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Behind Erik Prince’s China venture
The Blackwater founder has cut a lucrative security-training deal with Chinese insiders. But is it against U.S. interests?
The International Security Defense College in Beijing is a private security training school that is overseen by Frontier Services Group, which was founded by Erik Prince, a former Navy SEAL who created Blackwater. (For The Washington Post)
By Marc Fisher, Ian Shapira and Emily Rauhala
May 4, 2018
Beijing’s International Security Defense College, which boasts of becoming “the largest private security training school in China,” sits behind a 45-foot-high exterior wall and a barricade. Inside the compound, trainers with police and military experience teach classes on tackling detainees, handling hostage situations and thwarting terrorist attacks.
The school is overseen by Frontier Services Group, a Hong Kong-based company founded by Erik Prince, a former Navy SEAL who created Blackwater, a security firm that played a major and controversial role in the U.S. wars in Iraq and Afghanistan.
In November, Frontier graduated its first class of “overseas security specialists,” who were given “strict, strenuous and systematic” training to manage security in “high risk environments, warzones and operations across the globe,” according to a Frontier promotional statement. Prince delivered the commencement address by video link.
The school’s promotional materials boast that Frontier has trained more than 5,000 Chinese military personnel, 200 plainclothes police officers, 500 SWAT specialists, 200 railway police officers and 300 overseas military police officers. A slogan painted on the school’s wall reads, “Training ground for warriors.”
Promotional video for the Chinese security school overseen by Erik Prince-led firm
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Promotional video for the Chinese security school overseen by Erik Prince-led firm
The International Security Defense College boasts that Frontier has trained more than 5,000 Chinese military personnel, 200 plainclothes police officers, 500 SWAT specialists, 200 railway police officers and 300 overseas military police officers.
Prince spent more than a decade at the helm of Blackwater, which won hundreds of millions of dollars in government contracts to guard U.S. officials and facilities, mainly in Iraq and Afghanistan. After the company ran into legal and political problems stemming from its work for the U.S. military — including an incident in 2007 in which Blackwater workers killed 14 unarmed Iraqi civilians — Prince has lived and worked around the world, creating businesses based on providing security and handling logistics for enterprises on several continents.
Some members of Congress, military officials and people who do similar security work say that Prince’s role as chairman of Frontier puts him in the unsettling position of advancing the strategic agenda of the United States’ largest rival.
“He cloaks himself in the American flag when he’s seeking a U.S. contract, but he is the hood ornament of the new era of the military industrial complex and a set of mercenaries who work for countries, oligarchs and random billionaires,” said Sean McFate, a former military contractor who wrote a book about private armies, “The Modern Mercenary.” “The Pentagon and national security establishment view Erik as a pariah.”
Prince has said that the security training that Frontier does in China is meant to protect Chinese enterprises in Africa and Asia, not to support China’s domestic police or military.
Prince grew up in a strongly anti-communist home. From an early age, he wrote in his autobiography, “I wanted to battle the Soviets myself.”
Erik Prince, chairman of Frontier Services Group, is best known for his role running Blackwater, a security firm that played a major and controversial role in the U.S. wars in Iraq and Afghanistan. (Justin Chin/Bloomberg News)
More recently, however, he has said that his business in China “is not a patriotic endeavor”; rather, it is an effort “to build a great business and make some money doing it.”
Prince has a knack for showing up where history is being made. Born to a fortune, he has built armies of contractors, buddied up with foreign leaders, and delved into domestic politics, playing a supporting role in various campaigns against Hillary Clinton and helping Donald Trump’s presidential candidacy in 2016.
Blackwater won him prominence but also infamy, especially after some of his guards working in Iraq killed unarmed civilians. Prince, 48, portrays himself as a misunderstood patriot, a devoted warrior for his country. But he is also a globetrotting entrepreneur with a flair for intrigue.
Prince is a man of supreme connections — after living out of the country for several years, he turned up at Trump’s election night party; his oldest sister, Betsy DeVos, is the president’s education secretary; he’s also close to Stephen K. Bannon, Trump’s former chief strategist. His companies won contracts from the George W. Bush and Barack Obama administrations to operate drones and provide security for the CIA.
His connections get his ideas in front of important people: Last summer and fall, Prince’s proposal to have about 6,000 private contractors take on the training of Afghan security forces won consideration from top officials at the National Security Council, as did a related plan to pay private companies to help capture suspected terrorists for the U.S. government.
His connections get him into trouble: Special counsel Robert S. Mueller III is looking into whether Prince’s meeting last year in the Seychelles islands with a Russian official close to Russian President Vladimir Putin was actually an effort to create a back channel between the incoming Trump administration and the Kremlin. Prince has denied that he was representing the administration when he met with Kirill Dmitriev, the chief of the Russian Direct Investment Fund.
Prince has denied that he was representing the incoming Trump administration when he met with Kirill Dmitriev, pictured, the chief of the Russian Direct Investment Fund. (Nelson Ching/Bloomberg News)
And Prince has used his connections to push the envelope in innovative and potentially problematic ways: His growing business in China has now sparked allegations that he is acting against U.S. interests.
“Erik Prince likes to present himself as the perfect patriot, but in fact he is the super mercenary,” said Rep. Jan Schakowsky (D-Ill.), a longtime Prince critic. “The definition of a country is having hegemony over the use of force, and Erik Prince blurs that. . . . He wants to monetize war and peace.”
Prince turned down requests for an interview with The Washington Post. His spokesman, Jonathan Garfield, offered to answer questions sent by email. The Post provided detailed questions, and several days later, another Frontier spokesman, Marc Cohen, said the company would not respond to the questions because “it’s pretty clear that you’ve already made up what type of story you want to write and it’s not a good one.”
A Frontier spokesman later sent The Post a written statement saying that “Erik Prince is a proud American who would never seek to undermine the national interest. FSG is an international company with operations in China and is listed in Hong Kong. It aims to support infrastructure projects internationally to serve its clients’ needs in the interest of shareholders and does not support a political agenda.”
Prince contends that nothing he is doing in China conflicts with his dedication to his own country, but a former U.S. intelligence official who is knowledgeable about Prince’s initiatives said many of his former colleagues think he has crossed a line.
“The China stuff makes everybody uncomfortable,” said the former official, who spoke on the condition of anonymity because he is not authorized to discuss intelligence matters in public. “In the intelligence community and the Pentagon, there was discomfort to begin with because he was courting the Chinese government at the same time as he was courting the American government for work. . . . He is way out of bounds.”
A Blackwater sign marks Prince’s estate in Middleburg, Va., which he calls Blackwater Ranch. (The Washington Post)
Aimed squarely at China
Prince calls his palatial estate in Middleburg, Va., Blackwater Ranch, but in the seven years since he sold Blackwater’s successor company, he has built new businesses all around the world.
Blackwater, Prince wrote in his autobiography, “Civilian Warriors,” “became something resembling its own branch of the military and other government agencies. . . . We became the ultimate tool in the war on terror,” with 1,000 contractors in Iraq and hundreds in Afghanistan. Back at home, though, Prince’s company became, as even he described its soiled reputation, “the face of military evil — gun-toting bullies for hire.”
After the 2007 incident in Iraq turned Blackwater into a target of political criticism, especially from Democrats, and after then-Secretary of State Hillary Clinton in 2009 scrapped Blackwater’s contract to protect U.S. diplomats in Iraq, Prince came to believe that he was the target of unfair and unwarranted inspection.
The Blackwater Years
Prince commissioned as Navy officer, serves as SEAL.
Prince creates Blackwater, begins winning government security contracts.
Four Blackwater contractors are killed in Fallujah, Iraq. Their bodies are burned and hung from a bridge.
Blackwater contractors kill 14 unarmed Iraqi civilians in Nisour Square, Baghdad.
Secretary of State Hillary Clinton cancels Blackwater’s contract to protect U.S. diplomats in Iraq.
“I was strung up so the politicians could feign indignation and pretend my men hadn’t done exactly what they had paid us handsomely to do,” he wrote.
Boxed out of new business with the U.S. government, Prince turned his attention to partnerships in other countries. In 2010, after lawsuits and congressional investigations focused on Blackwater and those who had worked for the company, Prince moved to the United Arab Emirates, living there for three years. He wrote in his autobiography that he made the move because he was “fed up with an endless drip of frivolous lawsuits and years of bad press.”
In 2013, two years after he’d sold off the remains of Blackwater, Prince was working hard to write a new chapter of his career. According to a former associate, Prince poured millions of his own dollars into Africa through a private equity fund called Frontier Resource Group, which invested in mineral and oil extraction in countries such as Guinea and South Sudan.
But when the firm struggled to raise capital, former associates of Prince said, he changed course and began Frontier Services Group (FSG). The new venture was aimed squarely at the rapidly expanding economic engine of China, which was creating enterprises across Asia and Africa. Prince wanted to offer logistics and aviation services for China’s new businesses in some of the planet’s most problematic places.
After all the controversy surrounding Blackwater’s use of force and its military role, Prince repeatedly promised to steer clear of security work. He was, he said, creating an “austere logistics” company, which would focus on moving people and goods rather than providing security.
With that assurance, in 2014, William J. Fallon, a retired Navy admiral who served as the head of U.S. Central Command and had known Prince for many years, eagerly joined the company’s board, comfortable with Frontier’s mission.
Navy Adm. William J. Fallon, head of U.S. Central Command, arrives on April 18, 2007, to testify before the House Armed Services Committee on progress in Iraq. After retiring, Fallon joined Frontier’s board. Prince had repeatedly vowed that the company would not do any security work. (Jonathan Ernst/Getty Images)
“Erik’s a guy who’s very smart and very aggressive and has a lot of good ideas, and with some amount of prudent risk-taking, this was one of those things that looked appealing,” Fallon said.
Prince had allied himself with a well-connected Hong Kong entrepreneur, Johnson Ko, whom Forbes magazine ranked in 2016 as Hong Kong’s 49th-richest resident and whose digital TV set-top box business was a dominant player in the Chinese market.
For Ko, Prince offered a different kind of cachet. “He was a cool American,” said a second former Prince associate, who spoke on the condition of anonymity.
At a private security industry conference in Beijing last year, Prince was a VIP guest. The speeches were all in Chinese, but Prince was one of the main attractions. People lined up to have their photos taken with him.
After Blackwater
Prince resigns as chief executive of Blackwater, which had just changed its name to Xe Services. Prince eventually sold the firm, which is now called Academi.
Prince moves to Abu Dhabi and helps build a force of foreign security officers for the United Arab Emirates government.
Prince creates Frontier Resource Group, an investment firm in Abu Dhabi.
Prince sells controlling interest in Frontier Services Group to Chinese entrepreneurs, with Prince as chairman.
One Blackwater guard is convicted of murder and three others of manslaughter in the Nisour Square massacre.
“Erik’s a bit of a celebrity in China,” said the first onetime Prince associate. “People, including prominent Communist Party members, would just show up where Prince was just because they wanted to meet with him.”
At dozens of meetings in Hong Kong, Beijing and Shanghai, Prince pressed Ko’s company to acquire Frontier Services Group, the associate said. Five days after Prince’s memoir was published in 2013, the two men signed a deal that, according to the associate, netted Prince $3.5 million along with hundreds of millions of shares in the new Frontier Services Group.
Prince became chairman of Frontier, which would now be run by an executive team including Americans — its chief executive, Gregg Smith, a former Marine who had advised Prince on the Blackwater sale in 2010 — and Chinese managers from CITIC Group, formerly the China International Trust Investment Corp., a state-owned Chinese enterprise that held 20 percent of Frontier. (CITIC Group had been a major shareholder in Ko’s earlier venture, DVN, which became Frontier.)
CITIC “is just one step removed from the Chinese government, ”said Nicholas Bequelin, East Asia director of Amnesty International. “State-owned enterprises are led by people with key positions in the Communist Party.” After The Post provided CITIC with a list of questions, the company, through a spokesman, declined to comment.
For China’s leaders, the chance to work with someone like Prince was priceless, Bequelin said: “This is an attempt to learn how to secure interests. The Chinese realize they don’t have the know-how . . . to compete on the geopolitical stage. As they invest in places like Pakistan and Latin America, they know security is going to be a crucial need and you need to know how to do that.”
But although Prince is valuable as a symbol of American expertise in security, “among our partners, he’s not the one that matters,” said Xin Yang, founder and president of Frontier’s Beijing security training school. “The Chinese are gradually taking more control” of the company. CITIC is now playing a larger role as Frontier’s dominant shareholder, Xin said, and “Prince’s share is decreasing. The Chinese are in charge, so it won’t matter.”
A statue with writing that espouses the virtues of transformation stands in a courtyard inside the International Security Defensive College in Beijing, China. (Handout photo from International Security Defensive College)
More than 5,000 private security companies do business in China, according to Alessandro Arduino, author of “China’s Private Army,” a book about how the country uses foreign expertise to protect its fast-expanding economic empire.
Prince’s company has a special status among those businesses, Arduino said. Despite its sullied reputation back home, “Blackwater is a brand name in China,” he said, “and people know that no one under their protection died. And for the new Chinese generation, most of whom have only one child, nothing is more important than protecting life. Blackwater’s aggressive tactics have earned them criticism, but also praise within Beijing’s security apparatus because they never lost a client.”
As China presses its “Silk Road” strategy, a $1 trillion effort to extend its political and economic influence across Asia and into Europe and Africa, security has become a vital concern. And the role of private security companies was changing, especially after a 2010 law nudged those companies — a relatively new phenomenon in a country where the state has a monopoly on security matters — toward hiring military personnel. Today, “most of the people in private security in China are former members of the People’s Liberation Army or People’s Armed Police,” Arduino said.
Prince and Ko sold Frontier to potential investors at a 2014 dinner in Hong Kong that featured a celebrity chef and signed copies of “Civilian Warriors.” To some Americans at the event, Frontier’s sales pitch to hedge fund operators and other affluent guests sounded familiar. The company’s promotional slide deck included an illustration of a rugged landscape featuring armored vehicles, helicopters, a plane and a surveillance blimp. Although the page was stamped with the Frontier logo, “it was the same page used for a presentation” by Blackwater, which had been renamed Xe Services, the first former Prince associate said. Only the company logo had been swapped out.
A slide-deck swap
To impress investors, Frontier used an old Xe Services presentation, but swapped out the logo.
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