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November 11, 2009

Blackwater Said to Pursue Bribes to Iraq After 17 Died

By MARK MAZZETTI and JAMES RISEN

WASHINGTON — Top executives at Blackwater Worldwide authorized secret payments of

about $1 million to Iraqi officials that were intended to silence their criticism and buy their
support after a September 2007 episode in which Blackwater security guards fatally shot 17
Iraqi civilians in Baghdad, according to former company officials.

Blackwater approved the cash payments in December 2007, the officials said, as protests over
the deadly shootings in Nisour Square stoked long-simmering anger inside Iraq about reckless
practices by the security company’s employees. American and Iraqi investigators had already
concluded that the shootings were unjustified, top Iraqi officials were calling for Blackwater’s
ouster from the country, and company officials feared that Blackwater might be refused an
operating license it would need to retain its contracts with the State Department and private
clients, worth hundreds of millions of dollars annually.

Four former executives said in interviews that Gary Jackson, who was then Blackwater’s
president, had approved the bribes and that the money was sent from Amman, Jordan, where
the company maintains an operations hub, to a top manager in Iraq. The executives, though,
said they did not know whether the cash was delivered to Iraqi officials or the identities of the
potential recipients.

Blackwater’s strategy of buying off the government officials, which would have been illegal
under American law, created a deep rift inside the company, according to the former
executives. They said that Cofer Black, who was then the company’s vice chairman and a former
top C.I.A. and State Department official, learned of the plan from another Blackwater manager
while he was in Baghdad discussing compensation for families of the shooting victims with
United States Embassy officials.

Alarmed about the secret payments, Mr. Black cut short his talks and left Iraq. Soon after
returning to the United States, he confronted Erik Prince, the company’s chairman and founder,
who did not dispute that there was a bribery plan, according to a former Blackwater executive
familiar with the meeting. Mr. Black resigned the following year.

Stacy DeLuke, a spokeswoman for the company, now called Xe Services, dismissed the
allegations as “baseless” and said the company would not comment about former employees.
Mr. Black did not respond to telephone calls and e-mail messages seeking comment.

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Reached by phone, Mr. Jackson, who resigned as president early this year, criticized The New
York Times and said, “I don’t care what you write.”

The four former Blackwater executives, who had held high-ranking posts at the company, would
speak only on condition of anonymity. Two of them said they took part in talks about the
payments; the two others said they had been told by several Blackwater officials about the
discussions. In agreeing to describe those conversations, the four officials said that they were
troubled by a pattern of questionable conduct by Blackwater, which had led them to leave the
company.

A senior State Department official said that American diplomats were not aware of any payoffs
to Iraqi officials.

Blackwater continued operating as the prime contractor providing security for the United States
Embassy in Baghdad until spring, when the Iraqi government said it would deny the company
an operating license. The State Department replaced Blackwater with a rival in May, but the
company still does some work for the department in Iraq on a temporary basis.

Five Blackwater guards involved in the shooting are facing federal manslaughter charges, and
their trial is scheduled to start in February in Washington. A sixth guard pleaded guilty in
December. The company has never faced criminal charges in the case, although the Iraqi
victims brought a civil lawsuit in federal court against Blackwater and Mr. Prince.

Separately, a federal grand jury in North Carolina, where the company has its headquarters, has
been conducting a lengthy investigation into it. One of the former executives said that he had
told federal prosecutors there about the plan to pay Iraqi officials to drop their inquiries into
the Nisour Square case. If Blackwater followed through, the company or its officials could face
charges of obstruction of justice and violating the Foreign Corrupt Practices Act, which bans
bribes to foreign officials.

Officials at the United States Attorney’s Office in Raleigh declined to comment on their
investigation, and it is not clear whether the payment scheme is a focus of the grand jury.

Federal prosecutors in North Carolina have interviewed a number of former Blackwater

employees about a variety of issues, including allegations of weapons smuggling, according to
several former employees who say they have testified before the grand jury or been interviewed
by prosecutors, as well as lawyers familiar with the matter. Two former employees have pleaded
guilty to weapons charges and are believed to be cooperating with prosecutors.

Since 2001, Blackwater has undergone explosive growth, not only from security contracts in Iraq
and Afghanistan, but also from classified work for the Central Intelligence Agency that included
taking part in a now defunct program to assassinate leaders of Al Qaeda and to load missiles on
Predator drones.

The Nisour Square shooting was the bloodiest and most controversial episode involving
Blackwater in the Iraq war. At midday on Sept. 16, 2007, a Blackwater convoy opened fire on

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Iraqi civilians in the crowded intersection, spraying automatic weapons fire in ways that
investigators later claimed was indiscriminate, and even launching grenades into a nearby
school. Seventeen Iraqis were killed and dozens more were wounded.

The matter set off an international outcry and intense debates in Iraq and the United States
over the role of private contractors in war zones. Many Iraqis condemned Blackwater, which
they had long seen as an arrogant rogue operation, and Prime Minister Nuri Kamal al-Maliki
declared that the Blackwater shooting was a challenge to his nation’s sovereignty. His
government opened investigations into the episode and previous fatal shootings by Blackwater
guards, and threatened to bar the company from operating in the country.

Those responses deeply worried Blackwater officials. Before the Nisour Square shootings, the
company had operated in Iraq without a license largely because the Iraqi government had
never enforced the rules. Being blocked from the country would have been costly — the State
Department deal was Blackwater’s single biggest contract. From 2004 through today, the
company has collected more than $1.5 billion for its work protecting American diplomats and
providing air transportation for them inside Iraq.

“It would hurt us,” Mr. Prince, the chairman, said in an interview in January about losing the
diplomatic security contract. “It would not be a mortal blow, but it would hurt us.”

The former Blackwater executives said it was not clear who proposed paying off Iraqi officials.
But after Mr. Jackson, the former company president, approved the plan, the cash for the
payoffs was taken from Amman and given to Rich Garner, then a top manager in Iraq, the
former executives said. One of those executives said that officials in Iraq’s Interior Ministry,
which is responsible for operating licenses, were the intended recipients.

Mr. Garner, who still works for the company, could not be reached for comment. The former
executives said they did not know whether Mr. Garner was involved in decisions about the
bribery scheme.

At that time, Mr. Black was in a series of discussions with Patricia A. Butenis, the deputy chief
of mission at the American Embassy in Baghdad, about compensation payments to the Nisour
Square victims. According to former Blackwater officials, Mr. Black was furious when he learned
that the payoff money was being funneled into Iraq, and he swiftly broke off the talks with Ms.
Butenis.

“We are out of here,” Mr. Black told a colleague, one former executive said. After returning to
the United States, Mr. Black and Robert Richer, who had also joined Blackwater after a C.I.A.
career, separately confronted Mr. Prince with their concerns about the plan, one former
Blackwater executive said.

Mr. Richer left Blackwater in February 2008, followed by Mr. Black several months later, amid a
battle inside Blackwater between former C.I.A. officers working at the company’s office outside
Washington and executives at Blackwater’s headquarters in North Carolina.

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The former officials said that Mr. Black, Mr. Richer and others believed that Blackwater had
cultivated a cowboy culture that was contemptuous of government rules and regulations, and
that some of the company’s leaders — former members of the Navy Seals including Mr. Prince
and Mr. Jackson — had pushed the boundaries of legality. Contacted by telephone, Mr. Richer
would not discuss specifics of why he left the company.

Ms. Butenis, now the United States ambassador to Sri Lanka, declined to comment for this
article. But other State Department officials confirmed that embassy officials had met with
Blackwater executives to encourage them to compensate the victims of Nisour Square.

The United States military had a well-established program for paying families of civilian
victims of American military operations, but at the time of the Nisour Square shooting, the
State Department did not have a similar program, officials said.

In interviews, three Iraqis wounded in Nisour Square said that Blackwater had made payments
of several thousand dollars to them and other victims. Still, some of them joined the civil lawsuit
against Blackwater. Settlement talks collapsed Tuesday, according to Susan Burke, a lawyer for
the victims.

Even after the furor that was set off by the shootings, State Department officials made it clear
that they did not believe they could operate in Baghdad without Blackwater, and Iraqi officials
eventually dropped their public demands for the company’s immediate ouster.

Raed Jarrar, the Iraq consultant to the American Friends Service Committee, said in a recent
interview that the Maliki government had gone too easy on Blackwater. “They had two different
messages,” he said. “The Iraqi public, and even the Iraqi Parliament, was told that all private
contractors would be pulled out of the country, while the contractors and the State Department
were told the opposite.”

In late 2008, the Bush administration and the Iraqi government hammered out an agreement
governing the role of security contractors in Iraq. Under the new rules, security contractors lost
their immunity from Iraqi laws, which had been granted in 2004 by L. Paul Bremer III, the
head of the Coalition Provisional Authority, which ran the country after the start of the
American-led war. The Iraqi government also made it mandatory for security contractors to
obtain licenses to operate in the country.

In March 2009, the Iraqis said that the company would not be awarded a license. Two months
later, the State Department replaced it with a competing security contractor, Triple Canopy.

Barclay Walsh contributed research from Washington, and Mohammed Hussein from
Baghdad.

Copyright 2009 The New York Times Company

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