The criminal Fraud Section of the Justice Department has launched an investigation into whether officials of private security firm Blackwater Worldwide paid bribes ^[1] to Iraqi officials, a possible violation of the Foreign Corrupt Practices Act, The New York Times reports ^[1].

The FCPA investigation was opened late last year, after the Times in November reported that top Blackwater executives had approved around $1 million in secret payments to Iraqi officials after a 2007 incident in which the company’s security guards fatally shot 17 Iraqis in Baghdad’s Nisour Square, the newspaper said. The company also appears to have compensated families of victims in the incident, though it’s unclear how much of those payments were settlements versus bribes.

The bribery probe is not connected to the decision by a federal judge in December to dismiss manslaughter and weapons charges against the Blackwater guards  involved in the 2007 incident, the Times said. U.S. District Judge Ricardo Urbina in Washington found prosecutors had improperly used compelled statements from the guards given under a grant of immunity. The U.S. has appealed ^[2] the dismissal.

The State Department is assisting the Justice Department in the probe, the newspaper said. Blackwater in 2007 had been providing security in Iraq under a contract with State.

According to the Times, two State Department documents in the possession of Justice Department investigators have raised questions about whether the company had attempted to buy favor with Iraqi officials after the Nisour Square incident. The shooting deaths outraged Iraqis, and Blackwater — now known as Xe Services – risked being barred by Iraq from operating in the country.

One document is a handwritten note reflecting that a Blackwater representative had hired a prominent Iraqi lawyer to help the company compensate the shooting victims’ families. The note indicated the company hoped the lawyer could influence Prime Minister Kamal al-Maliki to help Blackwater obtain the necessary approval to continue operating in Iraq.

The lawyer, Jaafar al-Mousawi, who’d served as chief prosecutor in the trial of Saddam Hussein, told the Times in an interview in Baghdad that Maliki blessed the company’s plan to compensate the victims. “He said, ‘Go ahead and help because these are poor people,’ ” Mousawi said of Maliki.

Some 40 families received a total of around $800,000 as compensation, Mousawi told the newspaper. He said the company ultimately hoped the payments would appease the angry Iraqi government and help Blackwater retain its lucrative operating license. The company continued to work under contract for the State Department for two years in Iraq without the license, before losing the contract in May 2009, the Times said.

Now called Xe Services, the company is in the running for a $1 billion Pentagon contract ^[3] to train Afghanistan’s notoriously troubled national police force, The Associate Press reported last month.

The North Carolina-based security contractor remains controversial. Earlier this month, two former Blackwater security guards were arrested and charged with murder ^[4], for their role in an episode in Afghanistan last May that left two Afghans dead and a third wounded.