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McClatchy Newspapers

Blackwater Likely To Be Fined Millions in Iraq Weapons Case

Warren Strobel

WASHINGTON - The State Department is preparing to slap a
multi-million dollar fine on private military contractor Blackwater USA
for shipping hundreds of automatic weapons to Iraq without the
necessary permits.

Some of the weapons are believed to have ended up on the country's
black market, department officials told McClatchy, but no criminal
charges have been filed in the case.

expected fine is the result of a long-running federal investigation
into whether employees of the firm shipped weapons hidden in
shrink-wrapped pallets from its Moyock, N.C. headquarters to Iraq,
where Blackwater is the State Department's largest personal security

the arms shipment allegations first became public 14 months ago,
Blackwater, which has received $1.2 billion in federal contracts,
according to the Web site, has consistently denied
involvement in illicit arms trafficking.

However, the State
Department found that Blackwater shipped 900 weapons to Iraq without
the paperwork required by arms export control regulations, one
department official said. Of that number, 119 were "particularly ...
erroneous," he said. He and the other officials spoke on the condition
of anonymity because the decision hasn't been announced.

Federal laws require obtaining a license before exporting military hardware, including automatic weapons, overseas.

spokeswoman Anne Tyrrell said Wednesday that the company had "not been
informed of an intent to impose a fine, however ... we have been
cooperating with the government to respond to inquiries into our export

The State Department's "resolution of export matters
with other significant defense contractors, such as Boeing, L-3,
Lockheed-Martin and General Dynamics has typically resulted in some
payment" to the government, she said in an e-mail exchange.

last month announced what it billed as a major new initiative to ensure
that the company complies with rules for exporting military hardware.

that "our company has experienced remarkable growth in the last few
years," Blackwater CEO Erik Prince said: "This growth, our work for the
U.S. Government around the world, and the nature of the services we
offer have created compliance challenges."


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Blackwater said it
created the position of Vice President of Export Compliance and created
a three-person independent oversight committee whose members include
former U.S. Rep. Asa Hutchinson, R-Ark.

The amount of the planned
fine couldn't be learned, but one State Department official said it was
"way in the millions." The official said the fine could be announced as
early as this week. A second official, however, cautioned that it's not

Jay Greer, a spokesman for the State Department Bureau
of Politico-Military Affairs, which implements defense export controls,
declined comment.

The weapons case became public in September
2007 as part of a House Oversight and Government Reform Committee
inquiry into then-State Department inspector general Howard Krongard.

Raleigh, N.C., News & Observer, a McClatchy newspaper, first
reported that two former Blackwater employees, Kenneth Wayne Cashwell
and William Ellsworth "Max" Grumiaux, had pleaded guilty to weapons
charges and were cooperating with federal prosecutors in North Carolina.

What became of the weapons may never be known.

has a brisk black market for weapons. Pentagon probes have found that
Defense Department-supplied weapons intended for Iraq's security forces
were diverted. The Turkish government has complained that some ended up
in the hands of the Kurdistan Workers Party, or PKK, which Washington
and Ankara consider a terrorist group.

Blackwater employees are
also the subjects of a Justice Department probe into the killing of 17
Iraqi civilians in Baghdad's Nisoor Square on Sept. 16, 2007. That
incident sparked outrage over the actions of private military
contractors and forced the State Department to impose tighter rules on
the contractors.

A federal grand jury is weighing whether to indict the Blackwater guards who were involved in the killings.

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