The Prince and the Punishment

Gratitude is a fruit of great cultivation;
You do not find it among gross people.-- Samuel Johnson, Journal of a Tour to the Hebrides

It's hard to understand why he's mad. The settlement sounded like such a good deal for him and his company. And furthermore, he's trying to sell the company and the settlement will probably help that, and to make things even better, he now lives happily in Abu Dhabi where it is harder to sue him. (He moved hurriedly in August. It had nothing to do with the lawsuits he was defending. He needed to get there quickly so his children could enroll in school. School started on August 15.) Here's why Eric Prince's petulance is hard to fathom.

On August 21, 2010 it was announced that Xe, formerly known as Blackwater Worldwide, the company founded by Eric Prince in 1997, had settled State Department allegations of hundreds of export and other violations b y agreeing to pay fines of $42 million. According to the New York Times, the illegal activities for which it was fined included "illegal weapons exports to Afghanistan, making unauthorized proposals to train troops in south Sudan and providing sniper training for Taiwanese police officers." Xe signed a $120 million contract with the State Department to provide security services at new U.S. Consulates in Harat and Mazr-e-Sharif in mid-June of 2010. If the settlement and the contract are netted out, Xe will net $78 million on the two deals.

Although the fines seem like a lot of money to those not involved in such things, in fact they are a small price to pay. Here's what Xe got in exchange for paying the fines: the company is now able to once again bid on and get contracts with the government, something it would have been barred from doing had it pled guilty to criminal conduct. (Since 2001 it's been paid hundreds of millions by the U.S. Government for activities it conducted in Afghanistan and Iraq. It can now look forward to many hundreds more.) Here's something else it got for paying the fines: it won't be subject to any criminal charges on account of those transactions. Not that all its criminal type legal troubles are over. According to reports there is still an ongoing federal probe to see whether the company bribed Iraqi officials; five executives have been indicted on weapons and obstruction of justice charges; and two former employees face federal murder charges in connection with the death of two Afghan civilians. Whether those charges would impact its ability to get government contracts is unclear. What is also unclear is whether the investigation of Xe requested by Senator Carl Levin in February from the attorney general might yet result in criminal charges that could impact its ability to get government contracts. (In February Senator Levin, Chairman of the Senate Armed Services Committee, asked Attorney General Eric Holder to investigate whether Xe had made false or misleading statements in bidding for an Army contract in Afghanistan.) What is clear is that for the present, Xe is once again able to bid on government contracts and stands to make millions of more if its bids are accepted.

Mr. Prince no longer lives in the United States. According to court documents filed in a case brought by former Xe employees against Mr. Prince accusing him of defrauding the government, Mr. Prince has moved to Abu Dhabi. In addition to enrolling his children in good schools, he reportedly hopes to continue the very profitable line of work in which he has been engaged, in Africa and the Middle East. According to colleagues there's another reason he moved. They told the New York Times, Mr. Prince is bitter about the "legal scrutiny and negative publicity his company had received." It's hard to imagine why he thought his company, facing the kinds of charges described above and having settled the charges described above, would be surprised at the absence of favorable publicity. The offenses for which it's been fined as well as those still being investigated, rarely earn their perpetrator applause.

Mr. Prince's colleague who spoke to the NYT also said that Mr. Prince needed "a break from America." Mr. Prince is an heir to a "Michigan auto parts fortune." Michigan is in America. His family made its fortune in America and that fortune enabled Mr. Prince to make millions more. I am confident his "break from America" will not have any adverse affect on his fortunes and I am sure he does not want it to be perceived as a lack of appreciation for all America has done for him. He probably just moved because Abu Dhabi has really good schools. It's too bad he didn't stay in the town in which he lived and worked and help to improve the schools there.