Suit: Blackwater operating illegally in Iraq after contract

The latest in a series of war-crimes lawsuits against Blackwater and its affiliated companies alleges that they continue to operate illegally in Iraq a month after the expiration of their lucrative security contract with the U.S. State Department.

The new lawsuit, filed Wednesday in U.S. District Court in Alexandria, says Blackwater is still providing armed protection services in Iraq under the name Greystone Ltd. for the International Republican Institute, a nonprofit organization funded by the U.S. government.

That work is illegal, the lawsuit says, because the Iraqi government has refused to grant Blackwater licenses to do business or carry weapons in the country.

The company denied that it is operating illegally.

Iraqi anger over alleged unprovoked killings of civilians by Blackwater contractors was a key factor in the State Department's decision not to renew the company's contract to protect U.S. diplomatic personnel in Iraq.

That contract, which earned the Moyock, N.C.-based company hundreds of millions of dollars, expired in May.

But Blackwater, which changed its name to Xe in February, continues to work for IRI, the lawsuit alleges: "Xe-Blackwater, seeking to obscure its continued illegal operations in Iraq, directed its employees to enter into new contracts under the Greystone name rather than the Blackwater name."

According to its Web site, IRI "advances freedom and democracy worldwide by developing political parties, civic institutions, open elections, good governance and the rule of law." The organization was established in 1983. Although it bills itself as nonpartisan, prominent Republicans occupy many of its leadership positions.

Sen. John McCain, the 2008 Republican presidential nominee, is chairman of the board.

IRI's Iraq operation is funded by the State Department.

According to the organization's three most recent tax returns, for 2005 through 2007, Blackwater was paid $17 million a year for security services - nearly a quarter of IRI's $75 million annual budget.

Lisa Gates, an IRI spokeswoman, confirmed that the organization has an ongoing security contract with Blackwater and added, "As a U.S. State Department grantee, should Blackwater not be able to operate legally in Iraq, IRI would hire a new security firm."

The plaintiffs in the lawsuit filed Wednesday are the estate of Husain Salih Rabea, a 72-year-old Iraqi, and Ali Kareem Fakhri, a college student, both of whom were allegedly fired upon by Blackwater shooters for no reason as they drove on a public roadway in Hilla, Iraq, on Aug. 13, 2007.

The Blackwater contractors left the scene without stopping to offer any medical aid, the lawsuit says.

Rabea died from his wounds, leaving five sons and three daughters.

They are among 50 Iraqi plaintiffs named in a flurry of lawsuits filed this month in Alexandria alleging war crimes committed by Blackwater contractors in five separate incidents. Susan Burke, a Washington lawyer working on all the cases, said Wednesday that more are on the way.

Anne Tyrrell, a Xe spokeswoman, called the latest lawsuit "riddled with error." She said another Xe affiliate, not Greystone, was operating in Hilla in August 2007 under a State Department contract.

She said the terms of that contract preclude her from discussing operational details, but added, "Xe and all of our affiliated companies respect U.S. and local laws, and we work closely with local governments to ensure that we are meeting all local requirements."

The lawsuits name Erik Prince, Xe's chairman, and 11 affiliated companies as defendants.

Characterizing Prince and his companies as "modern-day merchants of death," the lawsuits also allege that Xe employs shooters who have been found to use steroids or other judgment-altering substances and that the company has destroyed tapes of reckless and dangerous behavior by its contractors.

Tyrrell said Xe has a zero-tolerance drug policy and "strong internal and external document preservation controls."

Several of the new lawsuits are consolidations of cases filed previously in Washington and California, including the fatal shooting of an Iraqi vice president's bodyguard on Christmas Eve 2006 and the Sept. 16, 2007, shootings in Baghdad's Nisoor Square that left 17 Iraqis dead.

Bill Sizemore, (757) 446-2276, bill.sizemore@pilotonline.com