Blackwater agrees to $7.5M fine

Contractor, now known as Academi, admits to range of lawbreaking

jneff@newsobserver.comAugust 7, 2012 

— The military contractor formerly known as Blackwater ended a long-running criminal investigation Tuesday by admitting to lawbreaking that ranged from possessing illegal machine guns at its Camden County training grounds to attempting to land $15 billion in oil and defense contracts in southern Sudan while U.S. companies were barred from doing business there.

The company agreed to pay a fine of up to $7.5 million and entered a deferred prosecution agreement that will essentially expire after three years of good corporate behavior. Only the corporation admitted wrongdoing; no executives, including former owner Erik Prince, were held individually responsible.

The U.S. Attorney’s Office in Raleigh announced the agreement with the firm, which after several name changes is now called Academi. “Academi/Blackwater operated in a manner which demonstrated systemic disregard for U.S. government laws and regulations,” said Chris Briese, the top FBI agent in the bureau’s Charlotte office.

In recent years, Blackwater has been embroiled in numerous civil and criminal cases. The company agreed in 2010 to pay the State Department $42 million for matters related to Tuesday’s criminal plea. The company settled with the families of army officers killed when a Blackwater airplane flying without a flight plan crashed into an Afghan mountain.

Blackwater and some former employees still face other legal problems. Five former top executives, including former president Gary Jackson, face weapons charges in federal court in Raleigh. Four former employees face weapons and manslaughter charges for a 2007 shooting in a Baghdad square that killed 17 Iraqis. Two former Blackwater guards were convicted of manslaughter last year for the murder of two Afghans in 2009.

In 2010, McClatchy Newspapers first reported on Blackwater’s attempts to land business in south Sudan while the country was under U.S. sanctions. The region had become an autonomous entity after decades of civil war.

Prince, who has been long active in evangelical Christian groups, sent two people to south Sudan in 2005 to negotiate business.

The documents released Tuesday identify them as “Consultant 1” and “Employee 1”; documents obtained by McClatchy identified them as Bradford Phillips, a prominent evangelical Christian, and Blackwater vice president Chris Taylor, respectively The fathers of Phillips and Prince were early leaders in the activist conservative Christian movement in the United States.

As Taylor negotiated business with the Sudanese officials, he arranged for the delivery of Iridium satellite phones to top Sudanese officials.

“Toys were delivered and they are now functioning,” Taylor wrote in a Nov. 28, 2005 email to Blackwater headquarters.

These “toys” were the subject of count one of Tuesday’s plea agreement: It was illegal to export such goods to a country under sanctions.

Blackwater also proposed a wide variety of business ventures: training the Sudanese military, police and the presidential security detail; collecting intelligence; and building an oil pipeline. All told, the contracts could have added up to $15 billion over five years.

These contracts were discussed during 2005 and 2006, when such proposals were banned under sanctions. In late 2006, a senior Sudanese official sent a letter promising to put down half of the money for some of the contracts. However, no bank would agree to set up the necessary escrow account, and none of the contracts were signed.

Details of agreement

The plea agreement details numerous times where Blackwater played fast and loose with the rules governing the export of military goods and ideas.

Blackwater admitted exporting ammunition and body armor to Iraq and Afghanistan without required permits.

An intelligence subsidiary, Total Intelligence Solutions, provided anti-terrorism training to the Canadian military without required Defense Department permission. And the company allowed foreign nationals to design and engineer an armored personnel carrier, the Grizzly, when the foreign nationals lacked the required approval.

The agreement also cites various instances in which the company used illegal methods of circumventing federal firearm laws.

Blackwater acquired two Steyr machine guns in 2003 and never registered them as required by federal law.

Other automatic weapons counts include Blackwater’s acquisition of 17 AK-47s and 17 M4s. which they did not properly register with the Bureau of Alcohol, Tobacco and Firearms. Instead, the company claimed that they were simply storing the guns for the Camden County Sheriff’s Office.

Blackwater was technically a private firearms dealer, and as such could not possess more than two fully automatic weapons, but law enforcement agencies can.

Tiny Camden County had just 12 full-time deputies at the time, and major violent crimes are a rarity.

Also in the agreement the company admitted to falsifying paperwork for guns gifted to the King of Jordan.

According to court records, cases against several individual Blackwater executives for weapons violations and making false statements are still working their way through the system.

Former Blackwater president Gary Jackson, former vice president William Mathews Jr., former general counsel Andrew Howell, former vice president Ana Bundy and Ronald Slezak, who handled federal firearms paperwork, were indicted in 2010. They face similar charges and are awaiting trial.

A spokeswoman for the U.S. Attorney’s Office in Raleigh, Robin Zier, noted that Tuesday’s agreement requires the company to cooperate in other prosecutions.

David Isenberg, author of “Shadow Force: Private Security Contractors in Iraq,” said that someof the agreement merely forces the company to do what it should have years ago.

The contract allows the company to deduct up to $2.5 million from its fine to pay for the costs of complying with Tuesday’s agreement.

“So they got credit for a fine levied against them,” he said. “I’d call that a pretty nice deal.”

Neff: 919-829-4516

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