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Buying Blackwater

by Jody Ray BennettInternational Relations and Security Network (ISN)

22 Jun 2010

Protest against Blackwater, courtesy of rjosef/flickr

Protest against Blackwater, April 2007

The recent announcement that the notorious private military company formerly known as Blackwater is up for sale highlights the end of an era, but leaves many remaining questions about its future, Jody Ray Bennett reports for ISN Security Watch.

ISN Security Watch

Earlier this month, Xe Services, LLC, the latest re-branded name of the company that was once known as Blackwater Worldwide, announced that the company was up for sale. The announcement that Xe was seeking new ownership came somewhat as a surprise to industry insiders both in favor of and critical of the company, especially considering Blackwater’s seemingly amazing ability to withstand the yearly toll of accidents, mishaps and misconduct that has since earned it a highly negative reputation throughout the world.

While the specific reason for the decision to sell has not been given, founder, owner and former CEO Erik Prince said in an interview with the Associated Press that “Performance doesn't matter in Washington, just politics,” and cited the constant criticism of the company as one factor that moved him to the decision.

But much of the criticism of Blackwater that developed over the years was not unwarranted. Indeed, the timeline of the company’s activities that earned Prince millions is generously peppered with events that, in return, earned his company a reputation as an extremely secretive, wildly aggressive, profit-motivated, scandalous private military that had become too entrenched in US national security.

All 'merc'-andise must go!

With the announcement of the sale, Xe has since opened two retail stores, which could be an attempt to sell off the remainder of its commercial merchandise to the public. At the Blackwater Pro Shop, one can purchase everything from Blackwater logo-clad hats, t-shirts, pilsner glasses and mousepads to glock holsters, various knives and rifles that can be customized.

Aside from its retail merchandise, however, the fate of Xe’s other companies remain unclear. Prince still owns the US Training Center, a collection of three training compounds throughout the US. It also manages Greystone, Ltd, a division of Blackwater used to attract foreign clients and recruit foreign personnel. Prince also owns a host of other companies such as Total Intel Solutions, an intelligence-gathering firm, and according to one report, also owns “a construction company, Raven Development and Paravant, which has been used as a shell company to win training contracts in Afghanistan.”

A former Blackwater executive told ISN Security Watch that Total Intelligence Solutions was “shut down” sometime at the end of May or beginning of June of this year because it was “not profitable.”

In a Vanity Fair article published last December—a piece regarded by some as a form of graymail—Prince stated he once entertained the idea of deploying “a ship—complete with security personnel, doctors, helicopters, medicine, food and fuel—[to be stationed] off the coast of Africa to provide ‘relief with teeth’ to the continent’s trouble spots or to curb piracy off Somalia.” The next month, Xe’s only maritime ship, the McArthur, was put up for sale in Spain at a discount of $3.7 million.

Two months later, Xe sold its aviation division, Aviation Worldwide Services, to AAR Corp for $200 million, “despite a wrongful-death lawsuit filed by families of three soldiers killed in Afghanistan, when one of the company's helicopters slammed into a mountainside in 2004.” A report at MarketWatch.com noted that “An Army investigation of the crash blamed it on ‘poor navigation and decision-making,’ according to press reports at the time.”

According to a former company executive, Blackwater tried to sell at least one-third of its holdings as far back as 2007 when it was in negotiations with investment giant, Cerberus; eventually talks stagnated and the purchase never occurred. Some industry experts, however, are not surprised. In a post on his website’s message board, journalist and traveler Robert Young Pelton, who was once embedded with Blackwater contractors in Baghdad, commented, “Erik has always been trying to sell Blackwater, even before [the Nisour Square shootings] killed that idea.”

“The sale was inevitable,” the former executive told ISN Security Watch, later explaining that once Prince and former CEO Gary Jackson stepped down, leadership and management of the company took a nosedive. Jackson and four other former company executives were indicted last April on felony weapons charges from a 2008 raid that found the officials had taken part in activities to hide gifts of weapons to the king of Jordan.
“There was no hope it was going to survive,” the former employee told ISN Security Watch, “The business is worth maybe one-fifth of what it once was.” According to the source, Prince’s decision to sell occurred approximately eight months ago when “the bankers started coming around for their money.”

Take the money and run

The former executive went on to explain to ISN Security Watch that Xe’s most likely buyers would include Cerberus, technology giant AECOM, or even large land developers, one of which has reportedly made an offer to Prince to buy the land upon which the US Training Centers sit.

Since the announcement that Xe was being placed on the market, it was revealed that Prince is planning a move to the United Arab Emirates. Earlier this month, a report by Jeremy Scahill in The Nation wrote, “If Prince's rumored future move is linked to concerns over possible indictment, the United Arab Emirates would be an interesting choice for a new home—particularly because it does not have an extradition treaty with the United States.”

Essentially, the UAE would be a perfect place for Prince to move if there were concerns that actions could be taken against him by US prosecutors, or even to “liquidate major holdings so he can move his money offshore […] in advance of possible claims by victims of Blackwater violence.” Blackwater has previously moved funds offshore through Prince’s Greystone, a “wholly-owned offshore company.”

Prince’s book titled We Are Blackwater was set for release in 2008 but was delayed for unknown reasons. He is reportedly gearing up to release a book this fall.


Jody Ray Bennett is a freelance writer and academic researcher. His areas of analysis include the private military and security industry, the materialization of non-state forces and the transformation of modern warfare


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