Prince of Blackwater heads to Africa(Read article summary)
Erik Prince, who made a fortune in Iraq thanks to his politically connected and controversial Blackwater military contractor, is leading a group of Chinese investors on a hunt for natural resources and investment opportunities in Africa.
Sara D. Davis/AP/File
Erik Prince, the man who founded Blackwater, the private military contractor that became synonymous with mercenary excess during the Iraq war, has apparently begun a bold new business venture: He's going to be investing with a group of unnamed Chinese government-linked companies in resource extraction and infrastructure in sub-Saharan Africa.
At least that's according to the South China Morning Post, which published an exclusive interview with Mr. Prince yesterday. The paper says Mr. Prince has founded an investment company called Frontier Resource Group earlier this year as an "Africa-dedicated investment firm partnered with major Chinese enterprises, including at least one state-owned resource giant that is keen to pour money into the resource-rich continent."
Prince made a fortune during the early and extremely fat years for contractors of the global war on terror, thanks to political connections and an appetite for risk. Roughly $2 billion of US contracts in Iraq flowed through the company. But the name "Blackwater" eventually grew tarnished under the weight of alleged corruption and murder in the field. It was Blackwater employees who were who were ambushed and killed in Fallujah in 2004, sparking the US assault on that Iraqi town that helped further polarize the war. In 2007, panicking Blackwater guards unleashed a barrage of fire in Nisour Square in Baghdad, killing 17 civilians.
The massacre cemented Iraqi fury at private military contractors and set the stage for the Iraqi governments refusal to allow US forces to remain in Iraq with immunity from local prosecution, something that forced the US departure at the end of last year. By the time Prince sold out of Blackwater in 2010, which he'd renamed "Xe" in an attempt to dissociate his venture from its unsavory public image, US government contracts were drying up. In April 2010, five senior Blackwater executives (not Prince though) were indicted on weapons violations and making false statements to law enforcement.
But Prince has since found other governments to do business with. He had moved to the United Arab Emirates, a low-tax monarchy on the Persian Gulf, were he grew close to the crown prince of Abu Dhabi, Mohamed bin Zayed Al Nahyan. While there, he worked on the creation of the Puntland Maritime Police Force, a private militia designed to conduct anti-piracy operations in Somalia.
In July of this year, the UN Security Council called the Force "the most brazen violation of the [Somalia] arms embargo by a private security company." The UN said the force had over 1,000 men under arms and wrote: "This private army disingenuously labelled a “counter-piracy” force, has been financed by zakat contributions mainly from high-ranking officials from the United Arab Emirates, including the Crown Prince of Abu Dhabi and Deputy Supreme Commander of the United Arab Emirates Armed Forces Sheikh Mohammed bin Zayed Al Nahyan. The Government of the United Arab Emirates, however, has officially denied any involvement in the project." (Zakat is charitable tithing in Islam).
The anti-piracy militia was ultimately abandoned by its funders, leaving a new, well-armed, and semi-organized group in the mix of competing militias in the Horn of Africa.
But Prince still sees his future on the continent. The Frontier Resources Group remains headquartered in Abu Dhabi, but he told the SCMP that "Africa is so far the most unexplored part of the world, and I think China has seen a lot of promise in Africa." He told the paper that his Africa fund has raised $100 million in private equity so far and argued that investors will be wise to place their bets on his new venture.
"We are the search radar for [Asian investors] in Africa because we have the expertise and we know how to measure and control the risks," Prince said.
It will be interesting to follow the upcoming chapters of Prince's business life, which already read like something out of a John Le Carre novel.