This article has been updated. See below.
Armed security company Academi LLC, formerly known as Blackwater Worldwide, has agreed to a three-year deferred prosecution agreement and a $7.5 million fine to settle violations of U.S. export laws and arms trafficking regulations.
The agreement was unsealed today in North Carolina, where Academi maintains a major training center. The Arlington-based company has been involved in a number of controversial incidents and has rebranded itself from Blackwater to Xe Services and now Academi.
The rebranded Academi has hired a number of high-profile former public officials to sit on its board of directors, including former Attorney General John Ashcroft.
“High-ranking corporate officials hold positions of trust not only in their companies but also in the eyes of the public,” Jeannine A. Hammett, IRS-Criminal Investigation special agent in charge, said in a statement. “That trust is broken when such officials abuse their power and commit crimes to line their own pockets.”
Today’s settlement announcement comes after a five-year investigation spanning numerous federal agencies for a variety of violations, including allegations of foreign bribery. The company agreed in August 2010 to pay a $42 million fine to settle export violations with the State Department.
A 17-count criminal information unsealed today in U.S. District Court in North Bern, N.C., focuses on violations of the International Emergency Economic Powers Act, the Arms Export Control Act and various federal firearms regulations.
The charges include providing security and defense services to the government of war-torn Sudan in 2006 without a required license from the State Department, as well as illegally exporting satellite phones to Sudan in 2005 without approval from the Treasury Department. Treasury has maintained sanctions on Sudan since 1997 for its record of human rights violations and sponsorship of terrorism.
The company is also charged with illegally providing services in Canada, Sweden, Denmark without State Department licences.
And in 2006, Blackwater illegally exported ammunition and body armor to Iraq without a State Department license, the government says. The company is also charged with lying about firearms given as a gift to the King of Jordan.
Foreign bribery violations are not among the charges.
The deferred prosecution agreement was reached between Academi and the U.S. Attorney’s office in the Eastern District of North Carolina. The agreement requires the company to retain an external monitor, subject to the approval of the U.S. Attorney.
The monitor is required to judge the effectiveness of Academi’s export compliance programs and record deficiencies. Twice a year, the monitor is required to submit a compliance report to the U.S. Attorney’s office.
According to the deferred prosecution agreement, Academi can receive credit up to $2.5 million for costs related to export compliance.
Prosecutors note the company’s remedial efforts, including the implementation of an extensive company-wide export compliance program, and cooperation with the federal investigation.
The case was prosecuted by Assistant U.S. Attorneys Robert J. Higdon Jr., John Bowler and Eric Goulian in the Eastern District of North Carolina.
A representative from Academi did not immediately respond to a request for comment.
A separate Foreign Corrupt Practices Act investigation of the company by the Justice Department Criminal Division’s Fraud Section was closed, according to a July 19 letter from prosecutors to the company that was provided to Just Anti-Corruption.
A reference in the deferred prosecution agreement to the FCPA probe as current was apparently not corrected before the agreement was released publicly. (See Just Anti-Corruption’s follow-up article on the discrepancy.)
U.S. authorities opened a foreign bribery probe against the company in late 2009 following a report in the New York Times that top Blackwater officials had approved around $1 million in secret payments to officials in Iraq following the shooting deaths of 17 Iraqis in Baghdad’s Nisour Square.
The killings grabbed bloody headlines and provoked outrage against a company that has enriched itself with Defense Department contracts.
This article and its headline have been updated to reflect that the Foreign Corrupt Practices Act probe of Academi was recently closed. Language in the deferred prosecution agreement that depicted the FCPA probe as ongoing was inaccurate.