June 8th, 2010
02:38 PM ET

Security Brief: Blackwater for sale

There was a time when Blackwater owner Erik Prince planned to grow his fledgling private contracting company into a family empire. But that was a long time ago. Today, the controversial contracting powerhouse that now goes by the name Xe, is up for sale.

In a few short years, Prince managed to turn a start-up firing range facility aimed at special forces and law enforcement, into a billion dollar empire that the U.S. State Department insisted it needed in order to perform its mission in Iraq, providing security personnel to protect diplomats and others who were spearheading reconstruction efforts.

But the company had an uncanny ability to draw negative headlines, particularly after a deadly shooting in Baghdad's Nisoor Square in September 2007 in which Blackwater contractors opened fired in a traffic circle, leaving more than a dozen civilians dead.

The Blackwater guards insisted they were coming under fire when they unleashed a barrage of bullets in the crowded traffic circle but the Iraqi government believed otherwise, and eventually kicked the company out of the country altogether.

Last year, Prince changed the company's name to Xe and announced that he was stepping down from day-to-day operations amid a slew of investigations from multiple government agencies. He fired Blackwater President Gary Jackson and brought in a new CEO who set out to clean house and set the company on a new course. The company's statement confirming that it's on the block reflects that desire to convince potential buyer's that it's changed.

"Xe's new management team has made significant changes and improvements to the company over the last 15 months, which have enabled the company to better serve the U.S. government and other customers, and will deliver additional value to a purchaser."

This isn't the first time Prince has pursued the idea of selling his company.

In early 2008, just months after the Nisoor Square shooting, Blackwater began negotiations with the equity firm Cerebus Capital Management, but those negotiations fell through after news of the talks were leaked to the media. This past February, Prince sold off his aviation division for $200 million.

The 40-year-old entrepreneur has made no secret of his frustrations with the U.S. government, which is incidentally, his best paying client. He insists that his men do good work, and that many of them haven't often gotten the respect they deserve.

soundoff (28 Responses)
  1. damiao


    June 8, 2010 at 3:03 pm | Report abuse |
  2. Paul Mxx

    Hopefully any future owner of this company can turn it around. I do want to say though, that it is this company, and many others like it, that frustrate me. I do not see how this company has grown to be so large. Yeah, I got it that they provide security to diplomats and blah blah blah. But the simple fact is that if a U.S. diplomat goes to an area where security or protection is required, it should be the job of the U.S. forces to protect them. Why do we have private security firms gaurding our diplomats when we have highly trained men and women already serving that can and should be doing this? Do you mean to tell me that a Xe employee (granted a lot of them are former military) can provide better security than our military? If yes is the answer, why the hell don't we higher them to fight in Iraq and Afghanistan and get our troops home?!?! And lets not even talk about the obscene amounts of money that they make as compared to a E-1 in any branch of the military that goes out to the same areas (usually more often) and pulls security patrols for/with more people. At least Private Joe Snuffy has the patriotism to serve in our nations military to do much the same thing. Bottom line: Stop giving these clowns our hard earn tax dollars, and have our very capable service members take care of diplomats.

    June 8, 2010 at 6:39 pm | Report abuse |
    • CGeorgeK

      "Business as usual" in Congress and Washington – is the reason to hire outside contractors. Do you know what these security guards make? Not the mimimum wage of security guards in the states. It is a great job. And the government pays the company plenty. How else can they skim off money for CIA and other agency covert opps? They are nothing but mercs. It would certainly be more practical and effective to use seasoned US troops. Think of how much better they could pay US soldiers if they didn't have to fork out zillions for these private firms.

      June 8, 2010 at 7:56 pm | Report abuse |
    • SOF

      The money made is one thing, and believe me, its more than you can imagine... IF you live to spend it and IF your other half in the states hasnt spent it by the time you get back... The OTHER reason to use private firms is two fold.. 1) is plausible deny-ability ... and 2) totally different rules of engagement... If a civilian shoots someone its NOT an act of War .. if a US Soldier shot the wrong person for whatever reason, it could escalate quickly into an international incident... There ARE some good reasons to do it this way... even if no one outside the "circles" doesnt understand it...

      June 8, 2010 at 9:26 pm | Report abuse |
    • KKL

      Try to convince the military that it's their job to protect diplomats. They will not.

      June 9, 2010 at 4:49 am | Report abuse |
    • John Ramirez

      They do a better job AND yes they are "seasoned U.S. troops" most are seasoned U.S. special operators and folks with special skills. They don't come more seasoned than these men and women. They also know how to follow rules of engagement. These are our"guys", they wear our uniforms in the past and did an excellent job there and now they are merely getting paid better. Btw, these folks are heroic as well and NEVER get credit for what they do well.. just criticism. ONe of the few stories that is public is their rescue of the Polish Ambassador in Iraq. Read it. http://www.rawstory.com/news/2007/CBS_Only_Blackwater_available_to_rescue_1003.html The regular U.S. brass knows their capabilities and uses them regularly for a reason.

      June 9, 2010 at 8:29 am | Report abuse |
    • KLH5812

      The simple answer is yes, private contractors do provide better security that the military. The military does not want a protective security mission nor have they been trained to do this type of mission...thanks...KLH

      June 9, 2010 at 10:18 am | Report abuse |
    • sean

      They have grown large because they do a job that needs to get done. Guarding diplomats and ambassadors and the like is not a job for the US military. The US military is not trained for that sort of mission at all. The US military is trained to fight and win wars, period, nothing more. And the answer is HELL YES a Xe employee can provide better security than military forces. Most Xe and other security firms have ex-elite military personnel who were the cream of the crop while they were in and are now trained for a different mission, while still utilizing the skills taught in the military. They are some of the most highly trained personnel and yes, should make a hell of a lot more then your E-1 who know to point and shoot when told to point and shoot.

      June 9, 2010 at 3:57 pm | Report abuse |
    • Pvt Contractor Joes Uffys Mith

      Paul, people like you never cease to amaze me. You have absolutely NO idea what you're talking about but you just charge headlong in and comment anyway. You've got it all figured out don't you? Well, just so you know....there is a huge difference between Big Army and a security detail (PSD or Static). Big Army is an offensive machine. When they are engaged, they close with, and destroy the enemy. That is their function, whether it is an active patrol, or they are in a defensive situation. If they are attacked, or they otherwise encounter the enemy....they maneuver in such a way to destroy him. This is specifically what they train for....day in and day out. A security detail is a very different animal. If you are engaged by hostile forces you get your principle out of the AO as quickly as possible. In other words...you run away. You are trained to basically fight furiously for about two minutes, and get the principle off the X under cover of heavy fire. Sounds kinda like the opposite of what the Army does, huh? If you put "Pvt Joe Snuffy Smith" in charge of protecting diplomat "A", and they are engaged by hostiles....Diplomat "A" is likely going to become a casualty because Pvt Smith is trained to engage, flank, and destroy the enemy with massive amounts of firepower instead of safely transporting Diplomat "A" out of the area.

      Incidentally....it costs the government a LOT less money to hire a clown like me to protect someone than it would to pay Pvt Joe Snuffy Smith. I get no benefits....specifically, if I get hurt the gov't doesn't own my injuries for the rest of my life. I also get no retirement. And I like it that way.

      By the way....I get "hired" to do a job. Not "highered"....

      Food for though.

      June 12, 2010 at 10:51 am | Report abuse |
    • ChipH

      There's a famous YouTube of Blackwater thugs in some car in Iraq, shooting randomly at people as they drive down the freeway, and shooting cars following them until the driver is killed and the passengers mangled in the resulting wrecks.
      They're playing rock music and screaming orgasmic hoo-ahh, as they fire with no provocation other than war dementia.
      If you ever hoped to retire overseas, you can bloody well forget about it now, you'd become a Xe revenge kidnapping.

      June 19, 2010 at 1:38 pm | Report abuse |
    • GMAN

      Some nice points.
      I respectfully disagree with the original poster that "using pfc's" will be a more economically viable solution for our diplomats. The economic solution will be 'thrown out the window" with the loss of the first diplomat.

      I understand his point but you have to ask the question. While these private contractors are becoming political baggage,"Why do they keep issuing them contracts?"

      The answer is that they have their personal safety at stake (as do all over there) but in a much more vulnerable environment than most. They want someone who has many years of experience with this type of mission.

      Until the military can provide the same services they are going to keep using them.

      June 19, 2010 at 3:21 pm | Report abuse |
  3. Kyle

    Please spellcheck your stories, CNN. The last sentence of this article has the word "of" misspelled. Is editing and proofreading really that difficult?

    June 8, 2010 at 10:21 pm | Report abuse |
    • Dick

      "Is editing and proofreading really that difficult?"

      "Is" should be replaced with "Are" in this case, since you are referencing the plural.

      June 9, 2010 at 1:36 pm | Report abuse |
  4. John Ramirez

    I know many people who work here and while there are some problems at the top they do very very difficult job in a exceedingly professional way. Just ask the people who they escort and protect, and who ask for them over and over again both Muslim and Western. The issue whether people are comfortable with the reality that many aspects of our military have been privatized is another thing altogether. However it is a reality and the world is much different today that it has been in the past.. including the military. End of story is these guys get results and do not worry about being politically correct while they do it. Btw, you cannot win a war with lawyers.. sorry. There is always going to be a body count and you are always going to have to decide who you believe more your guys or the other guys. There are never clean hands in war.

    June 9, 2010 at 8:22 am | Report abuse |
    • brian

      After 2+ years around these clowns, I respectfully disagree that they do anything in a "professional way." Pumping themselves full of 'roids and hanging out in the gym all day, going on a 4 hour convoy and then coming back and partying it up getting drunk 'til the wee hours of the morning is hardly what I would call "professional" behavior. Screaming down the MSR at 70+ mph and randomly spraying locations where they say they have been "engaged" previously without bothering to notice that an American Army unit is now securing the location is not what I would call "professional" or, for that matter, tactically profficient. The bottom line is that these guys were, and continue to be, mercenaries and loose cannon's that nobody bothers to keep on a leash...doing the things that nobody ever let them get away with when they were "in." Good riddance Xe...

      June 10, 2010 at 10:10 am | Report abuse |
  5. Jerry Dougall

    Look at the drawings of the top flange of the BOP and whatever the diameter is, manufacture a collar that is larger (2" to 3") Insert a high density rubber or teflon o-ring that is the length of the bolted flanges on the BOP. Then place this on the end of a riser pipe the same size as the riser pipe that was cut off above the BOP. Lower this with a drill rig until such time as it is within feet of the top of the BOP. This MUST be open ended at the surface to alleviate the pressure that is created from the well. With ROV's slowly manuever it so it is directly above the flange. Slowly lower this riser over the flange and the oil will surface to an awaiting tanker on the surface. I would appreciate if someone could critique this as I believe this to be viable. Thank-you.

    June 9, 2010 at 12:04 pm | Report abuse |
  6. newsmom

    a mercenary is a mercenary is a mercenary. i recommend "imperial life in the emerald city" as required reading for all defenders of xe, halliburton and other greedy companies like them. they are a disgrace to the republic.

    June 9, 2010 at 12:23 pm | Report abuse |
  7. brianINmesa

    I am concerned what portion of the devils work this so called christian is going apply the proceeds of a sale to. He is a person who should be watched.

    June 9, 2010 at 1:18 pm | Report abuse |
    • TomB

      You have to know the person. I was very lucky to have worked for Mr. Prince in another business heading into the year 2000. Great person. Great Patriot. Stand up guy. Hard to watch Eric get bashed by people who have never met or been associated with hiim.

      I was around when Blackwater was just starting to rise in North Carolina. If Mr. Prince needed anything at all that I could help with, I would be there in a heartbeat for him and I have not seen him in about 9 years. I would drop what I am doing and help. Please. Know the person before you attack him from things you are reading.

      June 9, 2010 at 2:09 pm | Report abuse |
  8. cain

    This "man" is going to "heaven" for helping to increase the body count of dem filthy ragheads and hajis.

    June 9, 2010 at 2:42 pm | Report abuse |
  9. Awake

    Private Corporate armies for hire...That's BAD for WE THE PEOPLE

    June 9, 2010 at 3:46 pm | Report abuse |
  10. Political Calculator

    Why are PMCs (private military contractors) used instead of soldiers?

    They're cheaper. Bottom line. You pay an entry level PMC with the same level of training as a Ranger $2000 US a week, flat rate, plus a yearly support payment to the company he works for. This costs the US government roughly $154,000 dollars a year.

    Comparatively, a single soldier with the same qualifications will cost the government $45,000 a year in salary, plus logistical support (food, clothing, transportation, protective equipment, ammunition, training, housing for himself and his family back home, medical support, psychological support, command structure, unit costs, and much more..) costing in excess of $250,000 a year. For the cost of deploying a single soldier, you can hire TWICE the number of PMCs to do exactly the same job.

    It's CHEAPER folks!

    June 9, 2010 at 6:55 pm | Report abuse |
  11. sean

    I've served in Iraq in uniform and can tell you that security work and "grunt" work outside the wire are two totally different animals that require two completely different mindsets. Security work is static, requires elaborate protocol (SOP) and usually exceptional planning to be done correctly. Grunt work is more offensive and less reactive for the most part. You also have the enablers like Air Weapons Teams, etc... Your job then is to close with and destroy the enemy. Errors in planning and maneuver are usually made up for by massing firepower. Its a very basic concept that stresses individual ability to maintain an aggressive posture and the leaders ability to remain fluid on the battlefield. Security contractors for the most part do not have this luxury. If they do make contact there's a chance they've already failed their mission and their VIP is at least in serious danger. Contact is business as usual for the grunt and he goes about it in a completely different way.

    I will say that contractors serve their purpose and bring a different skill set to the table. Do I think the tax dollars could be better spent? Absolutely. Am I willing to protect diplomats? Yes, but I'd rather not. I'm not trained for it and its not what I signed up for. If I wanted to protect diplomats I'd go do it in a different capacity.

    June 9, 2010 at 7:16 pm | Report abuse |
  12. sean

    Also, deploying a soldier into combat costs a lot more than people think. Its more than just a base salary and the DoD has estimated it at around $1,000,000 per soldier. Think of it this way. The average soldier in Iraq right now will deploy to Kuwait and train. In doing so the military will spend at least 2500 on airfare. Probably another 10,000 on feeding him for a year. He is signed for at least 100,000 in personal gear (weapon, NVGs, PEQ-15, body armor, etc...). He'll ride in an up-armored vehicle that security contractors can only dream about. A fully battle ready MRAP well exceeds the $1.5M mark. He'll be housed there which will be provided by KBR and God knows what we pay for that. The point is at the end of the day the cost difference is negligible and pointless for arguments sake. The trick to keeping the cost of war low is simply not fighting them. No war is cheap, beit fiscally or ethically. Debating a nations propensity to fight a war based only on the merit of cost is a huge disservice to the real issue of those who will ultimately pay for it with their lives; enemy, friendly and civilian alike.

    June 9, 2010 at 7:24 pm | Report abuse |
  13. Spanish Inquisition

    Did anyone mention to Mr Bush and Mr Cheney that they found the weapon of mass destruction? It's right here in their own backyard, the oil spil by BP. Does BP stand for Bush's Petroleum ?

    June 10, 2010 at 11:27 am | Report abuse |
    • Michael

      Not so long ago we all heard the slogan "drill baby drill".

      June 10, 2010 at 5:26 pm | Report abuse |
    • BarrySotoreo

      BP stands for Barack Petroleum. Maybe he can figure out a solution when he plays another 18 holes this weekend.

      June 11, 2010 at 7:37 am | Report abuse |
  14. john

    Lot of junior league comments - and so visceral - all testosteroned-up. I live OS for 13 years. Worked for USG, served USG, and ran business on my own.

    For sure - WAR BUSINESS - is a tough one, needs tough dudes, and tough rules - but management is the same. Standing behind their weapons - these professionals need to act accordingly - they did not, and management should have suffered and the company too. The surface guys are doing what they are told, or think - but always have to be managed.

    I carried a 9mm for a while on private business, never liked it - always thought it raised the theater of risk - but it sent a message, and I left it home more often than carried. On my own, chasing the $$, working with local comapanies and people - that was golden experience - and they trusted us and valued our work.

    Security - professionally is a tough, but what else did the company, and it's members do in country - there seems to be a whole part of the mission they either were not ballsy enough to promote, or if cut into their $$action, that is a local presence - which supporter here, or employee or former member of XE/.BW would allow some similar actions by "outsiders" "freelancers" in their own back yard - 0.

    Simply put it is a cash business - everything else is collateral damage - to use it condones it - crying about it now changes nothing, heal no one, brings no one back, and serves no role in educating the very practioners.

    June 19, 2010 at 2:08 pm | Report abuse |