Blackwater Used More Than 30 Front Companies to Obtain Government Contracts

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Blackwater/Xe Front Companies Chart

In a Monday, July 21, 2008 file photo, Blackwater Worldwide's headquarters is seen in Moyock, N.C. The New York Times is reporting that the security company Blackwater Worldwide formed a network of 30 shell companies and subsidiaries to get government business after the company faced strong criticism for its conduct in Iraq. (AP Photo/Gerry Broome, File)

30 False Fronts Won Contracts for Blackwater (New York Times):

Blackwater Worldwide created a web of more than 30 shell companies or subsidiaries in part to obtain millions of dollars in American government contracts after the security company came under intense criticism for reckless conduct in Iraq, according to Congressional investigators and former Blackwater officials.

While it is not clear how many of those businesses won contracts, at least three had deals with the United States military or the Central Intelligence Agency, according to former government and company officials. Since 2001, the intelligence agency has awarded up to $600 million in classified contracts to Blackwater and its affiliates, according to a United States government official.

The Senate Armed Services Committee this week released a chart that identified 31 affiliates of Blackwater, now known as Xe Services. The network was disclosed as part of a committee’s investigation into government contracting. The investigation revealed the lengths to which Blackwater went to continue winning contracts after Blackwater guards killed 17 Iraqi civilians in Baghdad in September 2007. That episode and other reports of abuses led to criminal and Congressional investigations, and cost the company its lucrative security contract with the State Department in Iraq.

The network of companies — which includes several businesses located in offshore tax havens — allowed Blackwater to obscure its involvement in government work from contracting officials or the public, and to assure a low profile for any of its classified activities, said former Blackwater officials, who, like the government officials, spoke only on condition of anonymity.

Senator Carl Levin, the Michigan Democrat who is chairman of the Armed Services Committee, said in a statement that it was worth “looking into why Blackwater would need to create the dozens of other names” and said he had requested that the Justice Department investigate whether Blackwater officers misled the government when using subsidiaries to solicit contracts.

The C.I.A.’s continuing relationship with the company, which recently was awarded a $100 million contract to provide security at agency bases in Afghanistan, has drawn harsh criticism from some members of Congress, who argue that the company’s tarnished record should preclude it from such work. At least two of the Blackwater-affiliated companies, XPG and Greystone, obtained secret contracts from the agency, according to interviews with a half dozen former Blackwater officials.

A C.I.A. spokesman, Paul Gimigliano, said that Xe’s current duties for the agency were to provide security for agency operatives. Contractors “do the tasks we ask them to do in strict accord with the law; they are supervised by C.I.A. staff officers; and they are held to the highest standards of conduct” he said. “As for Xe specifically, they help provide security in tough environments, an assignment at which their people have shown both skill and courage.”

Report: Blackwater created shell companies (AP):

The security company Blackwater Worldwide formed a network of 30 shell companies and subsidiaries to try to get millions of dollars in government business after the company faced strong criticism for reckless conduct in Iraq, The New York Times reported.

The newspaper said Friday that it was unclear how many of the created companies got American contracts but that at least three of them obtained work with the U.S. military and the CIA.

Sen. Carl Levin, chairman of the Senate Armed Services Committee, has asked the Justice Department to see whether Blackwater misled the government when using the subsidiaries to gain government contracts, according to the Times.

It said Levin’s committee found that North Carolina-based Blackwater, which now is known as Xe Services, went to great lengths to find ways to get lucrative government work despite criminal charges and criticism stemming from a 2007 incident in which Blackwater guards killed 17 Iraqi civilians. A committee chart outlines the web of Blackwater subsidiaries.

Messages left late Friday with spokespeople for the Michigan Democrat and Xe were not immediately answered.

The 2007 incident and other reports of abuses by Blackwater employees in Iraq led to criminal investigations and congressional hearings, and resulted in the company losing a lucrative contract with the State Department to provide security in Iraq.

But recently the company was awarded a $100 million contract to provide security for the agency in Afghanistan, prompting criticism from some in Congress. CIA Director Leon Panetta said that the CIA had no choice but to hire the company because it underbid others by $26 million and that a CIA review concluded that the contractor had cleaned up its act.

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