US firm formerly known as Blackwater to pay huge fine

The private security company will pay fine for violating export regulations.

Last Updated: Aug 21, 2010, 09:49 AM IST

Washington: The private security company formerly known as Blackwater Worldwide agreed to pay a USD 42 million fine for violating US export regulations, The New York Times reported late Friday.

Blackwater, which changed its name to Xe in 2009, gained notoriety in Iraq after guards protecting a convoy opened fire in a busy Baghdad square in September 2007, killing as many as 17 civilians.

The fine is relating to hundreds of violations, including illegal weapons exports to Afghanistan and providing sniper training for Taiwanese police officers, the Times reported, citing unnamed company and government officials familiar with the deal.

The unannounced settlement comes after lengthy talks between Xe and State Department lawyers that allowed the company to avoid criminal charges, the Times said.

"I have no immediate confirmation," State Department spokesman Darby Holladay said when asked about the report.

Five executives from the controversial company still face indictment on weapons charges, while at least two ex-employees face murder charges after two Afghans died in Kabul in May 2009.

Paying the fines will allow Xe to continue to compete for government contracts, the Times said.

US export rules mandate government approval for the export of certain types of US military technology or knowledge.

But Blackwater "began to seek training contracts from foreign governments and other foreign organisations without adhering closely to American regulations," the Times reported.

Blackwater "also shipped automatic weapons and other military equipment for use by its personnel in Iraq and Afghanistan in violation of export controls, and in some cases sought to hide its actions," the Times said.

According to the Times, investigators were also looking at whether weapons shipped to Iraq were sold on the black market and ended in the hands of the outlawed Kurdistan Workers` Party (PKK) rebel group Turkey considers a terrorist organisation.

In late June, CIA chief Leon Panetta defended his agency`s USD 100 million contract with Xe, saying the company provided needed security services in war zones and had underbid other competitors.

The CIA inked the deal after the US State Department in mid-June awarded Xe a security services contract worth some USD 120 million for work in Afghanistan.

Blackwater was founded in 1997 by former US Navy Seal Erik Prince. It rose to become the largest private security firm used by the US authorities in Iraq.

Prince, who does not face criminal charges, has been under a glaring spotlight as the subject of multiple lawsuits, including by two former civilian Blackwater employees over the company`s operations in Iraq and in the aftermath of Hurricane Katrina. He recently relocated to Abu Dhabi.

In documents filed with the Justice Department, a lawyer said Prince planned to settle in the United Arab Emirates before August 15, when his children were starting school.

Bureau Report