Erik D. Prince, founder and owner of Xe (formerly Blackwater). (Photo: U.S. Military)
Written by Warren P. Strobel, Jonathan S. Landay and Joseph Neff for McClatchy Newspapers
Washington – The security contractor Blackwater Worldwide tried for two years to secure lucrative defense business in Southern Sudan while the country was under U.S. economic sanctions, according to current and former U.S. officials and hundreds of pages of documents reviewed by McClatchy.
The effort to drum up new business in East Africa by Blackwater owner Erik Prince, a former Navy SEAL who had close ties with top officials in the George W. Bush White House and the CIA, became a major element in a continuing four-year federal investigation into allegations of sanctions violations, illegal exports and bribery.
The Obama administration, however, has decided for now not to bring criminal charges against Blackwater, according to a U.S. official close to the case.
Instead, the U.S. government and the private military contractor are negotiating a multimillion-dollar fine to settle allegations that Blackwater violated U.S. export control regulations in Sudan, Iraq and elsewhere. Prince renamed the company Xe Services in an apparent attempt to shake off a reputation for recklessness, and this month put it up for sale.
Had the company been indicted, it could have been suspended from doing business with the U.S. government, and a conviction could have brought debarment from all government contracts, including providing guard services for the CIA and State Department in war zones. In recent weeks the Obama administration awarded the firm a $120 million State Department security contract, and about $100 million in new CIA work.
The story of Blackwater’s efforts in Sudan is a tale of mixed motives that echo an earlier era of overseas empires, of evangelical Christians who offered to help defend Christian and animist Southern Sudan from the Muslim Arab military dictatorship in the north, but also sought to exploit the region’s oil and mineral wealth.
According to two former senior U.S. officials, the firm headed by Prince, who’s long been active in evangelical groups, at one point proposed a broad defense package that would have required the south to pledge as much as half its mineral wealth to pay for Blackwater’s services.
It’s also a story of a divided Bush administration. Prince personally lobbied Vice President Dick Cheney to lift the sanctions on Southern Sudan, according to the documents and a former senior U.S. official, who said that one meeting took place aboard Air Force Two. Prince’s aides also helped draft a letter from Southern Sudan’s leader, Salva Kiir, to President George W. Bush seeking an end to the sanctions.
Cheney supported Blackwater’s sales pitch, according to the documents. The State, Justice and Commerce Departments, however, investigated whether Blackwater had violated the sanctions that were imposed on Sudan beginning in 1997, some of which the Bush administration lifted in late 2006.
McClatchy reporters reviewed the documents on Blackwater’s drive for a security contract with Sudan and interviewed more than a dozen senior officials who were involved in Sudan policy decisions in the Bush and Obama administrations. None would speak on the record due to the sensitivity surrounding an ongoing law enforcement investigation. The company didn’t respond to repeated requests for comment.
Potential Profits
Perhaps the most unique character in the story is Bradford Phillips, a Christian evangelical activist and former congressional aide who runs the Persecution Project Foundation, a Culpeper, Va., nonprofit that works to publicize and alleviate the plight of Sudan’s Christians.
At Prince’s request, Phillips called on the government of Southern Sudan and recommended Blackwater’s protective services. He helped set up meetings between Kiir and Prince in Africa and Washington. The Washington session took place in November 2005 at the J.W. Marriott Hotel, a few blocks from the White House, the documents show.
The chief salesman to the Sudanese during the Washington meeting appears to have been Cofer Black, a former top CIA and State Department official who in 2001 famously demanded that a CIA subordinate kill terrorist leader Osama bin Laden and deliver his head in dry ice.
Southern Sudan had emerged in 2005 as an autonomous region after a U.S.-brokered peace deal ended a 22-year war with the North. Weeks after he took the helm of the new Southern Sudan government, Kiir’s predecessor, John Garang, was killed in an unexplained helicopter crash, and Blackwater’s sales pitch to the Bush administration was that protecting the new leader would support U.S. policy objectives.
The company, however, also saw huge potential profits.
After negotiating a $2 million draft contract to train Kiir’s personal security detail, Blackwater in early 2007 drafted a detailed second proposal, valued at more than $100 million, to equip and train the south’s army. Because the south lacked ready cash, Blackwater sought 50 percent of the south’s untapped mineral wealth, a former senior U.S. official said.
In addition to its well-known oil and natural gas reserves, Southern Sudan has vast untapped reserves of gold, iron and diamonds.
“Most people don’t know this stuff exists. These guys did,” said a second former senior official who saw the document, which apparently was never signed.
Ultimately, though, Blackwater’s venture in Southern Sudan foundered, U.S. officials said.
“Blackwater had some problems in Iraq,” said Deng Deng Nhial, the deputy chief of Southern Sudan’s Washington office. “Nothing really materialized. No services were performed.”
Deng said he had “no knowledge” that any contracts had been negotiated or signed.
Federal investigators, however, found evidence that Blackwater’s sales campaign had violated U.S. sanctions, export control laws and the Foreign Corrupt Practices Act, which is designed to prevent U.S. companies from bribing foreign officials in return for business, according to the officials and documents.
The suspected violations included brokering for defense services without a U.S. government-approved license; transferring satellite phones and encrypted e-mail capabilities to Southern Sudanese officials; and attempting to open a joint escrow account with the south’s government at a Minnesota bank.
Federal Probe
The focus on Sudan was part of a broader federal probe of Blackwater that began in 2006 and also examined the alleged bribery of foreign officials in Jordan, Iraq and Sudan and the alleged illegal exports of rifles, silencers and other military hardware to the Middle East, some of it hidden in pallets of dog food.
The U.S. Attorney for the Eastern District of North Carolina, where Xe Services is based, established a special task force that at times comprised as many as two dozen federal agents from at least eight U.S. agencies. They included the Justice, State, Defense, Homeland Security, Treasury and Commerce departments, and the FBI and CIA Inspector General’s office.
Prosecutors convened a grand jury in North Carolina to consider the case.
In April, a federal grand jury in that state indicted former Blackwater president Gary Jackson, former general counsel Andrew Howell and three other ex-employees with violating U.S. firearms laws, including falsifying federal paperwork to conceal a gift of firearms to King Abdullah II of Jordan, with whom the company had extensive ties.
No charges have been brought against the company itself, or against Prince or current executives.
Prince, who founded the firm in 1997 and won more than $1.6 billion in unclassified federal contracts and an unknown amount of secret work, announced in early June that he plans to sell Xe Services.
“The intent (of the pending fine) was not to force the company to go out of business. That may be the result that was not (the) intent,” said the U.S. official familiar with the case and with the pending multi-million dollar fine.
Why Blackwater hasn’t been charged in the Sudan matter remains contentious.
“These were . . . allegations of serious violations,” said a former State Department official with knowledge of the case. “Anything that involves a proscribed country like Sudan is . . . serious.”
Some officials charge that Blackwater has received special treatment, in light of the wide range of alleged export control violations some of which the company has acknowledged to the U.S. government, according to documents McClatchy has reviewed.
The U.S. official close to the case, who asked that neither he nor his agency be named, indicated that there are differences over whether there’s sufficient evidence to support a successful prosecution. Moreover, he said, Xe has improved its export control practices.
The official also emphasized that “Southern Sudan was a very unique beast,” a U.S.-backed enclave within a country that was under stiff American sanctions.
Justice Department spokesman Dean Boyd said the department doesn’t comment on internal deliberations. “The Justice Department follows the facts and the evidence wherever they lead in investigations and prosecutions, and will continue to do so,” he said.
Broken Promise
If the renamed Blackwater were indicted under the Foreign Corrupt Practices Act and the International Traffic in Arms Regulations, it would cost Xe Services more than 95 percent of its business.
As Blackwater, that business included protecting the CIA’s Kabul station and participating in a never-implemented program to hunt down and kill al Qaida leaders.
Blackwater’s failed foray into Sudan began as an attempt to branch out from its work in Iraq, which peaked in 2006, where it first gained international attention after four of its security guards were ambushed and killed, and two of the charred bodies hung on a bridge in the town of Fallujah in March 2004.
Africa was a new market, and Sudan’s Christian-Muslim divide looked to some within Blackwater as a front in Bush’s “war on terrorism.”
Several officials with knowledge of Sudan policy said the State Department and CIA initially encouraged Blackwater to explore providing protection for Southern Sudan’s leaders, fearing they could be targeted for assassination.
The Bush administration promised protection, secure communications and air transport to Garang, the long-time Southern Sudanese rebel leader, said a U.S. official with years of experience in Sudan. The promise went unfulfilled, however, and Garang’s untimely death in July 2005 caused great bitterness among his backers in Washington.
A month earlier, Prince had met with Bradford Phillips, who knew Garang, to discuss possible Blackwater training for the Southern Sudanese leader’s security detail.
The two men had met years earlier through their fathers, industrialist Edgar Prince and conservative activist Howard Phillips, both prominent in the Christian conservative movement.
That fall, Blackwater formally retained Phillips, who traveled to the Southern Sudanese capital of Juba, where he promoted Blackwater to Kiir, who was Garang’s successor.
Christopher Taylor, a Blackwater vice president who led the company’s Sudan initiative, accompanied Phillips on two subsequent trips.
Phillips didn’t respond to repeated requests for comment and ordered a reporter who visited his Charlottesville, Va., home to get off his property. Reached by phone, Taylor declined comment for this report. Neither man has been charged with any wrongdoing.
Equipment and Training
Documents show there was extensive activity by the company well before the U.S. sanctions against Southern Sudan were lifted in late 2006. In November 2005, Kiir traveled to Washington on his first official visit and met Cheney.
While there, Kiir and his aides met Blackwater executives, including Prince, Taylor and Black, the veteran CIA officer. At the Marriott hotel, Black delivered a presentation on Blackwater’s capabilities and urged Kiir to lobby Bush to lift the sanctions on Southern Sudan.
Several days later, accompanied by Philips, two of Kiir’s close advisers toured Blackwater’s sprawling Moyock, N.C., facility.
A senior Southern Sudanese official confirmed the trip to Blackwater’s headquarters, and said Kiir’s government was interested in elite bodyguard training and secure satellite phones that couldn’t be intercepted by the Khartoum government.
Taylor and Phillips then visited Sudan in February 2006. Taylor gave Kiir and his aides the satellite phones, access to the secure e-mail accounts and a formal proposal for Blackwater protective services.
Over subsequent months, and while the U.S. sanctions were still in effect, Blackwater pressed its sales drive, which included a meeting between Prince and Kiir in Nairobi, Kenya, and a third visit to Sudan by Taylor.
Bush lifted the U.S. sanctions on Southern Sudan by executive order on Oct. 13, 2006, but by that time, federal investigators had concluded that Blackwater had already crossed the permissible line in brokering defense services.
Eleven days later, Blackwater and Southern Sudan concluded preliminary negotiations on a contract to train Kiir’s bodyguards. It’s not clear whether the contract was ever implemented.
History of Conflict
Sudan, Africa’s largest country in land area, was riven by a 22-year civil war between the mostly Muslim north and the Christian and animist south that killed an estimated 2 million people and forced millions more to flee. The International Criminal Court last year charged Sudan’s president, Omar al Bashir, with war crimes stemming from the conflict in Sudan’s Darfur region and which the U.S. has called genocide.
Sudan was added to the State Department’s list of state sponsors of terrorism in the 1990s, in part because it harbored Osama bin Laden. President Bill Clinton imposed comprehensive sanctions on the country in 1997 in an attempt to weaken the country’s Islamic dictatorship.
The 2005 Comprehensive Peace Agreement, brokered with U.S. help, ended the north-south war. However, there’s widespread concern that civil war could erupt again if the south chooses to secede in a referendum scheduled for January. Both sides are rapidly arming themselves, Sudan specialists say.
(Landay and Strobel reported from Washington. Neff, of the Raleigh News & Observer, reported from Raleigh, N.C. McClatchy special correspondent Alan Boswell in Juba, Sudan, and intern Maggie Bridgeman in Washington contributed to this article.)