Just days before two former Blackwater employees alleged in sworn statements filed in federal court that the company's owner, Erik Prince, "views himself as a Christian crusader tasked with eliminating Muslims and the Islamic faith from the globe," the Obama administration extended a contract with Blackwater for more than $20 million for "security services" in Iraq, according to federal contract data obtained by The Nation. The State Department contract is scheduled to run through September 3. In May, the State Department announced it was not renewing Blackwater's Iraq contract, and the Iraqi government has refused to issue the company an operating license.

Despite its scandal-plagued track record, Blackwater (which has rebranded itself as Xe) continues to have a presence in Iraq, trains Afghan forces on US contracts and provides government-funded training for military and law enforcement inside the United States. The company is also actively bidding on other government contracts, including in Afghanistan, where the number of private contractors is swelling. According to federal contracting records reviewed by The Nation, since President Barack Obama took office in January the State Department has contracted with Blackwater for more than $174 million in "security services" alone in Iraq and Afghanistan and tens of millions more in "aviation services." Much of this money stems from existing contracts from the Bush era that have been continued by the Obama administration. While Obama certainly inherited a mess when it came to Blackwater's entrenchment in Iraq and Afghanistan, he has continued the widespread use of armed private contractors in both countries. Blackwater's role may be slowly shrinking, but its work is continuing through companies such as DynCorp and Triple Canopy.

"These contracts with Blackwater need to stop," says Representative Jan Schakowsky, an Illinois Democrat and a member of the House Select Committee on Intelligence. "There's already enough evidence of gross misconduct and serious additional allegations against the company and its owner to negate any possibility that this company should have a presence in Iraq, Afghanistan or any conflict zone--or any contract with the US government."

On July 24 the Army signed an $8.9 million contract with Blackwater's aviation wing, Presidential Airways, for aviation services at Bagram Air Base in Afghanistan. Bagram, home to a massive--and expanding--US-run prison, has been the subject of intense criticism from the ACLU and human rights groups for holdings hundreds of prisoners without charges and denying them habeas corpus and access to the International Committee of the Red Cross.

The Blackwater aviation contract for Afghanistan is described as "Air Charter for Things" and "Nonscheduled Chartered Passenger Air Transportation." The military signed an additional $1.4 million contract that day for "Nonscheduled" passenger transportation in Afghanistan. These payments are part of aviation contracts dating back to the Bush era, and continued under Obama, that have brought Blackwater tens of millions of dollars in Afghanistan since January. In May, Blackwater operatives on contract with the Department of Defense allegedly killed an unarmed Afghan civilian and wounded two others. Moreover, Presidential Airways is being sued by the families of US soldiers killed in a suspicious crash in Afghanistan in November 2004.

The sworn affidavits from the former Blackwater employees, first reported by The Nation on August 3, have sparked renewed calls on Capitol Hill for the Obama administration to cancel all business with Blackwater. "I believe that the behavior of Xe, its leadership, and many of its employees, puts our government and military personnel, as well as our military and diplomatic objectives, at serious risk," Schakowsky wrote in an August 6 letter to Secretary of State Hillary Clinton. "Given this company's history of abuse and in light of recent allegations, I urge you not to award further contracts to Xe and its affiliates and to review all existing contracts with this company." Schakowsky sent a similar letter to Secretary of Defense Robert Gates.

Meanwhile, VoteVets.org, a leading veterans' organization, has called on the House Committee on Oversight and Government Reform and the Senate Foreign Relations Committee to investigate the allegations contained in the sworn declarations submitted in the Eastern District of Virginia on August 3. VoteVets.org, which has more than 100,000 members, also appealed to the House and Senate Judiciary Committees to "immediately hold hearings, and make recommendations on a new legal structure" to hold private military contractors accountable for alleged crimes.

"Given the charges made against Xe and Erik Prince in these sworn statements, which include smuggling and use of illegal arms inside of Iraq, as well as the encouraged murder of innocent Iraqis, it is essential that these loopholes be closed, retroactively, so that Xe, Prince, and his employees cannot escape proper prosecution in the United States now or in the future," wrote the group's chair Jon Soltz, an Iraq War veteran, in a letter to Senator John Kerry and other lawmakers. "It is absolutely crucial that we show Iraqis and the rest of the world that no matter who you are or how big your company is, you will be held accountable for your conduct--especially when in a war zone. Failure to do so only emboldens our enemy, and gives them yet another tool to recruit more insurgents and terrorists that target our men and women in harm's way."

For its part, Blackwater/Xe issued a statement responding to the sworn statements of two of its former employees. The company called the allegations "unsubstantiated and offensive assertions." It said the lawyers representing alleged Iraqi victims of Blackwater "have chosen to slander Mr. Prince rather than raise legal arguments or actual facts that will be considered by a court of law. We are happy to engage them there."

What Blackwater/Xe's statement did not flatly say is that the allegations are untrue. "I would have expected a crisp denial," says military law expert Scott Horton, who has followed this case closely. "The statement had the look of a denial to it, without actually refuting the specific allegations. I can understand why from the perspective of a corporate public affairs officer--just repeating the allegations would be harmful and would add to their credibility."

Blackwater also claims that the accusations "hold no water" because, even though the two former employees said that they had already provided similar information to federal prosecutors, no further Blackwater operatives or officials have been indicted. The company claims that according to the US attorney, the indictment of five Blackwater employees for the September 2007 Nisour Square shootings is "very narrow in its allegation" and does not charge "the entire Blackwater organization in Baghdad."

But, as Blackwater certainly knows, there are multiple prosecutors looking into its activities on a wide range of issues, and more than one grand jury can be seated at any given time. Simply because indictments were not announced regarding other actions when the Nisour Square charges were brought by the Justice Department does not mean Prince, Blackwater and its management are in the clear.

"We know that the federal criminal investigation is still ongoing, so this prosecutor's statement was not really anything definitive," says Horton. "Second, the presumption in US law is that, with fairly rare exceptions, crimes are committed by natural persons, not by legal entities like corporations. A corporation might be fined, for instance, but if it's deeply entangled in criminal dealings, it's the officers who would be prosecuted. Among other things, of course, it's impossible to put a corporation in the slammer. So saying that Blackwater wasn't charged with any crime really doesn't mean much."

Blackwater says it will formally respond to the allegations against Prince and Blackwater in a legal motion on August 17 in federal court in the Eastern District of Virginia, where Prince and the company are being sued for war crimes and other alleged crimes by Susan Burke and the Center for Constitutional Rights.

On August 5, Blackwater's lawyers filed a motion with the court reiterating their request for a gag order to be placed on the plaintiffs and their lawyers. That motion largely consisted of quotes from two recent Nation magazine articles covering the case, including one about the allegations against Prince. Despite the fact that the affidavits of "John Doe #1" and "John Doe #2" were public, Blackwater accused the lawyers of "providing this information" to the media. Blackwater's lawyers charged that the plaintiffs' attorneys comments to The Nation were intended "to fuel this one-sided media coverage and to taint the jury pool against [Erik Prince and Blackwater]," adding that The Nation articles and the "coordinated media campaign" of the lawyers "demonstrate a clear need for an Order restraining extrajudicial commentary by the parties and their counsel." On August 7, Judge T.S. Ellis III, a Reagan appointee, denied Blackwater's motion.