Jeremy Scahill - Blackwater

But while Blackwater raised its profit margin and profile with its training services in the aftermath of 9/11, its true fame and fortune would not be gained until it formed Blackwater Security Consulting in 2002 and burst into the world of soldiers-for-hire. As with Blackwater’s founding, Erik Prince would once again provide the medium for another’s idea. This time, it was the vision of former CIA operative Jamie Smith. Smith had been recruited by Al Clark to teach weapons classes while he was a law student at Regent University, “America’s preeminent Christian university,” in Virginia Beach, not far from Blackwater. 80

In an interview, Smith said he first thought about the prospects for a private security company while working as a CIA operative during the 1991 Persian Gulf War. “I’m not trying to say that I was some sort of soothsayer a decade prior to all of this, but it was an infantile idea, it looked like it was just going to continue the trends of privatization,” Smith said. “There were already companies doing similar things. There wasn’t a lot of public knowledge surrounding that. DynCorp was working, there were other companies, SAIC, that were doing something along the same lines.” Smith said he realized that the military was beginning to use private forces to guard military facilities, a practice known as “force protection,” thus freeing up more forces for combat. It was a trend, and Smith said he “did not think it was something that could be arrested because of the nature of our military being a volunteer service. Do you really want to have your volunteer force standing guard out at the front gate when they could be doing things a lot more valuable for you? So I just didn’t see that it would change and that it would probably just continue.” 81

Like Al Clark a few years earlier, Jamie Smith didn’t have the means at the time to start his own private security company, and while the demand was certainly there, it was not overwhelming. Then, after 9/11, Smith says Prince “called and said, ‘Hey, I’d like you to consider a full-time job and come back to work with us,’ and I told him that was interesting to me and that I would consider doing that with the caveat that we could create this security company.” Prince agreed. But, Smith contends, Prince didn’t see the payoff in what would shortly become Blackwater’s biggest moneymaker. “I was told, ‘You can’t devote all your time to this because it’s not going to work.’ They said, ‘You can devote about 20 percent of your total time to this, but no more than that—you need to stick to what you’re doing now,’” Smith said. 82Smith joined Blackwater full-time in December 2001, and Blackwater Security Consulting was incorporated in Delaware on January 22, 2002. 83Within months, as the U.S. occupied Afghanistan and began planning the Iraq invasion, Blackwater Security was already turning a profit, pulling in hundreds of thousands a month from a valuable CIA contract. 84

One of the key players in landing that first Blackwater Security contract was A. B. “Buzzy” Krongard, executive director of the CIA, the agency’s number-three position. 85Krongard, who was named to that post in March 2001, 86had an unusual background for a spook, having spent most of his adult life as an investment banker. He built up Alex.Brown, the country’s oldest investment banking firm, into one of the most successful, eventually selling it to Bankers Trust, which he resigned from in 1998. 87There have been some insinuations that Krongard was working undercover for the CIA years before he officially joined the agency in 1998 as a special adviser to George Tenet. 88But he won’t reveal how he met the CIA director, except to say that it was through “mutual friends.” 89The Princeton alum, Hall of Fame lacrosse player, and former Marine boasts of having once punched a great white shark in the jaw; and he keeps one of its teeth on a chain and pictures of the animal in his office. 90Despite his bravado, some at the agency thought Krongard more of a wanna-be, according to a 2001 Newsweek story published shortly after his ascension to the number-three spot. “A wanna-be? Maybe I am. Maybe I’m not. That’s as much as you’re going to get,” Krongard responded. 91

9/11 conspiracy theorists have long been interested in Krongard because the bank he headed until 1998, which was bought out by Deutsche Bank after he left, was allegedly responsible for the unusually high number of put options on United Airlines stock placed just before 9/11, options that were never collected. 92There is no evidence of his having prior knowledge of the attacks. While at the CIA, working under George Tenet, Krongard acted internally, reorganizing divisions 93and pushing for projects like an intelligence venture capital firm, 94but he did on occasion speak publicly. In October 2001, he declared, “The war will be won in large measure by forces you do not know about, in actions you will not see and in ways you may not want to know about, but we will prevail.” 95

Some three years later, in January 2005, Krongard made news when he became the most senior administration figure to articulate the benefits of having not killed or captured Osama bin Laden. “You can make the argument that we’re better off with him (at large),” he said. “Because if something happens to bin Laden, you might find a lot of people vying for his position and demonstrating how macho they are by unleashing a stream of terror…. He’s turning into more of a charismatic leader than a terrorist mastermind.” 96Krongard also characterized bin Laden “not as a chief executive but more like a venture capitalist,” saying, “Let’s say you and I want to blow up Trafalgar Square. So we go to bin Laden. And he’ll say, ‘Well, here’s some money and some passports and if you need weapons, see this guy.’” 97

It’s not clear exactly what the actual connection was between Prince and Krongard. Some have alleged that Krongard knew Prince’s father. 98In a brief telephone interview, Krongard would only say he was “familiar” with Prince and Blackwater. 99A former Blackwater executive, however, asserted, “I know that Erik and Krongard were good buddies.” 100Whatever Krongard’s involvement, it was the CIA that handed Blackwater its first security contract in April 2002. 101Krongard visited Kabul and said he realized the agency’s new station there was sorely lacking security. 102Blackwater received a $5.4 million six-month no-bid contract to provide twenty security guards for the Kabul CIA station. 103Krongard said it was Blackwater’s offering and not his connection to Prince that led to the company landing the contract, and that he talked to Prince about the contract but wasn’t positive who called who, that he was “not sure which came first, the chicken or the egg.” 104He said that someone else was responsible for actually signing off on the CIA contract. “Blackwater got a contract because they were the first people that could get people on the ground,” Krongard said in the interview. “We were under the gun, we did whatever it took when I came back from Kabul…. The only concern we had was getting the best security for our people. If we thought Martians could provide it, I guess we would have gone after them.” 105

The relationship between Krongard and Prince apparently got chummier after the contract was signed. “Krongard came down and visited Blackwater, and I had to take his [family] around and let them shoot on the firing range a number of times,” said a former Blackwater executive in an interview. “That was after the contract was signed, and he may have come down just to see the company that he had just hired.” 106Prince apparently became consumed with the prospect of being involved with secretive operations in the war on terror—so much so that he personally deployed on the front lines. 107Prince joined Jamie Smith as part of the original twenty-man contingent Blackwater sent to fulfill its first CIA contract, which began in May 2002, according to Robert Young Pelton’s book Licensed to Kill . 108Most of the team guarded the CIA Kabul station and its assets at the airport, but Smith and Prince also went to one of the most dangerous places in Afghanistan, Shkin, where the United States was establishing a base four miles from the Pakistani border. But after just one week, Prince left the Shkin detail and the mud fortress (that some called the “Alamo”) out of which U.S. forces operated. Smith told Pelton that Prince’s trip was more like “playing CIA paramilitary” and that he left to go “schmooze” those who could give more work to Blackwater Security. 109Smith stayed in Shkin for two months and then in Kabul for four months. After leaving Shkin, Prince remained in Kabul for a week. Apparently Prince enjoyed the experience so much that he subsequently tried to join the CIA, but was reportedly rejected when his polygraph test came back inconclusive. 110Though Prince was denied the status of a full CIA operative, he has apparently maintained close ties with the agency. Prince reportedly was given a “green badge” that permitted him access to most CIA stations. 111“He’s over there [at CIA headquarters] regularly, probably once a month or so,” a CIA source told Harper’s journalist Ken Silverstein in 2006. “He meets with senior people, especially in the [directorate of operations].” 112