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Shaping up Blackwater's Act

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There has been much talk and ritualistic hand wringing, gnashing of teeth, and tearing of hair since the news broke that the CIA awarded Xe Services -- formerly Blackwater -- a contract to guard some of its forward bases in war zones.

CIA director Leon Panetta said on ABC's This Week this past weekend that:

State Department relies on them. We rely on them to a certain extent. So, we've bid out some of those contracts. They provided a bid that underbid everyone else by about $26 million and a panel that we had said that they can do the job, that they've shaped up their act, he said.


There was really not much choice but to accept that contract," said Panetta.

I don't know if Panetta was entirely truthful when he said they did not have much choice. After all, Blackwater may be among the biggest but it not the only firm capable of providing security for forward bases. What about DynCorp or Triple Canopy, for example?

But Panetta was closer to the mark when he said that Xe Services has cleaned up its act. Let's be honest here. I don't know whether Xe will ever overcome the legacy of its days as Blackwater. Its genuine mistakes, as well as the years of often grossly unfair characterizations in the media and popular opinion, took a toll on its public image. Obviously its rebranding effort has not worked, because people still think of it as Blackwater.

But we need to be fair about this. It is not the same Blackwater. A lot has happened in the fifteen months since Eric Prince stepped down as president and CEO of Blackwater.

Since March 2009 Xe has been led by Joseph Yorio. More important than his past Army service, at least to my way of thinking, is that he has lots of business experience running things, something Prince didn't have prior to starting Blackwater. Yorio has worked 18 years in senior leadership roles in multinational corporations like Unisource Worldwide, Corporate Express, and DHL.

According to a company overview that Xe has been circulating during the past year, it recognizes "that the company must work to address past, and to prevent future, errors in order to move forward," To do so it restructured Xe's legal department, first by retaining a partner from Crowell & Moring, a law firm with a top-tier government contracts practice, as its acting general counsel, and then by recruiting and hiring a new general counsel, Christian Bonat, who most recently served as senior counsel to the general counsel of the Department of Defense during the Obama Administration, and previously as the legal counsel of DoD in the Bush Administration.

Bonat also leads the company's anti-corruption efforts. The company has adopted a new anti-corruption policy, and is in the process of developing and implementing comprehensive compliance procedures and training, to help to ensure that all personnel are responsive to the requirements of U.S. law. While I think it would be better to not have the same person do both roles -- after all, Xe can afford to pay the salary -- it is a start.

The company has also strengthened its commitment to accountability by hiring Karen Jones as vice president for export compliance. In an innocuous but telling sentence, the overview states, "In previous years, the company export compliance program was inadequate to address the regulatory requirements for exports of equipment in support of U.S. Government missions."

Finally, the company has instituted an ethical advocate hotline managed by an independent vendor to field and respond to whistle-blower disclosures related to the company's conduct worldwide. Once the vendor determines that a report does not implicate senior management personally, it is forwarded to the general counsel and the COO for action. In addition to the current language and dialects offered on the ethical advocate website it will soon be available in a number of Afghan dialects.

Of course, I wonder what happens if a report does implicate a member of senior management. I'm really not trying to be flippant here, but a hotline is only credible if a potential whistleblower thinks all disclosures are taken seriously. Perhaps Xe thinks that no member of senior management will ever do anything that merits blowing the whistle. Let's hope that is so.

So even though these steps are not perfect they are significant improvements over what went before. In short, to paraphrase the old Virginia Slims commercial, Blackwater has come a significant if not a long -- way, baby.

 
 
 

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