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December 16th, 2010 - Blackwater Seeks Dismissal of Iraq Shooting Suit

News article from the Associated Press

News article from the New York Times

Summary of the Blackwater Killings

Blackwater Seeks Dismissal of Iraq Shooting Suit

         

By Tom Breen

Associated Press

December 16, 2010

 

Raleigh, N.C. - The security firm formerly known as Blackwater told a federal judge Thursday that the U.S. government - and not the company - should be held accountable for a 2007 shooting by its contractors that killed 17 Iraqis.

 

The Moyock, N.C.-based company and several of its contractors are seeking the dismissal of a lawsuit that was filed on behalf of three people killed in the shooting - Ali Kinani, Abrahem Abed Al Mafraje and Mahde Sahab Naser Shamake. It accuses the parties of wrongful death and negligence, and seeks punitive damages.

 

Lawyers for the company, now known as Xe Services, argued in court that Blackwater contractors were essentially acting as employees of the U.S. government because they were providing security to State Department personnel.

 

Unlike duties performed by other contractors, the sensitive nature of providing security in a war zone required the kind of oversight the government normally reserves for its own employees, attorney Andrew Pincus argued.

 

"This isn't food service, where we can sort of leave it to the chefs," he said.

 

Lawyers for both the plaintiffs and the government disputed that, and said the practical effect of transferring the focus of the lawsuit to the federal government would be its dismissal. The federal government is exempt from such lawsuits.

 

Judge Terrence W. Boyle didn't immediately rule on the motions in the case, but said the most important issue seems to be whether the government is ultimately responsible for the actions of its contractors.

 

"If the government can cut the cord and let that drift off into space, that's one world," he said. "But it's a different world if the government has to be held accountable."

 

In separate motions, lawyers for Blackwater and the contractors argued they can't be sued by foreigners for something that happened in a foreign country governed by foreign law. They also argue that Iraqi law prohibits such lawsuits.

 

The contractors contend insurgents ambushed them in a traffic circle before they opened fire, but prosecutors say the men unleashed an unprovoked attack on civilians using machine guns and grenades.

 

The five contractors were initially charged with manslaughter for their role in the 2007 Nisoor Square shooting, which strained relations between Baghdad and Washington. A year ago, a federal judge dismissed those charges, citing missteps by the government.

 

A sixth contractor, Jeremy Ridgeway, pleaded guilty in the criminal case. He filed a separate defense in the civil lawsuit, arguing that the federal court in North Carolina has no jurisdiction to hear the case.

 

Blackwater changed its name to Xe Services in March, saying its brand had been tarnished by its work in Iraq. The company settled a separate series of federal lawsuits earlier this year connected to the Nisoor Square shooting and others in Iraq.

 

The company is now looking for new ownership.

 

Associated Press Writer Mike Baker contributed to this report.

 

External link: http://www.washingtonpost.com/wp-dyn/content/article/2010/12/16/AR2010121606064.html


Blackwater Founder in Deal to Sell Company

 

By Andrew Ross Sorkin & Ben Protess

New York Times

December 16, 2010

 

Erik D. Prince, the founder of the private security firm formerly known as Blackwater Worldwide, has reached a deal to sell his embattled firm to a small group of investors based in Los Angeles who have close ties to Mr. Prince, according to people briefed on the deal.

 

Blackwater, now called Xe Services, was once the United States’ go-to contractor in Iraq and Afghanistan. It has been under intense pressure since 2007, when Blackwater guards were accused of killing 17 civilians in Nisour Square in Baghdad. The company, its executives and personnel have faced civil lawsuits, criminal charges and Congressional investigations surrounding accusations of murder and bribery. In April, federal prosecutors announced weapons charges against five former senior Blackwater executives, including its former president.

 

The sale, which is expected to be announced on Friday, came after the State Department threatened to stop awarding contracts to the company as long as Mr. Prince owned the firm, people involved in the discussions said. These people requested anonymity because they were not authorized to speak about the confidential talks. The sale is intended to help shake the stigma associated with its ownership under Mr. Prince.

 

Yet questions remain about Mr. Prince’s continuing relationship with the company. While he is expected to step down from any management or operational role, he will have a financial interest in the company’s future, according to people briefed on the negotiations. As part of the deal, he will be paid an “earn out,” or a payment that depends on the company’s financial performance over the next several years, these people said.

 

One of the lead investors in the deal is Jason DeYonker of Forté Capital Advisors, who has a long relationship with Mr. Prince and Blackwater. He helped advise Mr. Prince in his development of Blackwater’s business plan when the company was founded and helped negotiate the company’s first training contracts with United States government agencies and the company’s expansion of its training center in Moyock, N.C. In addition, he managed the Prince family’s money from 1998 to 2002. The other lead investor is Manhattan Growth Partners, a private equity firm in New York.

 

Exact terms of the deal could not be learned, but people involved in the talks said the transaction was worth about $200 million. Bank of America led the financing of the transaction, these people said.

 

Mr. Prince, a former Navy Seal who created Blackwater in 1997, put his company up for sale in June and moved his family to Abu Dhabi, court records show. Mr. Prince, who built Blackwater using an inheritance from his family’s Michigan auto parts fortune, stepped aside as Xe’s chief executive in 2009 but has remained chairman until now. Mr. Prince sold the company’s aviation division, Presidential Airways, to the AAR Corporation in March.

 

The auction for Xe Services has dragged on for months as speculation has swirled about the company’s future and the auction process. Some bidders speculated that Mr. Prince had always favored selling the company to the investor group led by Mr. DeYonker.

 

The new buyers are hoping to recast the company as a military training organization instead of a private security service. The company’s training center in Moyock has trained more than 50,000 United States government personnel and allied forces. The buyers hope to receive new contracts to train forces in Iraq, Afghanistan and Yemen, among other locations, especially as the United States withdraws troops and needs to train local forces.

 

After the sale, the company will continue to be subject to an agreement it reached with the State Department in August. Under the settlement, the company paid $42 million in fines over hundreds of violations of United States export control regulations, permitting it to continue to compete for government contracts.

 

Wendy Wysong, a partner at the law firm Clifford Chance, was appointed as a special compliance officer for Xe Services as a result of the settlement.

 

James Risen contributed reporting.

 

Copyright 2010 The New York Times Company

 

External link: http://dealbook.nytimes.com/2010/12/16/blackwater-founder-in-deal-to-sell-company/

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