolina narrowed its focus.
That grand jury handed down the indictments of the five former Blackwater executives earlier this year. That indictment includes charges that Blackwater executives sought to hide evidence that they had given weapons as gifts to King Abdullah of Jordan.
Despite the fines and investigations that have plagued Blackwater, the firm has continued to win contracts from the State Department and the C.I.A.
In June, the State Department awarded Blackwater a $120 million contract to provide security at its regional offices in Afghanistan, while the C.I.A. renewed the firm’s $100 million security contract for its station in Kabul. At the time, the C.I.A. director, Leon E. Panetta, defended the decision, saying that the company had offered the lowest bid and had “cleaned up its act.”