Blackwater’s original five-year GSA contract value (i.e., the government’s projection of how much business Blackwater would do with federal agencies) was estimated at a meager $125,000.62 When it was extended by five years in 2005, the estimate was pushed to $6 million.63 But all of those projections were far shy of the actual business Blackwater would win under the GSA. As of 2006, Blackwater had already been paid $111 million under the schedule. “This is a multiple-award schedule, indefinite quantity, indefinite delivery contract,” said GSA spokesman Jon Anderson. “When the contract is first awarded, we do not know whether or not agencies are going to place orders with the contractor as the contractor has to compete with other . . . contractors for task orders, so we set the estimated dollar value of the contract at $125,000. Blackwater was obviously very successful in their endeavors and was able to build their sales to $111 million over a six-year period.”64 By 2008, the number would reach more than a billion dollars.
In 2000, as business was picking up for Blackwater, all was not well at the Moyock compound. Al Clark, the man many credit with dreaming up the company, found himself at odds with Prince and others at the company. “As time went on, some things took place there that I didn’t really agree with, so I left to start another business,” recalled Clark, who founded Special Tactical Systems with former Blackwater employee and fellow SEAL Dale McClellan in 2000. “One of the things that started happening was Erik wanted it to be a playground for his rich friends. And I was questioned on why would I train your standard Army guy on the same level that I’d train a SEAL. And my rebuttal was, ‘Why would you base the value of someone’s life on the uniform they’re wearing, because once the bullets start flying they don’t discriminate,’ and I was basically told my standards were too high.”65
Clark says during training sessions he “gave everybody everything I had when I had them,” but he said company executives “thought there was no incentive for [clients] to come back if I gave them everything, and my argument was, they may not get a chance to come back, so while we’ve got them, we should give them everything we have. A lot of cops were paying out of their own pocket, taking their vacation time away from their families, to go to a school they thought would give them something their departments wouldn’t.” Clark was reluctant to expand much on his split with Prince, but he summed up his feelings about leaving Blackwater: “Let’s put it this way: I wanted it to be a place built by professionals for professionals, and I wanted it to be professional, and it didn’t feel to me like it was being that way.”66 Blackwater had already started down the path to success when Clark left in 2000, having landed a couple of hundred thousand dollars in payments on its GSA contract and other awards, but it wasn’t until more than a year later that the business really began to boom. That would come courtesy of two terror attacks attributed to Osama bin Laden.
Shortly after 11:00 a.m. on the morning of October 12, 2000, in the Yemeni port of Aden, a small boat approached the U.S. Navy guided missile destroyer the USS Cole, which had just finished up a routine fuel stop. As the boat neared the ship’s port side, it exploded, ripping a forty-by-forty-foot hole in the massive ship. Osama bin Laden would later take responsibility for the suicide attack that killed seventeen U.S. sailors and injured thirty-nine others. The second annual tragedy, following 1999’s Columbine massacre, that would benefit Blackwater resulted in a $35.7 million contract with the Navy, Blackwater’s ancestral branch of the military, to conduct “force protection” training.67 Traditionally, the average Navy midshipman didn’t train for a combat role, but with increased threats to the fleet, that began to change. “The attack on the USS Cole was a terrible tragedy and dramatic example of the type of threat our military forces face worldwide on a day-to-day basis, emphasizing the importance of force protection both today and in the future,” Adm. Vern Clark, the chief of Naval operations, told the Senate Armed Services Committee in May 2001. “The Navy has taken action at home and abroad to meet this challenge, undergoing a sea change in the way we plan and execute self-defense. We have enhanced the manning, training, and equipping of naval forces to better realize a war fighter’s approach to physical security, with AT/FP serving as a primary focus of every mission, activity, and event. Additionally, we are dedicated to ensuring this mindset is instilled in every one of our sailors.”68 At the time, the Navy had already committed itself to incorporating “a comprehensive plan to reduce infrastructure costs through competition, privatization, and outsourcing.”69 Among its projects was a review of some 80,500 full-time equivalent positions for outsourcing.70 While the bombing of the USS Cole significantly boosted Blackwater’s business, it would pale in comparison to the jackpot that would come courtesy of the greatest act of terror ever carried out on U.S. soil.
On the morning of September 11, 2001, American Airlines Flight 11, carrying ninety-two passengers from Boston to Los Angeles, abruptly turned course and headed straight toward New York City. At 8:46 a.m., the plane smashed directly into the North Tower of the World Trade Center. Some seventeen minutes later, United Airlines Flight 175 crashed into the South Tower. At 9:37 a.m., American Airlines Flight 77 hit the Pentagon. As fire and smoke burned from two of America’s most famous buildings, the attacks almost instantly accelerated an agenda of privatization and conquest long sought by many of the people who had just taken over the White House less than a year earlier. President Bush’s Secretary of the Army, Thomas White, a former Enron executive, oversaw the rapid implementation of the privatization agenda kick-started by Dick Cheney a decade earlier.71 The program would soon see the explosion of a $100 billion global for-profit military industry. Among the greatest beneficiaries of the administration’s newly declared “war on terror” would be Erik Prince’s Blackwater. As Al Clark put it, “Osama bin Laden turned Blackwater into what it is today.”72
“The bombing of the USS Cole in Aden, Yemen, sent a ripple through the U.S. Navy, and then 9/11 happened and the ripple was worldwide,” Blackwater vice president Chris Taylor said in a 2005 speech at George Washington University Law School. “The Navy appropriately responded realizing that in order to combat today’s terrorist threat, all sailors would need substantial training in basic and advanced force protection techniques. The Navy moved swiftly to create a sound training program, the majority of which Blackwater now executes and manages all over the country. Sailors the world over are now better prepared to identify, appropriately engage, and defeat would-be attacks on naval vessels in port and underway. To date, Blackwater has trained some 30,000 sailors.”73 Blackwater was officially awarded the $35.7 million Navy contract for “force protection training that includes force protection fundamental training . . . armed sentry course training; and law enforcement training.”74 The bulk of the work was to be performed in Norfolk, with some in San Diego and San Antonio.75 A Blackwater trainer who oversaw the contract commented shortly after it started in 2002 that his instructors were shocked to find many sailors “have never held a firearm, except for at boot camp.”76
The post-9/11 environment provided Erik Prince and his Blackwater colleagues with a blank canvas on which to paint a profitable future for the company, seemingly limited only by imagination and personnel. Defense Secretary Rumsfeld had come into office determined to dramatically expand the role private companies like Blackwater would play in U.S. wars, and 9/11 had put that agenda on the fastest of tracks. On September 27, two weeks after 9/11, Prince made a rare media appearance as a guest on Fox News’s flagship program, The O’Reilly Factor. “I’ve been operating in the training business now for four years and was starting to get a little cynical on how seriously people took security,” Prince said on the show. “The phone is ringing off the hook now.”77 The reason for Prince’s appearance on Fox was to discuss the air marshal program and the training that marshals would receive, some of it at Blackwater. That month, Blackwater inked contracts with the FBI worth at least $610,000.78 Soon it would be providing training for virtually every wing of the government, from the De
partment of Energy’s National Nuclear Security Administrative Service Center to the Department of the Treasury’s Financial Crime Enforcement Network to the Department of Health and Human Services assistant secretary’s office.79
But while Blackwater raised its profit margin and profile with its training services in the aftermath of 9/11, its true fame and fortune would not be gained until it formed Blackwater Security Consulting in 2002 and burst into the world of soldiers-for-hire. As with Blackwater’s founding, Erik Prince would once again provide the medium for another’s idea. This time, it was the vision of former CIA operative Jamie Smith. Smith had been recruited by Al Clark to teach weapons classes while he was a law student at Regent University, “America’s preeminent Christian university,” in Virginia Beach, not far from Blackwater.80
In an interview, Smith said he first thought about the prospects for a private security company while working as a CIA operative during the 1991 Persian Gulf War. “I’m not trying to say that I was some sort of soothsayer a decade prior to all of this, but it was an infantile idea, it looked like it was just going to continue the trends of privatization,” Smith said. “There were already companies doing similar things. There wasn’t a lot of public knowledge surrounding that. DynCorp was working, there were other companies, SAIC, that were doing something along the same lines.” Smith said he realized that the military was beginning to use private forces to guard military facilities, a practice known as “force protection,” thus freeing up more forces for combat. It was a trend, and Smith said he “did not think it was something that could be arrested because of the nature of our military being a volunteer service. Do you really want to have your volunteer force standing guard out at the front gate when they could be doing things a lot more valuable for you? So I just didn’t see that it would change and that it would probably just continue.”81
Like Al Clark a few years earlier, Jamie Smith didn’t have the means at the time to start his own private security company, and while the demand was certainly there, it was not overwhelming. Then, after 9/11, Smith says Prince “called and said, ‘Hey, I’d like you to consider a full-time job and come back to work with us,’ and I told him that was interesting to me and that I would consider doing that with the caveat that we could create this security company.” Prince agreed. But, Smith contends, Prince didn’t see the payoff in what would shortly become Blackwater’s biggest moneymaker. “I was told, ‘You can’t devote all your time to this because it’s not going to work.’ They said, ‘You can devote about 20 percent of your total time to this, but no more than that—you need to stick to what you’re doing now,’” Smith said.82 Smith joined Blackwater full-time in December 2001, and Blackwater Security Consulting was incorporated in Delaware on January 22, 2002.83 Within months, as the U.S. occupied Afghanistan and began planning the Iraq invasion, Blackwater Security was already turning a profit, pulling in hundreds of thousands a month from a valuable CIA contract.84
One of the key players in landing that first Blackwater Security contract was A. B. “Buzzy” Krongard, executive director of the CIA, the agency’s number-three position.85 Krongard, who was named to that post in March 2001,86 had an unusual background for a spook, having spent most of his adult life as an investment banker. He built up Alex.Brown, the country’s oldest investment banking firm, into one of the most successful, eventually selling it to Bankers Trust, which he resigned from in 1998.87 There have been some insinuations that Krongard was working undercover for the CIA years before he officially joined the agency in 1998 as a special adviser to George Tenet.88 But he won’t reveal how he met the CIA director, except to say that it was through “mutual friends.”89 The Princeton alum, Hall of Fame lacrosse player, and former Marine boasts of having once punched a great white shark in the jaw; and he keeps one of its teeth on a chain and pictures of the animal in his office.90 Despite his bravado, some at the agency thought Krongard more of a wanna-be, according to a 2001 Newsweek story published shortly after his ascension to the number-three spot. “A wanna-be? Maybe I am. Maybe I’m not. That’s as much as you’re going to get,” Krongard responded.91
9/11 conspiracy theorists have long been interested in Krongard because the bank he headed until 1998, which was bought out by Deutsche Bank after he left, was allegedly responsible for the unusually high number of put options on United Airlines stock placed just before 9/11, options that were never collected.92 There is no evidence of his having prior knowledge of the attacks. While at the CIA, working under George Tenet, Krongard acted internally, reorganizing divisions93 and pushing for projects like an intelligence venture capital firm,94 but he did on occasion speak publicly. In October 2001, he declared, “The war will be won in large measure by forces you do not know about, in actions you will not see and in ways you may not want to know about, but we will prevail.”95
Some three years later, in January 2005, Krongard made news when he became the most senior administration figure to articulate the benefits of having not killed or captured Osama bin Laden. “You can make the argument that we’re better off with him (at large),” he said. “Because if something happens to bin Laden, you might find a lot of people vying for his position and demonstrating how macho they are by unleashing a stream of terror. . . . He’s turning into more of a charismatic leader than a terrorist mastermind.”96 Krongard also characterized bin Laden “not as a chief executive but more like a venture capitalist,” saying, “Let’s say you and I want to blow up Trafalgar Square. So we go to bin Laden. And he’ll say, ‘Well, here’s some money and some passports and if you need weapons, see this guy.’”97
It’s not clear exactly what the actual connection was between Prince and Krongard. Some have alleged that Krongard knew Prince’s father.98 In a brief telephone interview, Krongard would only say he was “familiar” with Prince and Blackwater.99 A former Blackwater executive, however, asserted, “I know that Erik and Krongard were good buddies.”100 Whatever Krongard’s involvement, it was the CIA that handed Blackwater its first security contract in April 2002.101 Krongard visited Kabul and said he realized the agency’s new station there was sorely lacking security.102 Blackwater received a $5.4 million six-month no-bid contract to provide twenty security guards for the Kabul CIA station.103 Krongard said it was Blackwater’s offering and not his connection to Prince that led to the company landing the contract, and that he talked to Prince about the contract but wasn’t positive who called who, that he was “not sure which came first, the chicken or the egg.”104 He said that someone else was responsible for actually signing off on the CIA contract. “Blackwater got a contract because they were the first people that could get people on the ground,” Krongard said in the interview. “We were under the gun, we did whatever it took when I came back from Kabul. . . . The only concern we had was getting the best security for our people. If we thought Martians could provide it, I guess we would have gone after them.”105
The relationship between Krongard and Prince apparently got chummier after the contract was signed. “Krongard came down and visited Blackwater, and I had to take his [family] around and let them shoot on the firing range a number of times,” said a former Blackwater executive in an interview. “That was after the contract was signed, and he may have come down just to see the company that he had just hired.”106 Prince apparently became consumed with the prospect of being involved with secretive operations in the war on terror—so much so that he personally deployed on the front lines.107 Prince joined Jamie Smith as part of the original twenty-man contingent Blackwater sent to fulfill its first CIA contract, which began in May 2002, according to Robert Young Pelton’s book Licensed to Kill.108 Most of the team guarded the CIA Kabul station and its assets at the airport, but Smith and Prince also went to one of the most dangerous places in Afghanistan, Shkin, where the United States was establishing a base four miles from the Pakistani border. But after just one week, Prince left the Shkin detail and the mud fortress (that some called the “Alamo”) out of which U.S. fo
rces operated. Smith told Pelton that Prince’s trip was more like “playing CIA paramilitary” and that he left to go “schmooze” those who could give more work to Blackwater Security.109 Smith stayed in Shkin for two months and then in Kabul for four months. After leaving Shkin, Prince remained in Kabul for a week. Apparently Prince enjoyed the experience so much that he subsequently tried to join the CIA, but was reportedly rejected when his polygraph test came back inconclusive.110 Though Prince was denied the status of a full CIA operative, he has apparently maintained close ties with the agency. Prince reportedly was given a “green badge” that permitted him access to most CIA stations.111 “He’s over there [at CIA headquarters] regularly, probably once a month or so,” a CIA source told Harper’s journalist Ken Silverstein in 2006. “He meets with senior people, especially in the [directorate of operations].”112
Blackwater: The Rise of the World's Most Powerful Mercenary Army Page 13
