President Obama, Why Did You Pay Blackwater $70 Million in February?

For those already outraged at the
AIG bonus scandal, here is a fact that should add more fuel to the
fire: The Obama administration has paid the mercenary firm formerly
known as Blackwater nearly $70 million to operate in Iraq and, according to the Washington Times,
may keep the company on the payroll months past the official expiration
of its Iraq contract in May. I reviewed Blackwater's recent
transactions with the Obama State Department and discovered a $45
million payment to Blackwater on February 4, 2009 for "protective
services-Iraq." It is described as a "funding action only." Here is the
interesting part: The estimated "Ultimate Completion Date" is 5/07/2011.

The Washington Times (as described below) reported on a $22
million payment to Blackwater on February 2. Combined with the $45
million payment I discovered, that's nearly $67 million in 72 hours.
Not bad for a company supposedly going down in flames.

With the US economy in shambles and millions of Americans struggling
to make ends meet and keep their homes, Obama and Secretary of State
Hillary Clinton need to explain to US taxpayers how they justify these
mega-payments to a scandal-plagued mercenary company. (At the very
least, someone should ask Robert Gibbs about it).

It has been widely reported that the Bush administration's preferred mercenary company, which recently renamed itself Xe, will soon be leaving Iraq. That news
came early this year after the State Department, under immense public
pressure, announced it would not renew the company's lucrative deal to
act as the private paramilitary force for senior US occupation
officials. The Iraqi government has said it wants the company to leave
Iraq and says it has revoked the company's operating license. The Obama
administration continues to use Blackwater in Afghanistan and the
company has extensive domestic training contracts with the military and
law enforcement agencies inside the borders of the US.

Earlier this week, the Washington Postreported
that some of Blackwater's armed operatives may simply be rehired by two
other US mercenary firms that are expected to take over Blackwater's
work in Iraq under the Obama administration: Triple Canopy and DynCorp.
Now, The Washington Times reports
that the State Department has signed contracts with Blackwater that
appear to extend the company's presence in Iraq at least until
September 2009.

According to the paper:

"On Feb. 2, a department spokesman was asked whether officials
planned to renew one of Blackwater's contracts past May. The spokesman,
Robert Wood, said the department had told Blackwater 'we did not plan
to renew the company's existing task force orders for protective
security details in Iraq.'

"But records available through a federal procurement database show
that on that same day, the State Department approved a $22.2 million
contract modification for Blackwater 'security personnel' in Iraq, with
a job completion date of Sept. 3, 2009."

"Why would you continue to use Blackwater when the Iraqi government
has banned the highly controversial company and there are other
choices?" said Melanie Sloan, executive director of the nonpartisan
Citizens for Responsibility and Ethics in Washington.

State Department spokesman Noel Clay told the Washington Times the
contract modification involves aviation services. "The place of
performance is Iraq, but it is totally different than the Baghdad one
that expires in May," he said. Sloan called the State Department's
explanation of the Feb. 2 deal a "parsing of words" and said "they
should just be straight with us." Xe spokeswoman Anne Tyrell declined
to comment on the status of the company's work in Iraq or the Feb. 2
contract modification. She said the company was aware that the State
Department had indicated that it did not plan to renew its contracts in
Iraq but that Xe officials had not received specific information about
leaving the country. "We're following their direction," she said.

Blackwater recently renamed itself Xe and its owner Erik Prince "resigned" as CEO, though he remains its sole owner and chairman.

UPDATE: Could Arlen Specter's Logic on AIG Bonuses Be Applied to Blackwater?

Several people have written me asking what the Obama administration
SHOULD do with Blackwater, following the reports last night that the
State Department paid the company some $70 million over a 72 hour
period in February.

Many people take the position that Obama is dealing with remnants of
the Bush administration's disastrous policies and that it will take
time to unravel. Fair enough. But, with the US economy in shambles, is
it really a priority to make good on payments to a company like

I have long written that the Obama Iraq policy will necessitate
using mercenary forces. This is true for a number of reasons, not the
least of which is Obama's refusal to scrap that monstrous US fortress
they are calling an embassy. If it's not going to be Blackwater
guarding Obama's occupation officials, it will be Triple Canopy and
DynCorp (who will in turn hire a bunch of the "fired" Blackwater guys
anyway). The point here is this: I disagree that the reality is simply
that Obama needs time to phase out Blackwater and his hands are tied
when it comes to paying them on existing contracts. I believe Obama
needs them to sustain his bad Iraq policy, which will continue the
occupation, albeit with a softer face. If Obama wanted to, he could
outright fire Blackwater. Henry Waxman and others have called for that.
He certainly would have the support of the American people,
particularly given how much money Blackwater has milked from the US

All of this brings me to Republican Sen. Arlen Specter, former chair
of the Judiciary Committee. Yesterday, he was interviewed on MSNBC by
Andrea Mitchell about the AIG bonuses. Read what he says about the AIG
contracts not having to be honored and then apply the logic to Obama's
Blackwater situation:

MITCHELL: What say you when it comes to these bonuses? Should they
be taxed back? Should the AIG executives who approved the bonuses have
to commit hari-kari? With whom do you side?

SPECTER: Andrea, they're not enforceable under the law. They are
against public policy. It is obviously against public policy to pay
bonuses to people who caused the problem. If you have, for example, a
contract for the sale of heroin, that's not enforceable. You take those
cases to court, they won't be enforced. It's just that plain. It's set
out very simply in the restatement of the law on contracts


MITCHELL: Well, you know, there's been a lot ventilating on all
sides, but you're a former district attorney, a former prosecutor,
experienced lawyer and we tend to trust your judgment on this, former
Judiciary Chairman. So let me hear you out on when you say they're not
enforceable, the top economic adviser and the Treasury Secretary said
that these were contracts that if the government broke the contracts,
there would be greater expense in going to court and suing to get the
money back.

What would the next steps be in a practical way to get the money back and break the contracts?

SEN. SPECTER: The top economic adviser and the Secretary of the
Treasury are wrong again. It happens too often to be excusable. I'd
like to argue this as a legal matter. If you have a contract, which is
against public policy, it is not enforceable. I gave you an extreme
example. If you have a contract for the delivery of heroin, the use of
heroin, the delivery of heroin is against the law, you can't enforce it.

Let those individuals who claim that they're entitled to bonuses go
to court and the government will defend the case and will say these are
against public policy. How can you pay a bonus to this individual in
this company, which raised the problem and caused this $180 billion
bailout and now they want bonuses on top? It is simply unenforceable.

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