What do you get when you cross "Mutant X" with the Twilight Zone?
Answer: Eric Prince.
Carl Jarvis
On 3/20/18, Miriam Vieni <miriamvieni@xxxxxxxxxxxxx> wrote:
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Erik Prince, chairman and executive director of Frontier Services Group
Ltd., walks to a closed-door House Intelligence Committee meeting on Capitol
Hill in Washington, D.C., U.S., on Thursday, Nov. 30, 2017. Prince, best
known for running the Blackwater private security firm whose employees were
convicted of killing Iraqi citizens, was a presence during Donald Trump's
presidential transition and worked in part with Michael Flynn. Photographer:
Aaron P. Bernstein/Bloomberg via Getty Images
Before He Was FBI Director, Chris Wray Supervised an Investigation That
Found Erik Prince Likely Broke U.S. Law
Jeremy Scahill, Matthew Cole
Mar. 19
Photo illustration: Elise Swain for The Intercept/Getty Images
As a private attorney in 2016, FBI Director Chris Wray supervised a team of
lawyers that informed the Justice Department that Blackwater founder Erik
Prince had likely violated U.S. law while trying to sell secretly modified
paramilitary attack aircraft to Azerbaijan’s military.
Wray and Robert Hur, now a senior Justice Department official, were both
partners at the powerhouse law firm King & Spalding in 2015 when officials
at Prince’s Hong Kong-based logistics company, Frontier Services Group,
discovered suspicious activity by Prince over the proposed sale of the
planes. Hur is currently the top lieutenant to Rod Rosenstein, the U.S.
deputy attorney general. At King & Spalding, he was one of the lead lawyers
on the Prince investigation.
FSG retained King & Spalding to conduct a review of the company’s legal
exposure to violations of U.S. law on weapons sales and the export of
defense services to foreign governments and militaries. The attorneys
concluded that Prince could potentially be charged with brokering defense
articles without a license, according to a copy of the review obtained by
The Intercept. The FSG-hired lawyers briefed the Obama Justice Department’s
National Security Division in February 2016 on Prince’s activities and, a
month later, FSG’s CEO notified the State Department that FSG intended to
voluntarily report its possible violations of U.S. defense export laws.
“The potential violations stem principally from conduct of Mr. Prince, a
U.S. person,” CEO Gregg Smith wrote to the director of the State
Department’s Directorate of Defense Trade Controls, which regulates the
export of defense articles and services, in a letter obtained by The
Intercept.
In the letter, Smith promised to provide the State Department with a copy of
the findings of FSG’s internal investigation. In April 2016, The Intercept
published two reports detailing Prince’s attempts to modify small aircraft
for sale to militaries in Africa and the Middle East, and a federal
investigation into his alleged business ties to Chinese intelligence.
According to a second letter dated April 13, 2016 and seen by The Intercept,
Smith asked the State Department for an extension so FSG could review the
report for more potential violations of U.S. defense export laws.
When contacted by The Intercept for this story, Smith declined to comment.
“Please be advised that I resigned from FSG and all of its affiliates
effective May 1, 2016,” he wrote in an email. “By prior agreement I am
precluded from making any comment whatsoever on FSG, its affiliates or
officers.”
Violations of International Traffic in Arms Regulations can trigger civil
penalties of up to half a million dollars or criminal penalties of up to 20
years in prison, depending on the specific nature of the violations.
A current FSG spokesperson, responding on behalf of the company and Prince,
said, “Any assertion that FSG or Mr. Prince violated any laws in this matter
is categorically false.”
FSG’s apparently good-faith attempt to uncover potential wrongdoing by
Prince represented the culmination of a power struggle between Smith and
Prince for control of the company. “Erik was not cooperating or supportive”
of the internal review, according to a former senior FSG official.
WASHINGTON, DC - JULY 12: FBI Director nominee Christopher Wray testifies
during his confirmation hearing before the Senate Judiciary Committee July
12, 2017 on Capitol Hill in Washington, DC. If confirmed, Wray will fill the
position that has been left behind by former director James Comey who was
fired by President Donald Trump about two months ago. (Photo by Alex
Wong/Getty Images)
Chris Wray testifies during his confirmation hearing before the Senate
Judiciary Committee July 12, 2017 on Capitol Hill in Washington, D.C.
Photo: Alex Wong/Getty Images
A close associate of Prince previously told The Intercept that, at the time
of the Wray-led investigation, Prince was operating a “secret skunkworks
program” using his role as FSG’s founder and chair to cover his shadowy
activities. “Erik wants to be a real, no-shit mercenary,” said the
associate. “Erik hides in the shadows … and uses [FSG] for legitimacy.”
Soon after Smith reported Prince’s potential violations to the State
Department, Smith was forced out of the company, and Prince and his Chinese
business partners consolidated power.
What action, if any, the Justice Department took after Wray’s team shared
their initial findings has not been made public. “We were perplexed by the
lack of immediate action” by the State and Justice departments, the former
senior FSG official told The Intercept, adding that he and others at the
company got the impression that “nobody wanted to dig into this until after
the [2016] election.”
At King & Spalding, Wray chaired the special matters and government
investigations team, though it is unclear how involved he was in its
day-to-day work or the FSG investigation. “Chris led the group that our
attorneys reported to,” said the former senior FSG official.
The team Wray led reads like a who’s who of former Justice Department
officials. Hur, who worked with Rosenstein in the George W. Bush Justice
Department before his most recent stint at King & Spalding, and Gary
Grindler, former chief of staff to former Attorney General Eric Holder, took
the lead in briefing the government on the Prince situation in 2016.
“The evidence strongly suggests that Mr. Prince was offering a foreign
defense article (i.e., an attack aircraft) for sale to the Azerbaijan MOD,”
according to the internal investigation.
Principal Associate Deputy Attorney General Robert K Hur speaks during a
press briefing at the White House in Washington, Thursday, July 27, 2017.
(AP Photo/Alex Brandon)
Deputy Attorney General Gary Grindler speaks during the unveiling of the
Justice Department's National Strategy for Child Exploitation Prevention and
Interdiction, Monday, Aug. 2, 2010, at the National Center for Missing and
Exploited Children Charles B. Wang International Children's Building in
Alexandria, Va. (AP Photo/Drew Angerer)
Top/Left: Principal Associate Deputy Attorney General Robert K Hur speaks
during a press briefing at the White House in Washington, Thursday, July 27,
2017. Bottom/Right: Deputy Attorney General Gary Grindler speaks during the
unveiling of the Justice Department's National Strategy for Child
Exploitation Prevention and Interdiction, Monday, Aug. 2, 2010.Photos: Alex
Brandon/AP, Drew Angerer/AP
Asked about the status of any investigations into Prince stemming from King
& Spalding’s work, Justice Department spokesperson Sarah Isgur Flores told
The Intercept: “We don’t comment, confirm, or deny the existence of
investigations.” Grindler, who is still a partner at King & Spalding, said
he is “unable to comment because all of the information I have is covered by
the attorney client privilege.”
For his part, Erik Prince appears emboldened by the Donald Trump presidency.
He gave heartily to a pro-Trump super PAC and his sister, Betsy DeVos, is
the education secretary. Prince continues to very publicly push for the
Trump administration to utilize his private spy and security services with
no apparent concern that the FBI or Justice Department may be pursuing him.
On Sunday, Prince and Oliver North, of Iran-Contra fame, hosted a fundraiser
at Prince’s home in Virginia for his longtime friend California Republican
Rep. Dana Rohrabacher.
Prince, the founder of the notorious private security firm Blackwater, has
also emerged as a central figure in the investigation of possible collusion
between Trump and his associates and Russia. He testified before the House
Intelligence Committee in November on his alleged efforts to establish a
secret back channel between Trump and Russia during a meeting in the
Seychelles in January 2017. Prince told the panel he had not played any such
role, but some top Democrats on the committee say they are examining whether
he misled them under oath.
While many details about Prince’s effort to create a private air force have
been previously reported by The Intercept, Wray and Hur’s involvement and
their interaction with the Obama Justice Department have not. Their role
raises new questions about why the government’s investigation into Prince
appears to have languished and what role the two senior officials may play
in any continuation of the probe.
Given that Wray and Hur could potentially be involved with investigations or
a prosecution of Prince, there could be ethical issues stemming from their
past work for FSG. “Whenever a move like this happens, it’s legitimate to
ask whether that creates a risk of disclosing confidential information,”
said Len Niehoff, a law professor who teaches ethics at the University of
Michigan. “It’s certainly fair to ask questions to ensure there’s no
conflict of interest or improper disclosure.”
Justice Department spokesperson Flores said, “We don’t comment, confirm, or
deny recusals because to do so could confirm or deny the existence or
details of an underlying investigation.”
The 2015 internal report by FSG’s lawyers from King & Spalding concluded
that “based on the information available, it appears likely that Mr. Prince
engaged in ‘brokering activities,’” without the necessary approval from the
U.S. government in connection with the attempted sale of the secretly
modified paramilitary aircraft to Azerbaijan’s Ministry of Defense.
Under federal law, U.S. citizens seeking to offer military services or
technologies to foreign governments must have a license certifying that the
services or articles are approved under the International Traffic in Arms
Regulations, or ITAR.
In their February 22, 2016 meeting with officials from the Justice
Department’s National Security Division, FSG’s lawyers from King & Spalding
“raised the possibility” that Prince may have been illicitly brokering
defense services to a foreign government without the necessary approvals
from the U.S. government, according to the March 2016 letter from Smith,
FSG’s then-CEO.
In the letter, Smith alleged that Prince modified the aircraft with weapons
systems “without FSG management knowledge” to “prevent management
oversight.” Smith alleged that Prince “for his own interests directed the
aircraft modification and then promoted the sale of the modified aircraft to
private buyers and governments.” Smith noted that FSG had no evidence that
Prince had the necessary license from the U.S. government. Prince’s offer to
sell the aircraft was part of a broader proposal to Azerbaijan for security
and logistical services. That effort was known internally at FSG as “Project
Zulu.”
The King & Spalding findings centered around a deal Prince tried to make
with Azerbaijan’s Ministry of Defense for several American crop dusters that
Prince had secretly modified into attack and surveillance aircraft. The deal
was Prince’s last-ditch effort to realize a long-held desire to sell small
offensive aircraft to governments around the world for small and
low-intensity conflicts.
Prince used FSG’s legitimacy to privately pitch an array of services to
Azerbaijan. The King & Spalding investigation determined that nearly
everything Prince offered to the Azerbaijani government was a service FSG
couldn’t provide and was not for the company’s benefit. The deal ultimately
fell apart.
Top/Left: A Thrush aircraft originally purchased by FSG. Bottom/Right:
Slides from Prince’s original plan to weaponize the Thrush 510G.Photo/Slide:
Obtained by The Intercept
As The Intercept reported in 2016, Prince orchestrated a plan to modify
small crop-dusting aircraft, known as Thrush, and sell them to foreign
governments to be used in counterinsurgency operations and protect oil
fields and other natural resource extraction operations in dangerous
countries.
At the time, Prince was being investigated by U.S. law enforcement and his
communications were being monitored. What began as an investigation into
Prince’s attempts to sell defense services in Libya and other countries in
Africa widened to include allegations that Prince received assistance from
Chinese intelligence to set up an account for his Libya operations through
the Bank of China. FSG’s single largest shareholder is Citic Group, the
Chinese government’s largest state-owned investment firm. Citic, which
recently invested another $60 million in FSG, is the company’s largest
single shareholder.
The FSG spokesperson did not address any of the allegations contained in the
2015 King & Spalding report obtained by The Intercept. He stated that FSG
“voluntarily filed a report” with the State Department in September 2016.
That was after Smith and other Americans in leadership at FSG had left the
company.
“Based on the documents and information available, FSG’s review did not
identify ITAR violations,” said the FSG/Prince spokesperson, adding “there
has been no follow up whatsoever making it crystal clear that this matter
has ended.” He did not address the discrepancy between this assertion and
the positions laid out by the lawyers in the investigation, which were
briefed to the Justice Department earlier in 2016.
After Trump’s election, Prince emerged from the shadows he’d occupied for
much of the Obama administration. He was one of the top contributors to the
pro-Trump super PAC, Make America Number One Again. Prince was a frequent
guest at Trump Tower and secretly advising Trump during the transition. His
wife posted pictures from inside Trump-Pence headquarters on election
night.
Prince seemed unconcerned about the investigations into his activities. He
openly, though unsuccessfully, campaigned — through White House meetings,
cable news interviews, and op-eds in major publications — to have the war in
Afghanistan privatized by mercenary forces and effectively placed under his
control. Prince pitched this and other intelligence operations to the CIA
and senior administration officials.
The ranking Democrat on the Intelligence Committee, Rep. Adam Schiff, has
said he wants to re-interview Prince in light of new information from a
Prince associate, George Nader, who is reportedly cooperating with Special
Prosecutor Robert Mueller. Nader contradicted key details of Prince’s
testimony to Congress, according to the Wall Street Journal.
Prince has run up against ITAR in the past. In 2010, he sold most of his
equity in the companies that fell under the Blackwater umbrella. Soon after,
he left the United States and became a resident of Abu Dhabi. The remnant of
his network was renamed Academi LLC. Federal prosecutors eventually
attempted to prosecute Prince’s former companies, culminating in a 2012
deferred prosecution agreement to settle a long list of U.S. legal and
regulatory violations, including ITAR violations, committed from 2005
through 2008 when Prince was in charge.
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