Center for Strategic Communication

Security contractors in Baghdad. Photo: courtesy of Robert Young Pelton.

Depending on how you look at it, the world’s most notorious mercenary firm just got away with misleading the government about arming and training foreign governments — or the company agreed to pay millions, only to defer a potential prosecution on those charges. The firm formerly known as Blackwater has agreed to fork over $7.5 million to the Justice Department $7.5 million to avoid going to court on 17 criminal charges. It’s not exactly a bank-breaker for the company, now known as Academi LLC. Then again, the legal deal announced yesterday doesn’t get Academi entirely off the hook.

On Tuesday, Academi and the Justice Department entered into a “Deferred Prosecution Agreement” that allows Academi to spend the next 36 months convincing the government that its extra-legal extracurricular activities are all in the past, a vestige of the firm’s former owners. If it can’t, however, Academi may have federal prosecutors breathing down their necks.

In a statement, Academi described itself as “pleased” to reach the deal on what spokesman John Procter pointedly called a “legacy matter” — that is, an account that the current ownership, which took control of the firm in late 2010, had nothing to do with.

“It is yet another step in our commitment to fairly resolve past issues and become the industry leader in governance, compliance, and regulatory matters,” the Academi statement reads. “The agreement, which does not involve any guilty plea or admit to any violations, reflects the significant and tangible efforts that ACADEMI’s new ownership and leadership team have made in achieving that goal.”

The statement of facts that Academi has stipulated, however, point to some of the old firm’s particularly shadier practices.

As far back as 2005, Blackwater pursued a deal with the proto-government in what would later be the independent nation of South Sudan. One problem: the company did so without a necessary State Department license. The proposed deal began after unnamed U.S. officials approached Blackwater with an ultimately-unfruitful proposal to do business in South Sudan. Among the ideas discussed: the mercenaries would train the South Sudanese army; provide bodyguards of South Sudan’s president; place a “HUMINT (human intelligence) collection team” in the country; secure the ruling officials’ communications; and deliver “a full range of data collections and monitoring technology.”

The problem was that South Sudan wasn’t yet independent; and the Sudanese government that it fought for independence was under U.S. sanctions. Meetings with State Department officials in 2005 to carve out geographical exemptions to the sanctions, allowing Blackwater to do business, were unsuccessful. According to the statement of facts, Blackwater employees shipped satellite phones to South Sudanese contacts after marking the boxes “Not For Sale,” to make sure the made it through customs.

In 2006, an internal Blackwater email about the South Sudanese deal instructed, “Remember, the money has to come from a Ugandan government account, and we have to have a Ugandan security forces contact info [sic] to get this finished.” The company looked forward to a huge payday. South Sudanese officials didn’t just want to buy a security sector from Blackwater, they wanted the company to construct and protect an oil pipeline that could net the firm $15 billion. The South Sudanese, however, ultimately changed their minds and scrapped the deal.

Then come the gun charges. A Blackwater employee failed to register two Steyr machine guns with the Bureau of Alcohol, Tobacco and Firearms, opting to register them with a North Carolina county sheriff. Then the employee parlayed that into a deal for the company to purchase AK-47s for the sheriff’s office after a “terrorist threat” analysis recommended the sheriff buy them.

More bizarrely, in 2005, the King of Jordan visited Blackwater’s Moyock, N.C. headquarters, where Blackwater employees presented him with the mercenary version of a fruit basket: an assortment of Glocks, along with a Remington shotgun and a Bushmaster M4 rifle. Blackwater forgot to report to the government that it had given weapons to the head of a foreign country, which is illegal.

Academi has the next three years to essentially prove to the Justice Department that all of this is a relic of the firm’s bad old days, before it came under new ownership and hired legal compliance officers. It may not have an easy case to make. Two employees who worked for Academi under its current management are suing the company for wrongful termination after they blew the whistle on a third employee’s attempts to fake the results of a gun test for Afghan security forces. The Justice Department may not be done with Academi/Blackwater yet.