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the New York Times

Blackwater Said to Approve Iraqi Payoffs After Shootings

Mark Mazzetti and James Risen

From left, Gary Jackson, then-president of Blackwater; Cofer Black, then-vice president of Blackwater; and Erik Prince, chairman and founder.

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

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.


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"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.

"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.

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

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