Blackwater Said to Approve Iraqi Payoffs After Shootings

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 Blackwater executives said in interviews that Gary Jackson, who was then the company's president, had approved the bribes, and the money was sent from Amman, Jordan, where Blackwater 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 company spokeswoman, 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.

Reached by phone, Mr. Jackson, who resigned as president of Blackwater 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.

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 company in May, but Blackwater 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. Blackwater, now known as Xe Services, has never faced criminal charges in the case, although the Iraqi victims brought a civil lawsuit in federal court against the company and Mr. Prince.

Separately, a federal grand jury in North Carolina, where Blackwater has its headquarters, has been conducting a lengthy investigation into the company. 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 Blackwater workers 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 Iraqi civilians in the midst of 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 Blackwater, 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.

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.

A senior State Department official said that American diplomats were not aware of any payoffs to Iraqi officials. 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 Blackwater would not be awarded a license. Two months later, the State Department replaced the company with a competing security contractor, Triple Canopy.