Blackwater chairman defends his company

By RICHARD LARDNER, Associated Press Writer

WASHINGTON - Blackwater chairman Erik Prince vigorously defended his private security company on Tuesday, rejecting charges that his staff acted like a bunch of cowboys immune to legal prosecution while protecting State Department personnel in Iraq and Afghanistan.

"I believe we acted appropriately at all times," Prince, a 38-year-old former Navy seal, told the House Oversight and Government Reform Committee.
His testimony came as the FBI is investigating Blackwater personnel for their role in a Sept. 16 shootout that left 11 Iraqis dead. The incident and others, including a shooting by a drunk Blackwater employee after a 2006 Christmas party, has raised pointed questions by lawmakers about whether the government is relying too heavily on private contractors who fall outside the scope of the military courts martial system.
"Privatizing is working exceptionally well for Blackwater," said Rep. Henry Waxman, D-Calif., committee chairman. "The question for this hearing is whether outsourcing to Blackwater is a good deal to the American taxpayer, whether it's a good deal for the military and whether it's serving our national interest in Iraq."
Waxman said he agreed not to probe for specifics of the Sept. 16 incident during Tuesday's hearing, upon request by the Justice Department that Congress wait until the FBI concludes its investigation. But Waxman said it was still appropriate to probe Blackwater's company policies, and whether the State Department helped Blackwater cover up Iraqi deaths.
In particular, Waxman said he was concerned to learn the State Department advised the company on how much to pay the family of an Iraqi security guard shot by a drunken Blackwater employee in 2006. Internal e-mails later revealed a debate within the State Department on the size of the payment, Waxman said.
"It's hard to read these e-mails and not come to the conclusion that the State Department is acting as Blackwater's enabler," Waxman said.
Administration officials, speaking on condition of anonymity to describe an ongoing investigation, said the incident had been referred to federal prosecutors in Seattle, where the former Blackwater employee now lives, but there has been no public announcement of any charges.
Prince said the individual was immediately fired and fined.
"But we as a private organization can't do anything more. We can't flog him, we can't incarcerate him," said Prince, adding that he would be "happy to see" further investigation by law enforcement.
The Blackwater chairman said he also supports legislation that would guarantee Blackwater employees and other private security companies working for the State Department are subject to prosecution in U.S. courts. The House was expected to pass such a bill, sponsored by Rep. David Price, D-N.C., later on Tuesday.
Waxman also cited a November 2004 crash in Afghanistan of a plane piloted by Blackwater pilots as an example of what he said is the company's cavalier attitude about how it operates.
The crash of flight "Blackwater 61" killed the Blackwater crew and three U.S. military personnel who were passengers. According to information gathered by Waxman's staff, the Blackwater pilots lacked experience flying in Afghanistan, yet they were joy riding through a valley before crashing into a canyon wall.
Prince acknowledged pilot error led to the crash, but also said his company's aviators often fly missions in difficult conditions. He said the military violated its own rules by loading people and explosives on Blackwater 61. But Blackwater flew the mission anyway because that's what its government customer wanted.
"There is no FAA in Afghanistan," he said.
Throughout the hearing, Prince defended his staff as courageously defending U.S. diplomats overseas. He said 30 Blackwater contractors have been killed in action and no Americans have died while in its protection.
"We're the targets of the same ruthless enemies that have killed more than 3,800 American military personnel and thousands of innocent Iraqis," he said, sitting alone at the witness table.
Directly behind Prince sat Stephen Ryan, an attorney with the law firm McDermott Will & Emery.
Rep. Tom Davis, R-Va., the committee's top Republican, said the State Department is "trying to get it right," but its oversight of security contractors "seems to have some blind spots as well," according to his opening statement.
There's little data on contractor performance, Davis said, "so it's impossible to know if one company's rate of weapons related incidents is the product of a dangerous 'cowboy' culture or the predictable result of conducting higher-risk missions."
Davis said concentrating only on Blackwater won't answer the complex questions surrounding the use of security contractors.
"Nor are we likely to learn much by focusing on one sensational incident still under investigation," Davis said.
Prince rejected a claim in a congressional report released Monday, saying Blackwater does not engage in "offensive or military missions, but performs only defensive security functions."
He also disputed the math that concludes security contractors cost far more than American forces to protect U.S. diplomatic personnel. In its report, Waxman's committee said Blackwater charges the government $1,222 each day for a single security contractor, which works out to $445,000 on an annual basis. That's six times the cost of a U.S. soldier, the report said.
Prince said there's a large amount of expensive training for military personnel that the government pays for, but is not calculated in these unflattering estimates of what his company charges.
"That sergeant doesn't show up naked and untrained," Prince said.
Blackwater, founded in 1997 by Prince and headquartered in Moyock, N.C., is the largest of the State Department's three private security contractors with nearly 1,000 personnel working in Iraq. The others are Dyncorp and Triple Canopy, both based in Washington's northern Virginia suburbs.
Blackwater has had more shooting incidents than the other two companies combined, according to Waxman's report.
Among the Monday report's most serious charges was that Blackwater contractors sought to cover up a June 2005 shooting of an Iraqi man and the company paid — with State Department approval — the families of others inadvertently killed by its guards.

Blackwater denies involvement in illicit arms trade

WASHINGTON (CNN) -- Allegations that Blackwater USA -- whose operations were suspended after 20 Iraqi civilians were shot to death last weekend -- was "in any way associated or complicit in unlawful arms activities are baseless," the company asserted Saturday.

Blackwater employees patrol Baghdad by air in a February 2005 photograph.

Federal prosecutors are investigating allegations that employees of Blackwater illegally purchased weapons and sold them in Iraq, according to U.S. government sources.
A U.S. government official has said the U.S. attorney's office in Raleigh, North Carolina, is in the early stages of an investigation that focuses on individual company employees, and not the firm.
Blackwater, which is based in Moyock, North Carolina, is a security firm hired by the State Department to guard U.S. staff in Iraq.
"The company has no knowledge of any employee improperly exporting weapons," the Blackwater statement said. "When it was uncovered internally that two employees were stealing from the company, Blackwater immediately fired them and invited the ATF to conduct a thorough investigation." Watch a report on Blackwater's response to the allegations »
The first public hint that an investigation was under way came earlier this week in a statement from State Department Inspector General Howard Krongard after he was accused of blocking fraud investigations in Afghanistan and Iraq.
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Blackwater resuming operations in Iraq
Krongard said the State Department has been cooperating with the prosecutors in the Blackwater probe.
"In particular, I made one of my best investigators available to help assistant U.S. attorneys in North Carolina in their investigation into alleged smuggling of weapons into Iraq by a contractor," Krongard's statement said.
Blackwater resumed normal security operations in Iraq on Friday, the State Department said, after a brief hiatus following the lethal incident last Sunday.
The Iraqi government was outraged by the shootings and disputes the U.S. and Blackwater's claim that the guards were responding to an attack

Feds target Blackwater in weapons probe

WASHINGTON - Federal prosecutors are investigating whether employees of the private security firm Blackwater USA illegally smuggled into Iraq weapons that may have been sold on the black market and ended up in the hands of a U.S.-designated terrorist organization, officials said Friday.

The U.S. Attorney's Office in Raleigh, N.C., is handling the investigation with help from Pentagon and State Department auditors, who have concluded there is enough evidence to file charges, the officials told The Associated Press. Blackwater is based in Moyock, N.C.
A spokeswoman for Blackwater did not return calls seeking comment Friday. The U.S. attorney for the eastern district of North Carolina, George Holding, declined to comment, as did Pentagon and State Department spokesmen.
Officials with knowledge of the case said it is active, although at an early stage. They spoke on condition of anonymity due to the sensitivity of the matter, which has heightened since 11 Iraqis were killed Sunday in a shooting involving Blackwater contractors protecting a U.S. diplomatic convoy in Baghdad.
The officials could not say whether the investigation would result in indictments, how many Blackwater employees are involved or if the company itself, which has won hundreds of millions of dollars in government security contracts since the 2003 invasion of Iraq, is under scrutiny.
In Saturday's editions, The News & Observer of Raleigh reported that two former Blackwater employees — Kenneth Wayne Cashwell of Virginia Beach, Va., and William Ellsworth "Max" Grumiaux of Clemmons, N.C. — are cooperating with federal investigators.
Cashwell and Grumiaux pleaded guilty in early 2007 to possession of stolen firearms that had been shipped in interstate or foreign commerce, and aided and abetted another in doing so, according to court papers viewed by The Associated Press. In their plea agreements, which call for a maximum sentence of 10 years in prison and a $250,000 fine, the men agreed to testify in any future proceedings.
Calls to defense attorneys were not immediately returned Friday evening, and calls to the telephone listings for both men also were not returned.
The News & Observer, citing unidentified sources, reported that the probe was looking at whether Blackwater had shipped unlicensed automatic weapons and military goods to Iraq without a license.
The paper's report that the company itself was under investigation could not be confirmed by the AP.
Meanwhile, Secretary of State Condoleezza Rice ordered a review of security practices for U.S. diplomats in Iraq following a deadly incident involving Blackwater USA guards protecting an embassy convoy.
Rice's announcement came as the U.S. Embassy in Baghdad resumed limited diplomatic convoys under the protection of Blackwater outside the heavily fortified Green Zone after a suspension because of the weekend incident in that city.
In the United States, officials in Washington said the smuggling investigation grew from internal Pentagon and State Department inquiries into U.S. weapons that had gone missing in Iraq. It gained steam after Turkish authorities protested to the U.S. in July that they had seized American arms from the outlawed Kurdistan Workers Party, or PKK, rebels.
The Turks provided serial numbers of the weapons to U.S. investigators, said a Turkish official.
The Pentagon said in late July it was looking into the Turkish complaints and a U.S. official said FBI agents had traveled to Turkey in recent months to look into cases of missing U.S. weapons in Iraq.
Investigators are determining whether the alleged Blackwater weapons match those taken from the PKK.
It was not clear if Blackwater employees suspected of selling to the black market knew the weapons they allegedly sold to middlemen might wind up with the PKK. If they did, possible charges against them could be more serious than theft or illegal weapons sales, officials said.
The PKK, which is fighting for an independent Kurdistan, is banned in Turkey, which has a restive Kurdish population and is considered a "foreign terrorist organization" by the State Department. That designation bars U.S. citizens or those in U.S. jurisdictions from supporting the group in any way.
The North Carolina investigation was first brought to light by State Department Inspector General Howard Krongard, who mentioned it, perhaps inadvertently, this week while denying he had improperly blocked fraud and corruption probes in Iraq and Afghanistan.
Krongard was accused in a letter by Rep. Henry Waxman, D-Calif., chairman of the House Oversight and Government Reform Committee, of politically motivated malfeasance, including refusing to cooperate with an investigation into alleged weapons smuggling by a large, unidentified State Department contractor.
In response, Krongard said in a written statement that he "made one of my best investigators available to help Assistant U.S. Attorneys in North Carolina in their investigation into alleged smuggling of weapons into Iraq by a contractor."
His statement went further than Waxman's letter because it identified the state in which the investigation was taking place. Blackwater is the biggest of the State Department's three private security contractors.
The other two, Dyncorp and Triple Canopy, are based in Washington's northern Virginias suburbs, outside the jurisdiction of the North Carolina's attorneys.
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Associated Press writers Mike Baker in Raleigh and Desmond Butler and Lara Jakes Jordan in Washington contributed to this report.