TOON

Blackwater Founder Implicated in Murder

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Jeremy Scahill
August 4, 2009 - The Nation

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A former Blackwater employee and an ex-US Marine who has worked as a security operative for the company have made a series of explosive allegations in sworn statements filed on August 3 in federal court in Virginia. The two men claim that the company's owner, Erik Prince, may have murdered or facilitated the murder of individuals who were cooperating with federal authorities investigating the company. The former employee also alleges that Prince "views himself as a Christian crusader tasked with eliminating Muslims and the Islamic faith from the globe," and that Prince's companies "encouraged and rewarded the destruction of Iraqi life."

In their testimony, both men also allege that Blackwater was smuggling weapons into Iraq. One of the men alleges that Prince turned a profit by transporting "illegal" or "unlawful" weapons into the country on Prince's private planes. They also charge that Prince and other Blackwater executives destroyed incriminating videos, emails and other documents and have intentionally deceived the US State Department and other federal agencies. The identities of the two individuals were sealed out of concerns for their safety.

These allegations, and a series of other charges, are contained in sworn affidavits, given under penalty of perjury, filed late at night on August 3 in the Eastern District of Virginia as part of a seventy-page motion by lawyers for Iraqi civilians suing Blackwater for alleged war crimes and other misconduct. Susan Burke, a private attorney working in conjunction with the Center for Constitutional Rights, is suing Blackwater in five separate civil cases filed in the Washington, DC, area. They were recently consolidated before Judge T.S. Ellis III of the Eastern District of Virginia for pretrial motions. Burke filed the August 3 motion in response to Blackwater's motion to dismiss the case. Blackwater asserts that Prince and the company are innocent of any wrongdoing and that they were professionally performing their duties on behalf of their employer, the US State Department.

The former employee, identified in the court documents as "John Doe #2," is a former member of Blackwater's management team, according to a source close to the case. Doe #2 alleges in a sworn declaration that, based on information provided to him by former colleagues, "it appears that Mr. Prince and his employees murdered, or had murdered, one or more persons who have provided information, or who were planning to provide information, to the federal authorities about the ongoing criminal conduct." John Doe #2 says he worked at Blackwater for four years; his identity is concealed in the sworn declaration because he "fear[s] violence against me in retaliation for submitting this Declaration." He also alleges, "On several occasions after my departure from Mr. Prince's employ, Mr. Prince's management has personally threatened me with death and violence."

In a separate sworn statement, the former US marine who worked for Blackwater in Iraq alleges that he has "learned from my Blackwater colleagues and former colleagues that one or more persons who have provided information, or who were planning to provide information about Erik Prince and Blackwater have been killed in suspicious circumstances." Identified as "John Doe #1," he says he "joined Blackwater and deployed to Iraq to guard State Department and other American government personnel." It is not clear if Doe #1 is still working with the company as he states he is "scheduled to deploy in the immediate future to Iraq." Like Doe #2, he states that he fears "violence" against him for "submitting this Declaration." No further details on the alleged murder(s) are provided.

"Mr. Prince feared, and continues to fear, that the federal authorities will detect and prosecute his various criminal deeds," states Doe #2. "On more than one occasion, Mr. Prince and his top managers gave orders to destroy emails and other documents. Many incriminating videotapes, documents and emails have been shredded and destroyed."

The Nation cannot independently verify the identities of the two individuals, their roles at Blackwater or what motivated them to provide sworn testimony in these civil cases. Both individuals state that they have previously cooperated with federal prosecutors conducting a criminal inquiry into Blackwater.

"It's a pending investigation, so we cannot comment on any matters in front of a Grand Jury or if a Grand Jury even exists on these matters," John Roth, the spokesperson for the US Attorney's office in the District of Columbia, told The Nation. "It would be a crime if we did that." Asked specifically about whether there is a criminal investigation into Prince regarding the murder allegations and other charges, Roth said: "We would not be able to comment on what we are or are not doing in regards to any possible investigation involving an uncharged individual."

The Nation repeatedly attempted to contact spokespeople for Prince or his companies at numerous email addresses and telephone numbers. When a company representative was reached by phone and asked to comment, she said, "Unfortunately no one can help you in that area." The representative then said that she would pass along The Nation's request. As this article goes to press, no company representative has responded further to The Nation.

Doe #2 states in the declaration that he has also provided the information contained in his statement "in grand jury proceedings convened by the United States Department of Justice." Federal prosecutors convened a grand jury in the aftermath of the September 16, 2007, Nisour Square shootings in Baghdad, which left seventeen Iraqis dead. Five Blackwater employees are awaiting trial on several manslaughter charges and a sixth, Jeremy Ridgeway, has already pleaded guilty to manslaughter and attempting to commit manslaughter and is cooperating with prosecutors. It is not clear whether Doe #2 testified in front of the Nisour Square grand jury or in front of a separate grand jury.

The two declarations are each five pages long and contain a series of devastating allegations concerning Erik Prince and his network of companies, which now operate under the banner of Xe Services LLC. Among those leveled by Doe #2 is that Prince "views himself as a Christian crusader tasked with eliminating Muslims and the Islamic faith from the globe":

To that end, Mr. Prince intentionally deployed to Iraq certain men who shared his vision of Christian supremacy, knowing and wanting these men to take every available opportunity to murder Iraqis. Many of these men used call signs based on the Knights of the Templar, the warriors who fought the Crusades.

Mr. Prince operated his companies in a manner that encouraged and rewarded the destruction of Iraqi life. For example, Mr. Prince's executives would openly speak about going over to Iraq to "lay Hajiis out on cardboard." Going to Iraq to shoot and kill Iraqis was viewed as a sport or game. Mr. Prince's employees openly and consistently used racist and derogatory terms for Iraqis and other Arabs, such as "ragheads" or "hajiis."

Among the additional allegations made by Doe #1 is that "Blackwater was smuggling weapons into Iraq." He states that he personally witnessed weapons being "pulled out" from dog food bags. Doe #2 alleges that "Prince and his employees arranged for the weapons to be polywrapped and smuggled into Iraq on Mr. Prince's private planes, which operated under the name Presidential Airlines," adding that Prince "generated substantial revenues from participating in the illegal arms trade."

Doe #2 states: "Using his various companies, [Prince] procured and distributed various weapons, including unlawful weapons such as sawed off semi-automatic machine guns with silencers, through unlawful channels of distribution." Blackwater "was not abiding by the terms of the contract with the State Department and was deceiving the State Department," according to Doe #1.

This is not the first time an allegation has surfaced that Blackwater used dog food bags to smuggle weapons into Iraq. ABC News's Brian Ross reported in November 2008 that a "federal grand jury in North Carolina is investigating allegations the controversial private security firm Blackwater illegally shipped assault weapons and silencers to Iraq, hidden in large sacks of dog food." Another former Blackwater employee has also confirmed this information to The Nation.

Both individuals allege that Prince and Blackwater deployed individuals to Iraq who, in the words of Doe #1, "were not properly vetted and cleared by the State Department." Doe #2 adds that "Prince ignored the advice and pleas from certain employees, who sought to stop the unnecessary killing of innocent Iraqis." Doe #2 further states that some Blackwater officials overseas refused to deploy "unfit men" and sent them back to the US. Among the reasons cited by Doe #2 were "the men making statements about wanting to deploy to Iraq to 'kill ragheads' or achieve 'kills' or 'body counts,'" as well as "excessive drinking" and "steroid use." However, when the men returned to the US, according to Doe #2, "Prince and his executives would send them back to be deployed in Iraq with an express instruction to the concerned employees located overseas that they needed to 'stop costing the company money.'"

Doe #2 also says Prince "repeatedly ignored the assessments done by mental health professionals, and instead terminated those mental health professionals who were not willing to endorse deployments of unfit men." He says Prince and then-company president Gary Jackson "hid from Department of State the fact that they were deploying men to Iraq over the objections of mental health professionals and security professionals in the field," saying they "knew the men being deployed were not suitable candidates for carrying lethal weaponry, but did not care because deployments meant more money."

Doe #1 states that "Blackwater knew that certain of its personnel intentionally used excessive and unjustified deadly force, and in some instances used unauthorized weapons, to kill or seriously injure innocent Iraqi civilians." He concludes, "Blackwater did nothing to stop this misconduct." Doe #1 states that he "personally observed multiple incidents of Blackwater personnel intentionally using unnecessary, excessive and unjustified deadly force." He then cites several specific examples of Blackwater personnel firing at civilians, killing or "seriously" wounding them, and then failing to report the incidents to the State Department.

Doe #1 also alleges that "all of these incidents of excessive force were initially videotaped and voice recorded," but that "Immediately after the day concluded, we would watch the video in a session called a 'hot wash.' Immediately after the hotwashing, the video was erased to prevent anyone other than Blackwater personnel seeing what had actually occurred." Blackwater, he says, "did not provide the video to the State Department."

Doe #2 expands on the issue of unconventional weapons, alleging Prince "made available to his employees in Iraq various weapons not authorized by the United States contracting authorities, such as hand grenades and hand grenade launchers. Mr. Prince's employees repeatedly used this illegal weaponry in Iraq, unnecessarily killing scores of innocent Iraqis." Specifically, he alleges that Prince "obtained illegal ammunition from an American company called LeMas. This company sold ammunition designed to explode after penetrating within the human body. Mr. Prince's employees repeatedly used this illegal ammunition in Iraq to inflict maximum damage on Iraqis."

Blackwater has gone through an intricate rebranding process in the twelve years it has been in business, changing its name and logo several times. Prince also has created more than a dozen affiliate companies, some of which are registered offshore and whose operations are shrouded in secrecy. According to Doe #2, "Prince created and operated this web of companies in order to obscure wrongdoing, fraud and other crimes."

"For example, Mr. Prince transferred funds from one company (Blackwater) to another (Greystone) whenever necessary to avoid detection of his money laundering and tax evasion schemes." He added: "Mr. Prince contributed his personal wealth to fund the operations of the Prince companies whenever he deemed such funding necessary. Likewise, Mr. Prince took funds out of the Prince companies and placed the funds in his personal accounts at will."

Briefed on the substance of these allegations by The Nation, Congressman Dennis Kucinich replied, "If these allegations are true, Blackwater has been a criminal enterprise defrauding taxpayers and murdering innocent civilians." Kucinich is on the House Committee on Oversight and Government Reform and has been investigating Prince and Blackwater since 2004.

"Blackwater is a law unto itself, both internationally and domestically. The question is why they operated with impunity. In addition to Blackwater, we should be questioning their patrons in the previous administration who funded and employed this organization. Blackwater wouldn't exist without federal patronage; these allegations should be thoroughly investigated," Kucinich said.

A hearing before Judge Ellis in the civil cases against Blackwater is scheduled for August 7.

Wall Street profits from trades with Fed

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Henny Sender 
August 2 2009 - Financial Times/UK

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Wall Street banks are reaping outsized profits by trading with the Federal Reserve, raising questions about whether the central bank is driving hard enough bargains in its dealings with private sector counterparties, officials and industry executives say.

The Fed has emerged as one of Wall Street's biggest customers during the financial crisis, buying massive amounts of securities to help stabilise the markets. In some cases, such as the market for mortgage-backed securities, the Fed buys more bonds than any other party.

However, the Fed is not a typical market player. In the interests of transparency, it often announces its intention to buy particular securities in advance. A former Fed official said this strategy enables banks to sell these securities to the Fed at an inflated price.

The resulting profits represent a relatively hidden form of support for banks, and Wall Street has geared up to take advantage. Barclays, for example, e-mails clients with news on the Fed's balance sheet, detailing the share of the market in particular securities held by the Fed.

"You can make big money trading with the government," said an executive at one leading investment management firm. "The government is a huge buyer and seller and Wall Street has all the pricing power."

A former official of the US Treasury and the Fed said the situation had reached the point that "everyone games them. Their transparency hurts them. Everyone picks their pocket."

The central bank's approach to securities purchases was defended by William Dudley, president of the New York Fed, which is responsible for market operations. "We believe that opting for transparency is a greater good," he said. "If we didn't have transparency, we'd be criticised on other grounds."

However, another official familiar with the matter said the central bank "has heard that dealers load up on securities to sell to the Fed. There is concern, but policy goals override other considerations."

Barney Frank, chairman of the House financial services committee, said the potential profiteering may be part of the price for stabilising the financial system.

"You can't rescue the credit system without benefiting some of the people in it." Still, Mr Frank said Congress would be watching. "We don't want the Fed to drive the hardest possible bargain, but we don't want them to get ripped off."

The growing Fed activity has coincided with a general widening of market spreads – the difference between bid and offer prices – as the number of market participants declines. Wider spreads enable banks, in their capacity as market-makers, to make more profit.

Larry Fink, chief executive of money manager BlackRock, has described Wall Street's trading profits as "luxurious", reflecting the banks' ability to take advantage of diminished competition.

"Bid-offer spreads have remained unusually wide, notwithstanding the normalisation of financial markets," said Mohamed El-Erian, chief executive of fund manager Pimco in Newport Beach, California.

Spreads narrowed dramatically during the years of the credit bubble.

Brad Hintz, an analyst at AllianceBernstein, said he doubted that spreads would ever return to those levels, a development that could be pleasing to the Fed.

"They want to help Wall Street make money," he said.

Oil Supplies Are Running Out Fast

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Catastrophic shortfalls threaten economic recovery, says world's top energy economist

Steve Connor
August 3, 2009 - The Independent/UK

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The world is heading for a catastrophic energy crunch that could cripple a global economic recovery because most of the major oil fields in the world have passed their peak production, a leading energy economist has warned.

Higher oil prices brought on by a rapid increase in demand and a stagnation, or even decline, in supply could blow any recovery off course, said Dr Fatih Birol, the chief economist at the respected International Energy Agency (IEA) in Paris, which is charged with the task of assessing future energy supplies by OECD countries.

In an interview with The Independent, Dr Birol said that the public and many governments appeared to be oblivious to the fact that the oil on which modern civilisation depends is running out far faster than previously predicted and that global production is likely to peak in about 10 years - at least a decade earlier than most governments had estimated.

But the first detailed assessment of more than 800 oil fields in the world, covering three quarters of global reserves, has found that most of the biggest fields have already peaked and that the rate of decline in oil production is now running at nearly twice the pace as calculated just two years ago. On top of this, there is a problem of chronic under-investment by oil-producing countries, a feature that is set to result in an "oil crunch" within the next five years which will jeopardise any hope of a recovery from the present global economic recession, he said.

In a stark warning to Britain and the other Western powers, Dr Birol said that the market power of the very few oil-producing countries that hold substantial reserves of oil - mostly in the Middle East - would increase rapidly as the oil crisis begins to grip after 2010.

"One day we will run out of oil, it is not today or tomorrow, but one day we will run out of oil and we have to leave oil before oil leaves us, and we have to prepare ourselves for that day," Dr Birol said. "The earlier we start, the better, because all of our economic and social system is based on oil, so to change from that will take a lot of time and a lot of money and we should take this issue very seriously," he said.

"The market power of the very few oil-producing countries, mainly in the Middle East, will increase very quickly. They already have about 40 per cent share of the oil market and this will increase much more strongly in the future," he said.

There is now a real risk of a crunch in the oil supply after next year when demand picks up because not enough is being done to build up new supplies of oil to compensate for the rapid decline in existing fields.

The IEA estimates that the decline in oil production in existing fields is now running at 6.7 per cent a year compared to the 3.7 per cent decline it had estimated in 2007, which it now acknowledges to be wrong.

"If we see a tightness of the markets, people in the street will see it in terms of higher prices, much higher than we see now. It will have an impact on the economy, definitely, especially if we see this tightness in the markets in the next few years," Dr Birol said.

"It will be especially important because the global economy will still be very fragile, very vulnerable. Many people think there will be a recovery in a few years' time but it will be a slow recovery and a fragile recovery and we will have the risk that the recovery will be strangled with higher oil prices," he told The Independent.

In its first-ever assessment of the world's major oil fields, the IEA concluded that the global energy system was at a crossroads and that consumption of oil was "patently unsustainable", with expected demand far outstripping supply.

Oil production has already peaked in non-Opec countries and the era of cheap oil has come to an end, it warned.

In most fields, oil production has now peaked, which means that other sources of supply have to be found to meet existing demand.

Even if demand remained steady, the world would have to find the equivalent of four Saudi Arabias to maintain production, and six Saudi Arabias if it is to keep up with the expected increase in demand between now and 2030, Dr Birol said.

"It's a big challenge in terms of the geology, in terms of the investment and in terms of the geopolitics. So this is a big risk and it's mainly because of the rates of the declining oil fields," he said.

"Many governments now are more and more aware that at least the day of cheap and easy oil is over... [however] I'm not very optimistic about governments being aware of the difficulties we may face in the oil supply," he said.

Environmentalists fear that as supplies of conventional oil run out, governments will be forced to exploit even dirtier alternatives, such as the massive reserves of tar sands in Alberta, Canada, which would be immensely damaging to the environment because of the amount of energy needed to recover a barrel of tar-sand oil compared to the energy needed to collect the same amount of crude oil.

"Just because oil is running out faster than we have collectively assumed, does not mean the pressure is off on climate change," said Jeremy Leggett, a former oil-industry consultant and now a green entrepreneur with Solar Century.

"Shell and others want to turn to tar, and extract oil from coal. But these are very carbon-intensive processes, and will deepen the climate problem," Dr Leggett said.

"What we need to do is accelerate the mobilisation of renewables, energy efficiency and alternative transport.

"We have to do this for global warming reasons anyway, but the imminent energy crisis redoubles the imperative," he said.

Oil: An unclear future

*Why is oil so important as an energy source?

Crude oil has been critical for economic development and the smooth functioning of almost every aspect of society. Agriculture and food production is heavily dependent on oil for fuel and fertilisers. In the US, for instance, it takes the direct and indirect use of about six barrels of oil to raise one beef steer. It is the basis of most transport systems. Oil is also crucial to the drugs and chemicals industries and is a strategic asset for the military.

*How are oil reserves estimated?

The amount of oil recoverable is always going to be an assessment subject to the vagaries of economics - which determines the price of the oil and whether it is worth the costs of pumping it out -and technology, which determines how easy it is to discover and recover. Probable reserves have a better than 50 per cent chance of getting oil out. Possible reserves have less than 50 per cent chance.

*Why is there such disagreement over oil reserves?

All numbers tend to be informed estimates. Different experts make different assumptions so it is under- standable that they can come to different conclusions. Some countries see the size of their oilfields as a national security issue and do not want to provide accurate information. Another problem concerns how fast oil production is declining in fields that are past their peak production. The rate of decline can vary from field to field and this affects calculations on the size of the reserves. A further factor is the expected size of future demand for oil.

*What is "peak oil" and when will it be reached?

This is the point when the maximum rate at which oil is extracted reaches a peak because of technical and geological constraints, with global production going into decline from then on. The UK Government, along with many other governments, has believed that peak oil will not occur until well into the 21st Century, at least not until after 2030. The International Energy Agency believes peak oil will come perhaps by 2020. But it also believes that we are heading for an even earlier "oil crunch" because demand after 2010 is likely to exceed dwindling supplies.

*With global warming, why should we be worried about peak oil?

There are large reserves of non-conventional oil, such as the tar sands of Canada. But this oil is dirty and will produce vast amounts of carbon dioxide which will make a nonsense of any climate change agreement. Another problem concerns how fast oil production is declining in fields that are past their peak production. The rate of decline can vary from field to field and this affects calculations on the size of the reserves. If we are not adequately prepared for peak oil, global warming could become far worse than expected.