Blackwater focuses on brand shift

July 22, 2008
Security to take back seat to training, aviation services

MOYOCK, N.C. -- Blackwater Worldwide, the company that unwittingly became a catchall brand name for security contractors in Iraq, wants to shift its business away from the sector that earned it hundreds of millions of dollars.

Blackwater executives said Monday that they never intended security to become such a large part of their business. They said the intense and often negative media attention, coupled with multiple government investigations following a deadly shooting last year in Baghdad, simply make the cost of doing business too high.

"The experience we've had would certainly be a disincentive to any other companies that want to step in and put their entire business at risk," company founder and CEO Erik Prince told The Associated Press during a daylong visit to the company's North Carolina compound.

Blackwater will continue guarding U.S. officials in Iraq - under a contract worth hundreds of millions of dollars - but its future will be focused on training, aviation and logistics, the company said.

"Security was not part of the master plan, ever," company president Gary Jackson said.

Nevertheless, the company became synonymous with the image of private security guards in Iraq.

"It's been like Coca-Cola," Jackson said. "Blackwater: Security contractors."

Blackwater attracted worldwide attention last September when its security contractors opened fire in a crowded Baghdad intersection while responding to a car bombing.

Seventeen Iraqis were killed, making Blackwater a flash point in the debate over the use of contractors in war zones. Iraqi officials originally wanted the company expelled from the country, straining relations between Baghdad and Washington.

Since then, company executives say they've been investigated or audited by a litany of government agencies, from the FBI to Homeland Security to even the Agriculture Department.

In 2005 and 2006, security jobs represented more than 50 percent of the company's business. The security business is down to about 30 percent of Blackwater revenue now and Jackson said it will go much lower.

"If I could get it down to 2 percent or 1 percent, I would go there," he said, adding that the media have falsely portrayed much about that aspect of the company. "If you could get it right, we might stay in the business."

The Justice Department is expected to decide soon whether to bring charges against a handful of contractors involved in the shooting in Baghdad's Nosier Square. The company itself is not a target of the investigation and has pledged its cooperation with the probe.

Company executives would not say whether they expect their contractors to face charges but said an indictment likely wouldn't affect the core business model.

"Indictment of any of the folks who were in Nosier Square wouldn't be grounds for disablement (from government contracts)," Andrew Howell, the company's general counsel, said.

Blackwater's 7,000-acre compound offers unparalleled training facilities that attract swarms of U.S. military, federal law enforcement and local officials each year.

The company also has expanded its aviation division, which provides airplane and helicopter maintenance and also drops supplies into hard-to-reach military bases. A 6,000-foot runway is under construction and a large map in the company's hangar shows units based across the world, from Africa to the Middle East to Australia.

"Our focus is away from security work. We're just not bidding on it," Jackson said.

The State Department extended Backwater's contract to provide embassy security this year. Undersecretary of State Patrick Kennedy said Monday he has not been notified by Blackwater that it intends to reduce or eliminate security work.

"They have a contract with us through the next nine or 10 months," Kennedy said. "They have not indicated to us that they are attempting to get out of our current contract."

That decision to scale back future security business reflects not only the difficult year Blackwater has had but also the fact that there's probably not as much growth opportunity.

The growth in Backwater's aviation and international training sectors could also buffer the company against other changes in military policy. Defense Secretary Robert Gates is looking into the use of contractors for combat and security training.

"Why have we come to rely on private contractors to provide combat or combat-related security training for our forces?" Gates wrote in a July 10 memo to the Pentagon's top military officer, Joint Chiefs of Staff Chairman Adm. Mike Mullen.

The memo was released Monday to The Associated Press by the office of Sen. Jim Webb, D-Va. Webb raised concerns about the role of private contractors and specifically Blackwater, which opened a new counterterrorism training center in San Diego last month over the opposition of city officials.

Webb had been blocking Senate consideration of four civilian Defense Department nominees while waiting for answers. On Monday, Webb told Gates he was lifting his opposition to the nominees.


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