Blackwater reaches $42 million settlement with US over weapons smuggling

The US State Department said Monday that Xe, the controversial private security firm formerly known as Blackwater, has agreed to pay 42 million dollars in fines to settle alleged export violations.

It said the civil settlement was reached on Wednesday for 288 violations "involving the unauthorized export of defense articles and provision of defense services to foreign end-users" in a number of countries between 2003 and 2009.

"These violations did not involve sensitive technologies or cause a known harm to national security," the State Department said in a statement.

Many of the alleged breaches occurred while Xe, which protects US officials in Iraq and Afghanistan, was "providing services in support of US government programs and military operations abroad," it said

The State Department said that because the firm had taken steps to tackle the causes of its violations, it will not be considered ineligible for future contracts.

It said that Xe agreed to "an aggregate civil penalty of 42 million dollars," but 12 million dollars of it will be suspended to make up for the compliance measures it takes.

Despite a murky history, Xe is doing brisk business with the US government, including a 100-million-dollar contract with the CIA that unleashed a furious response from lawmakers in June.

CIA chief Leon Panetta said his agency did not have much choice but to turn to Xe among the few companies that provide the needed security services in warzones after it underbid other competitors.

The CIA inked the deal shortly after the State Department awarded Xe a security services contract worth some 120 million dollars for work in Afghanistan.

The North Carolina-based firm lost its contract to provide security for US embassy diplomats in Baghdad in May 2009 after Iraqis and others repeatedly accused it of adopting a cowboy mentality.

In June, Iraq expelled 250 former employees of the security firm.

The firm was thrown into the spotlight after five of its guards were accused of killing 17 unarmed Iraqis in a gun and grenade attack, and wounding some two dozen others during a September 2007 incident at the busy Nisur Square in Baghdad.