Apr 14, 2016
A chink in the prince’s armor?
Has Erik Prince fallen from a trusted provider to the U.S. government to a known bad actor?
Erik Prince’s real life reads like fiction. Son of a wealthy industrialist, he’s been a White House intern, attended the prestigious Naval Academy, is a former Navy Seal, founder and former chairman of the defunct Blackwater USA, current chairman of Frontier Services Group…and now, an accused money launderer? According to a piece published in The Intercept, Prince is under investigation by the U.S. Department of Justice and other federal agencies for attempting to broker military services to foreign governments and possible money laundering.
How did an intelligent, wealthy, well-educated and well-connected Prince fall so far out of favor? After forming Blackwater’s notorious mercenary services organization in 1997, Prince either served as the American society’s hero or villain, depending upon which side of the political aisle one was standing on. The Republican Party embraced Blackwater, while the Democrats saw legal and moral issues; regardless, in 2010 the Obama administration still funded Blackwater to the tune of $220 million for State Department and CIA support. All told, the company received over two billion dollars in government security contracts between 1997–2010.
Prince resigned as Blackwater’s chairman in 2009 after he was exposed in the press as an alleged CIA asset by former CIA director Leon Panetta. According to Prince, “Valerie Plame’s (a CIA operative) identity was compromised for political reasons. A special prosecutor [was even] appointed. Well, what happened to me was worse. People acting for political reasons disclosed not only the existence of a very sensitive program but my name along with it.”
Shortly thereafter, Blackwater was dismantled and sold off to a small group of Los Angeles-based investors for an estimated $200 million, and Prince went to work for the crown prince of Abu Dhabi. His mission was to help build an 800-member brigade of mercenaries to aid the United Arab Emirates (U.A.E.), and to help the U.A.E. create a new company called Reflex Responses (R2), a military contractor. Shortly thereafter, the Associated Press reported that Prince had trained a force of 2000 Somalis to perform antipiracy operations in the Gulf of Aden, an effort that was funded by the U.A.E. and several other Arab countries, and backed by the U.S.
A Prince’s sweet fortunes sour in Hong Kong
After assisting the U.A.E. and Somalia, Prince started establishing relationships with wealthy and powerful individuals connected to the Chinese Communist Party, and in January 2014, he officially founded Frontier Services Group (FSG), Ltd.
FSG bills itself as a logistics, aviation and transport company and is listed on the Hong Kong Stock Exchange, but is headquartered in Bermuda. The company is primarily backed by China’s state-owned investment firm, CITIC Group, and Hong Kong-based investor Chun Shun Ko. Prince not only serves as the chairman of FSG, but also leads a private equity firm called Frontier Resources Group (FRG), which provides advice and support for Chinese oil and gas investments in Africa.
It seemed a bit of an odd move for Prince to go from tactical warfare and support to logistics and transportation, but it all seemed very civil on paper. According to The Intercept’s investigation, however, “behind the back of corporate leadership at FSG, Prince was living a double life.”
In fact, a number of FSG colleagues accused Prince of using his role as chairman to offer Blackwater-style mercenary services to corrupt foreign governments, such as Libya, services that FSG simply did not have the capacity, expertise, or even the legal authority to conduct. In response to the charges, FSG’s leadership stripped Prince of the majority of his chairman duties last fall and terminated his two closest internal allies.
It was his dealings with Libya that caused Prince to finally hit the wall. By that point, U.S. officials were already on his trail and monitoring his every move as a result of suspected weapons sales in Africa. The surveillance turned up evidence exposing Prince’s conversations with others that suggested he was advising these partners to open bank accounts in China to assist his partners in Libya. And Prince himself traveled to Macau (the Disneyland of money laundering) to open an account with the Bank of China.
“It was not a personal account,” said the former U.S. intelligence official briefed on the investigation. “He was doing it for the purpose of what is considered now — in the investigation — money laundering on behalf of the Libyans.”
Prince’s lawyer, however, stated that the allegations were “total bullshit.”
We will see. In addition to the money laundering charges, Prince is being investigated by U.S. officials for having ties to Chinese intelligence and for brokering mercenary services without the State Department’s approval. Regardless of what charges stick, Prince has fallen from a trusted provider and enabler to the U.S. government to a known bad actor. I suspect we will see his name listed when McClatchy releases the full roster of Americans associated with the Panama Papers in the coming weeks.
