Inquiry: Blackwater covertly won U.S. contracts
Published 5:00 am Saturday, September 4, 2010
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.
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The Senate Armed Services Committee this week released a chart that identified 31 affiliates of Blackwater, now known as Xe Services. 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 episode and other reports of abuses led to criminal and congressional investigations, and they cost the company its lucrative security contract with the State Department in Iraq.
Hidden dealings
The network of companies — which include several businesses located in offshore tax havens — 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.
Sen. Carl Levin, D-Mich., who is chairman of the Armed Services Committee, said in a statement that “it was worth looking into why Blackwater would need to create the dozens of other names” and said he had requested that the Justice Department investigate whether Blackwater officers misled the government when using subsidiaries to solicit contracts.
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. At least two of the Blackwater-affiliated companies, XPG and Greystone, obtained secret contracts from the agency, according to the former Blackwater officials.
A CIA spokesman, Paul Gimigliano, said that Xe’s only current duties for the agency were to provide security for agency operatives. Contractors “do the tasks we ask them to do in strict accord with the law; they are supervised by CIA staff officers; and they are held to the highest standards of conduct” he said. “As for Xe specifically, they help provide security in tough environments, an assignment at which their people have shown both skill and courage.”
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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.
While congressional investigators have identified other Blackwater-linked businesses, it was not the focus of their inquiry to determine how much money from government contracts flowed through the web of corporations, especially money earmarked for clandestine programs.