Critical Analysis: Blackwater to Pay $7.5 Million Fine for Violations

Erik Prince, Founder of Blackwater/Academi
Erik Prince, Founder of Blackwater/Academi (Reuters)
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Erik Prince, Founder of Blackwater/Academi

Academi LLC, the private security contractor formerly known as Blackwater, has agreed to pay a $7.5M fine as part of a deferred prosecution agreement with the U.S. government, according to an FBI press release.  The company, which has earned billions of dollars in government security contracts in Iraq and Afghanistan, will pay the fine along with $42M for a settlement agreement with the U.S. State Department from two years ago for similar charges under the Arms Export Control Act and International Trafficking in Arms regulations.

As part of the agreement, Academi has acknowledged its responsibility for conduct ranging from illegal sales of equipment, body armor, and training to foreign governments in violation of the Foreign Corrupt Practices Act, to possession of illegal automatic weapons at its training facilities, to attempting to enter billions of dollars worth of oil and defense contracts in violation of a US embargo in Sudan. Academi will not face prosecution for seventeen violations under the deferred agreement as long as it complies with government auditing requirements and export restrictions.  The settlement concludes a five year investigation into Blackwater by the FBI, Justice Department, IRS, and others agencies.

In its press release, the FBI praised the settlement as sending a message that those who do business with the U.S. government will be accountable for their actions, no matter how powerful they are.  “For an extended period of time, Academi/Blackwater operated in a manner which demonstrated systemic disregard for U.S. government laws and regulations. Today’s announcement should serve as a warning to others that allegations of wrongdoing will be aggressively investigated,” said Special Agent Chris Briese of the FBI.  Added Special Agent John F. Khin, “This investigation showed that no contractor is above the law.”

Others outside the agencies are less enthusiastic about the settlement.  The agreement “merely forces the company to do what it should have years ago,” said David Isenberg, author of “Shadow Force: Private Security Contractors in Iraq.”  Critics have also noted that the company will be allowed to deduct $2.5M from its fine simply for complying with the agreement.  Furthermore, critics have pointed out that no company executives, including founder and former owner Erik Prince, are being held individually responsible for any wrongdoing.

Thomas Scott is a rising third year law student at the University of Denver and a Publishing Editor on The View From Above.