Private security contractor Blackwater Worldwide, often a target of congressional Democrats, soon may face new legal problems.
A grand jury in Washington is expected to decide soon whether to indict individual Blackwater guards involved in a widely publicized shooting incident in Baghdad last year, two people familiar with the investigation said. And the State Department's Directorate of Defense Trade Controls, which is responsible for export controls on some arms, is moving to hit the North Carolina-based firm with what could be millions of dollars in fines for shipping weapons to police training facilities in Iraq and Jordan without proper licensing, according to three officials briefed on the probe.
One official said 900 weapons were shipped improperly, though another said the figure is lower. Each weapon shipped could constitute a separate violation and carry a hefty fine. Sources said the foul-up may have been unintentional but left the company unable to properly account for the weapons.
"They didn't do the original paperwork, therefore they don't know where the guns are," said one source. A State Department spokeswoman declined to comment.
Via e-mail, Blackwater spokeswoman Anne Tyrrell said "export compliance has an important role in national security and we are dedicating significant resources to this key area." She declined to comment on specific investigations but said State's Defense Trade Control Directorate is among agencies that review the firm's operation.
Officials in the Commerce Department, which has jurisdiction over some military exports, are conducting a related regulatory review of Blackwater shipments. And federal officials in North Carolina have convened a grand jury to consider criminal charges related to the arms shipments, sources said.
Blackwater has partly acknowledged those inquiries. "Ongoing reviews by the departments of Justice, State and Commerce have highlighted the need for a significant and systems-wide initiative," Blackwater General Counsel Andrew Howell said in an Oct. 9 statement. Citing problems with "export compliance," the firm that day announced a new export compliance committee and vice president of export compliance job.
The compliance panel includes former Rep. Asa Hutchinson, R-Ark., a one-time U.S. attorney. Blackwater announced the panel's creation after receiving a letter from State's Defense Trade Control Directorate detailing possible violations, sources said. The directorate often reaches agreements through which firms voluntarily pay penalties.
Tyrell said Blackwater has "not been informed of an intent to impose a fine," but noted the directorate's "resolution of export matters with other significant defense contractors" typically results in payments. "The potential fine depends on the regulatory scheme at issue and the facts of the case," she said.
Blackwater, which in July announced plans to shift away from the security contracting business, will likely face new congressional challenges next year. After dropping provisions to limit the role of security contractors in Iraq from the fiscal 2009 defense authorization bill due to White House objections, Democrats led by Senate Armed Services Chairman Carl Levin D-Mich., are expected to push tougher restrictions next year. President-elect Obama last year repeatedly said Congress and the State Department should toughen oversight of Blackwater and other contractors.