Blackwater is no more. But its descendants live on — and they’re still raking in government money.
The company whose name is synonymous with some of the worst excesses of the Iraq war — and which earned more than $1 billion protecting U.S. facilities and personnel during the conflict — is back in the news because of an explosive New York Times story revealing that one of its top officials in Baghdad threatened to kill a State Department auditor who raised questions about its lucrative contracts.
Just weeks after the alleged threats, Blackwater guards killed 17 Iraqi civilians in Baghdad’s Nisour Square, a massacre that permanently strained ties between Iraq and the United States and triggered a criminal case against the guards that continues to this day.
The article is in one sense a literal blast from the past. Blackwater changed its name to Xe Services in 2009, in part because its brand had become so toxic after Nisour Square, and then sold itself to a group of outside investors in 2010. The board of the new company, ACADEMI, includes former Attorney General John Ashcroft and former San Antonio Spurs owner Red McCombs.
Erik Prince, Blackwater’s flamboyant founder and former chief executive officer, moved to Abu Dhabi, where he has been linked to quixotic efforts to build a mercenary force for the United Arab Emirates and a paramilitary outfit designed to battle Somali pirates. He also wrote a book defending his actions during the war and was working on creating a video game featuring unnamed contractors shooting their way through a war zone.
Prince may no longer be working on U.S. contracts, but Blackwater’s descendants are still scoring big jobs, providing training and embassy security around the world. With fewer contracts coming from Iraq and Afghanistan, consolidation across the security business means that the State Department — which remains heavily dependent on private-sector guards for its embassies and consulates — has a smaller and smaller number of companies from which to choose. That, in turn, means big profits for the remaining heavyweights, including those that own what had once been Blackwater.
In 2013, for instance, ACADEMI’s subsidiary International Development Solutions* received roughly $92 million in contracts from the State Department for security guards. More recently, ACADEMI, based in McLean, Virginia, and with 1,250 employees, received a $9 million contract from the Pentagon for private security services in Afghanistan.
In addition to protecting U.S. installations in the war zones, ACADEMI also has contracts to train Pentagon personnel heading abroad at the 7,000-acre training center in Moyock, North Carolina, which was built by Prince as the centerpiece of his Blackwater empire. The site features multiple firing ranges, a three-mile driving track, and two airfields.
The steady government work has made ACADEMI, like Blackwater before it, attractive to outside investors. In early June, ACADEMI joined forces with rival private security company Triple Canopy to form Constellis Holdings, adding even more distance (and name changes) between it and the original Blackwater.
Triple Canopy is one of several private security companies hired by the State Department to protect its embassies and consulates around the world. It had a particularly good year in 2012, when it received more than $200 million in contracts for security of the U.S. Embassy in Baghdad. The next year it received $5 million more to protect the U.S. Consulate in Basra in Iraq.
By merging, ACADEMI and Triple Canopy will have over 6,000 employees, shrinking competition in the U.S. market and highlighting the increasing consolidation of what had once been a freewheeling industry.
The Special Inspector General for Afghanistan Reconstruction reported that of the $4 billion obligated to the State Department for Afghanistan reconstruction from 2002 to March 2013, for instance, DynCorp received 69 percent, or nearly $3 billion.
And with over 618,000 employees worldwide, the London-based global security company G4S is one of the world’s largest private employers.
But with Blackwater in the news again, questions are once again being raised about the role of these companies and whether governments that are excessively reliant on their services are able to properly oversee them.
Meanwhile, Blackwater’s reckless reputation has become so well known that its follow-on companies have worked hard to distance themselves from it. First and foremost, they take great pains to point out that they have nothing to do with Prince, Blackwater’s infamous founder.
For example, here’s one of the FAQs on ACADEMI’s website: Is ACADEMI associated with Erik Prince or the former Blackwater?
The answer: "No … Erik Prince took both the Blackwater name and legacy with him when he sold the facility."
ACADEMI spokeswoman Callie Wang says the company is entirely separate from Blackwater and has absolutely no involvement in the criminal trial of the Blackwater guards.
When private investors bought Blackwater’s North Carolina training center in 2010, they implemented "significantly more than a cosmetic name change," Wang said. "We’ve built a record of excellence."
Most recently, ACADEMI had to dispel rumors that its employees were operating in Ukraine. Once again, Blackwater’s past haunted the rebuilt company.
"ACADEMI is not Blackwater, and ACADEMI has no personnel in Ukraine," the company said in a statement.
And in response to a request for comment, Triple Canopy said, "We respectfully decline the interview since we have no direct connection with the subject matter."
Still, the twisted saga of Blackwater’s post-Iraq history vividly illustrates the ways the hugely lucrative security business has evolved since its glory days during the long war there.
"It’s not the ACADEMIs and Triple Canopies you really have to worry about, but the much smaller companies that are cropping up in Africa and elsewhere in the world," said Sean McFate, author of the forthcoming book The Modern Mercenary. "There are new actors, smaller companies, emerging every day."
McFate, who used to work in Africa for DynCorp alongside Blackwater contractors, said that while Blackwater isn’t representative of the industry, he expects future atrocities to occur as the global security industry gets bigger.
"The industry is indeed growing, but not the way people think," McFate said. "Private military companies are no longer just U.S.-based; they’re appearing around the world. They are also going native, as warlords and others refashion themselves as for-rent security."
And Prince himself is very much still in the business.
A former U.S. Navy SEAL, Prince founded Blackwater in 1997 when he bought up land in North Carolina and built a training site for military and law enforcement officials.
A turning point for the company came with the 2000 bombing of the USS Cole in Yemen. Blackwater was hired by the Navy to train U.S. sailors how to protect themselves from attackers. It was a big contract that in turn led to further business, but it wasn’t until the wars in Iraq and Afghanistan that the company really took off. Over the decade, the company won well over $1 billion in government contracts and its guards became famous for their cowboy swagger.
The public first became aware of Blackwater in 2004, when four of its employees were killed, their bodies burned and hung from a bridge in Fallujah. Then on Christmas Eve in 2006, an off-duty Blackwater employee shot and killed an Iraqi security guard inside the Green Zone, increasing pressure on the Bush administration to hold private security contractors accountable for crimes committed in war zones.
The Nisour shooting in September 2007 left Blackwater’s reputation irreversibly damaged.
Prince tried to rebrand the company, renaming it Xe Services in 2009. But then in April 2010, five former employees of Blackwater were charged with violating federal arms laws after falsifying paperwork to conceal the fact that they’d given Jordan’s King Abdullah II firearms as a gift. The charges threatened to end Xe Service’s U.S. contracting business, and so Prince moved to sell the company and separate himself from it.
His family’s financial adviser from 1998 to 2002, Jason DeYonker, led the sale, organizing a group of private investors to purchase the company’s North Carolina training site for a reported $200 million. DeYonker continues to sit on the board of ACADEMI and is one of eight men on the board of Constellis Holdings.
In 2010, Prince also sold Greystone, an affiliate of Blackwater that did work for the CIA. The company is still operating under its original name and its website lists offices in Chesapeake, Virginia, and Abu Dhabi. Around that time, Prince also sold Aviation Worldwide Services, which provided things like ISR (intelligence, surveillance, and reconnaissance), airdrops, and defensive air support, to AAR Corp.
After selling his companies, Prince moved to Abu Dhabi, where he’s been implicated in a handful of secretive — and largely unsuccessful — security contracts like training Somalis to combat pirates.
Prince told Bloomberg Businessweek‘s Drake Bennett in November 2013 that he had done consulting work for Reflex Resources, or R2, which had a contract with the United Arab Emirates to build a battalion of foreign troops for the country. But he said he was mostly busy "running a small fund and investing in Africa."
His small fund is called Frontier Resource Group, a private equity firm based in Abu Dhabi, which has a contract with the South Sudanese government to build an oil refinery. The project was temporarily put on hold earlier this year, when the security situation in the country grew too dangerous.
Fortuna audaces iuvat, or "fortune favors the bold," reads the Frontier Resource Group’s website.
An email to the company’s address bounced back, saying the account does not exist.
While Prince pursued projects overseas, the firearms charges over the former Blackwater employees did not go away.
That is, until this February, when most of the charges were dismissed after retired CIA officials testified the weapons had been given to the Jordanian king with the authorization of the CIA.
Then at the beginning of June, the merger between ACADEMI and Triple Canopy was finalized.
The new company will be led by ACADEMI’s CEO Craig Nixon, who joined the company after spending two years as a partner at the McChrystal Group, a consulting company formed by Gen. Stanley McChrystal after he retired in 2010.
Nixon retired from the Army in 2011; his final assignment was as the deputy director of operations responsible for force protection for the U.S. Central Command.
The companies will continue to operate as separate entities and will keep their individual names, ACADEMI’s spokeswoman said.
Journalist and author Robert Young Pelton, who was hired by Prince in 2011 to ghostwrite his memoir, but is now suing him for failing to pay him the agreed fee, says the name changes don’t mean much. "It doesn’t matter who has the contract, they’re all the same people. Constellis represents a clean slate until they f*** up and get thrown under the bus."
This is inevitable, Pelton said, because the government has a bizarre love-hate relationship with these companies. On the one hand, they’re reliant on them to outsource political risk and on the other, eager to slap them in public whenever scandal happens.
* Correction, July 2, 2014: The name of the ACADEMI subsidiary that has received $92 million in State Department contracts for security guards is International Development Solutions. An earlier version of this story incorrectly called the company International Development Services. (Return to reading.)