Blackwater to Pay $42 Million to Settle Allegations of Violating U.S. Export Controls Regulations

On August 23, 2010, the U.S. State Department's Directorate of Defense Trade Controls (DDTC) announced that Blackwater Worldwide, a private security company now called Xe Services (Blackwater), has entered into a consent agreement to settle 288 violations of the Arms Export Control Act (AECA) and International Traffic in Arms Regulations (ITAR) in connection with unauthorized export of defense articles, including technical data, unauthorized provision of defense services, violating the terms of license authorizations, unauthorized sales activity involving a proscribed country, failure to maintain records involving ITAR-controlled transactions and false statements, misrepresentations, and omissions of material facts. 

According to the State Department, Blackwater sought training contracts from foreign governments and other foreign organizations without adhering closely to U.S. export regulations. Blackwater also shipped automatic weapons and other military equipment for use by its personnel in Iraq and Afghanistan in violation of export controls and in some cases sought to hide its actions. In one incident, Blackwater shipped weapons to Iraq hidden inside containers of dog food. 

To settle the alleged violations, Blackwater must pay a civil penalty of $42 million, a portion of which will be suspended on the condition that Blackwater spends the funds on self-initiated or consent agreement-authorized remedial compliance measures.