Blackwater affiliates covertly won government work

By James Risen and Mark Mazzetti

WASHINGTON

Blackwater Worldwide created a web of more than 30 shell companies or subsidiaries in part to obtain millions of dollars in U.S. government contracts after the security company came under intense criticism for reckless conduct in Iraq, according to congressional investigators and former Blackwater officials.

While it is not clear how many of those businesses won contracts, at least three had deals with the U.S. military or the Central Intelligence Agency, according to former government and company officials. Since 2001, the intelligence agency has awarded up to $600 million in classified contracts to Blackwater and its affiliates, according to a U.S. government official.

The Senate Armed Services Committee this week released a chart that identified 31 affiliates of Blackwater, now known as Xe Services, which is based in Moyock, N.C. The network was disclosed as part of a committee's investigation into government contracting. The investigation revealed the lengths to which Blackwater went to continue winning contracts after Blackwater guards killed 17 Iraqi civilians in Baghdad in September 2007. That incident and reports of abuses led to criminal and congressional investigations, and cost the company its lucrative security contract with the State Department in Iraq.

The network of companies allowed Blackwater to obscure its involvement in government work from contracting officials or the public, and to assure a low profile for any of its classified activities, said the former Blackwater officials, who, like the government officials, spoke only on condition of anonymity.

The CIA's continuing relationship with the company, which recently was awarded a $100 million contract to provide security at agency bases in Afghanistan, has drawn criticism from some members of Congress, who argue that the company's tarnished record should preclude it from such work.

A CIA spokesman, Paul Gimigliano, said Xe's only current duties for the agency were to provide security for agency operatives.

Congress began to investigate the affiliated companies last year, after the shooting deaths of two Afghans by Blackwater security personnel working for a subsidiary named Paravant, which had obtained Pentagon contracts in Afghanistan. In a Senate hearing earlier this year, Army officials said that when they awarded the contract to Paravant for training of the Afghan army, they had no idea that the business was part of Blackwater.

The company is facing a string of legal problems, including the indictment in April of five former Blackwater officials on weapons and obstruction charges, and civil suits stemming from the 2007 shootings in Iraq.

The business is up for sale by its founder, Erik Prince, who colleagues say is embittered by the public criticism and scrutiny that Blackwater has faced. He has not been implicated in the criminal charges against his former subordinates, but he has recently moved his family to Abu Dhabi, where he hopes to focus on obtaining contracts from governments in Africa and the Middle East, according to colleagues and former company officials.