American Shipper is reporting that a private security contractor, Xe Services (formerly known as Blackwater), has been fined $42 million for violating arms export control laws. The State Department contends that the company committed 288 violations of the International Traffic in Arms Regulations (ITAR), including the "unauthorized export of defense items and provision of defense services to foreign-end users in multiple countries from 2003 to 2009." While no sensitive technologies were involved, the items do require a license before they can be exported. Interestingly enough, many of the violations occurred while Xe was under contract to provide services to the State and Defense departments, as well as other U.S. government agencies.
The State Department has said that $12 million of the civil penalty will be suspended if the company corrects internal compliance procedures. Xe will not be banned from future government work or denied any license applications because the company has taken the necessary steps to identify and resolve compliance problems, including:
- Replacing senior management
- Establishing an Independent Export Compliance Committee to oversee remedial compliance efforts
- Improving ITAR compliance procedures
- Providing ITAR training to employees
- Conducting a targeted ITAR audit to confirm the effectiveness of its compliance measures
They are very lucky. If this had been handled as a criminal matter, the company would have been barred from future government contracts, just as the supply chain management company Agility has been. They are suspended from future U.S. government contracts until their criminal fraud case has been resolved.
The New York Times reported that Xe Services committed a range of violations, from illegally exporting weapons to Afghanistan, to making unauthorized proposals to train troops in Sudan, to providing Taiwanese police officers with sniper training. The company also shipped automatic weapons (and other military equipment) to its personnel in Iraq and Afghanistan. Xe is said to have covered its tracks by hiding their actions in some cases - going so far as to ship weapons inside containers of dog food. Who thought that one up?
