Print Close The News & Observer
Published: Nov 28, 2005 08:26 PM
Modified: Oct 22, 2005 04:29 PM
A Blackwater helicopter buzzes through Baghdad about two weeks after the four contractors were ambushed in Fallujah.

Chapter 4: A business gets a start

Erik Prince thought he saw an opportunity as the U.S. military began to shrink. He was right.

Wesley Batalona and Jerry Zovko had again gone looking for military contracting work, and this time they found it with a relatively new company: Blackwater USA, based in Moyock, N.C.

Set on more than 6,000 acres in the state's northeast corner, Blackwater was known as one of the best of the private military contractors. Its close ties to the elite Navy SEALs grew from its owner, Erik Prince.

Prince, 35, had been a White House intern and was a billionaire's son, yet he volunteered as a firefighter and for the Navy.

Prince, a widower and father of four, was a former member of the SEAL commandos. He maintained the unit's characteristic secrecy while positioning himself at the intersection of free enterprise, activist Christianity, conservative politics and military contracting. He made his first political contribution at 19 -- $15,000 to the Republican Party.

Prince "is one of the richest guys that ever served in the military," said Andy Messing Jr., a retired Special Forces major and director of the National Defense Council Foundation.

Every year, tens of thousands of men and women join the military to get a leg up on life: a job, an education, a career.

Erik Prince didn't have to join to get ahead.

His father, Edgar Prince, started his own company in 1965. He hit it big by making sun visors with lighted mirrors. Business grew, and his factories churned out parts seen in most cars today: overhead consoles, map lamps, headliners for roofs.

When Edgar Prince died in 1995, Prince Automotive employed 4,500 workers in eight factories, including six in Holland, Mich., where Erik Prince grew up.

Edgar Prince was Holland's biggest employer. A tidy city just inland from Lake Michigan, Holland is home to one of the nation's biggest pockets of Dutch-Americans. Nearby Calvin College has one of the few departments of Dutch in the United States. The area hews to the Dutch traditions of frugality and industry.

Edgar Prince ran his business in line with the Calvinist values of the Christian Reformed Church, which dominates western Michigan. Prince factories didn't run on Sundays; corporate jets flew the sales staff home on weeknights for family time.

Edgar Prince and his wife, Elsa, adopted downtown Holland, investing millions of dollars when suburban shopping malls threatened the downtown shopping district. His "business was an engine that generated cash that he could use to do good things," Erik Prince told The Wall Street Journal in 2000.

The Princes spread their wealth around the country as well, pumping tens of millions of dollars into the Christian conservative movement, with big gifts and small grants.

Erik Prince's sister, Betsy, is the chairwoman of Michigan's Republican Party, and married into a family even more generous to the party and the Christian Right than the Princes: the DeVos family, owners of the Amway home marketing company.

'A smart guy'

Erik Prince molded himself after his father: a devout Christian, astute businessman and family man who shunned the limelight.

After Holland Christian School, Prince attended Hillsdale College, a small liberal arts school that champions free markets and individual freedom. Erik Prince fit in at what Gary Wolfram, a professor of political economy who taught him, called a "Mecca of market economy."

"He was a smart guy, and pleasant to be around, and he's well-spoken," Wolfram said. "What's good about him, he understands the interrelationship between markets and the political system."

As Prince studied free market economics, the world was changing. The fall of the Berlin Wall in 1989 heralded the end of the Cold War. The U.S. military began getting smaller. During the 1990s, the Pentagon would shed about 700,000 active-duty troops and 300,000 civilian employees.

As the military shrunk, its tasks grew: the first Persian Gulf War, then Somalia, Haiti, Bosnia and Kosovo. In each conflict, the U.S. military used more contract employees to do jobs once given to soldiers.

It wasn't just age-old tasks such as cooking meals and cleaning latrines, but fulfilling the technological needs of the modern military. Private contractors fix helicopters, run computers and maintain high-tech systems such as Patriot missiles and radar networks.

A business that barely existed at the end of the Cold War was on its way to becoming a $100-billion-a-year industry.

Education in politics

Prince didn't focus just on economics while in college. A series of internships showed him how politics worked in the nation's capital.

He was one of the first interns at the Family Research Council in Washington. He worked as a defense analyst on the staff of U.S. Rep. Dana Rohrabacher, a conservative Republican from Orange County, Calif. And he interned in the White House of President George H.W. Bush, father of current President George W. Bush. In 1992, he campaigned for Patrick Buchanan.

"I interned with the Bush administration for six months," Prince told The Grand Rapids Press in early 1992. "I saw a lot of things I didn't agree with -- homosexual groups being invited in, the budget agreement, the Clean Air Act, those kind of bills. I think the administration has been indifferent to a lot of conservative concerns."

Back at school, Prince volunteered on a more humble scale: He was the first college student to join the Hillsdale Volunteer Fire Department. He'd be sitting in class when his radio crackled. As amused classmates looked on, he'd dash out.

"When you've been on a fire an hour and a half and the crowd's gone, some of the guys want to sit on bumpers and have a soft drink," said Kevin Pauken, one of the squad's full-timers. "Other guys will be rolling hoses and picking up equipment so you can get out of there. That was Erik."

In 1992, Prince enlisted in the Navy, was commissioned as an officer, and the next year joined the SEALs, who get their acronym from the attack routes of sea, air and land. He spent four years with Seal Team 8 in Norfolk, Va.

"Prince was a first-class SEAL, he was the real deal," said Messing, the retired Special Forces officer.

Prince left the SEALs in 1996. His father had died the previous year, and Erik took over the family business. About this time, his wife, Joan, was diagnosed with cancer (she died in 2003 at 36). Also in 1996, the Prince family sold its automotive business to S.C. Johnson Controls for $1.35 billion in cash. Prince headed the Prince Group, which held several nonautomotive factories and the company that developed downtown Holland.

Prince took up a variety of causes. He sits on several boards, including Christian Solidarity International, a human rights organization, and the Institute of World Politics, a fledgling foreign relations school in Washington that teaches would-be diplomats from a Judeo-Christian perspective. And he has continued to open his checkbook to the Republican Party and conservative candidates, contributing at least $151,250 since 1989.

He shuns reporters and declined, through a spokesman, to be interviewed for this story. Photos of him are hard to find.

Opportunity knocks

Prince has been equally secretive about his biggest venture since the SEALs: At 27, he founded Blackwater USA, buying an expanse of farmland in Camden and Currituck counties. He saw an opportunity as the shrinking military closed some of its own training centers, and he wanted to build the SEALs a good one just a short drive from the unit's East Coast base at Little Creek, Va.

Former Navy SEALs form the backbone of Blackwater, which advertises its Moyock compound -- now more than 6,000 acres -- as "the most comprehensive private tactical training facility in the United States."

It puts many military ranges to shame. One range is two-thirds of a mile long and perfect for sniper training. There are computerized target systems and an entire mock town for urban tactical training, and a track for tactical driving techniques. Soldiers can shoot from boats or hovering helicopters into junk cars, trucks and buses. Blackwater boasts that it can custom-design any sort of training a soldier wants.

Business was steady but unremarkable for the first few years. SWAT teams and police trained there, as well as soldiers from Fort Bragg and SEALs. The 2001 attacks on New York and Washington changed the tempo.

"Before the events of Sept. 11, I was getting pretty cynical about how people felt about training," Prince told The Virginian-Pilot newspaper two weeks after the Twin Towers fell. "Now the phone is ringing off the hook."

Blackwater got its own air wing, with helicopters and small cargo planes. It began training a SEAL-type unit for the navy of Azerbaijan and proposed setting up a giant training center outside Baghdad, modeled on its Moyock facility.

Some private security companies would take any job, unsavory client or not. Not Blackwater. Most of its work was for the U.S. government. It worked only for foreign governments approved by the U.S. State Department.

This month, Blackwater had 450 people in Iraq, company officials said. It guarded L. Paul Bremer, the highest-profile American target in Iraq before the Iraqis took control of their own government again June 28. And Blackwater won the job of guarding the new top American, Ambassador John Negroponte. In 2003, it was paid at least $18.9 million by the government.

Blackwater's growth since 9/11 meant the company needed workers.

This past winter, in Oceanside, Calif., a former SEAL and sometime Hollywood consultant and stuntman heard about those high-paying jobs via the informal SEAL alumni e-mail network.

Scott Helvenston was recently divorced and just two years earlier had declared bankruptcy, citing income of just $14,000 a year. That wasn't much for a father with two children.

What's more, Helvenston liked the idea of returning to military work. After a dozen years as a commando, he missed the life, the missions, the camaraderie.

He would go to work for Erik Prince.

(News researcher Brooke Cain contributed to this report.)

Staff writer Joseph Neff can be reached at 829-4516 or jneff@newsobserver.com.

Get $150+ in coupons in every Sunday N&O. Click here for convenient home delivery.

A subsidiary of The McClatchy Company