Accountability and Transparency
• Lack of public information and open records
• Lack of public input on decisions affecting the public interest
• Loss of recourse if the public is harmed
Democratically elected governments are accountable to voters and their processes are open to public scrutiny. Privatization shuts the public out of decision-making that deeply affects the public interest.
Terms of privatization contracts often are decided behind closed doors, without any public input. In some cases, the public is unaware of the possibility of a privatization deal until the contract is almost finalized. A prime example is the privatization of Chicago’s parking meters, which was planned and negotiated without public knowledge, and left the public extremely unhappy with the outcomes.
Transparency also refers to the public’s ability to obtain information regarding government contracts. While government documents generally are available through open records requests, private companies can shield information from public view by claiming it has a proprietary status.
Another important aspect of accountability and transparency relates to the government’s ability to properly manage contracts. Contracts and governmental policy must contain adequate mechanisms for monitoring and oversight to ensure contract compliance and hold contractors accountable for contractual abuses and the failure to deliver on promised deliverables.
In many large complicated contracts, it is difficult to hold companies accountable partly because no one can anticipate all possible contingencies and set consequences, and partly because companies may be able to shield important information from the government. Furthermore, governments that have sunk a lot of time and money into a contractual relationship may choose not to hold the contractor accountable for fear of losing that initial investment or the transaction costs associated with contract cancellation.
As the Blackwater Nisoor Square case shows, it can be difficult for the government to hold a private company accountable for even the most heinous actions. A New York Times editorial titled "Privatized War and Its Price" (January 2010) noted that in dismissing charges against Blackwater agents for killing civilians in Iraq, a federal judge "highlighted the government’s inability to hold mercenaries accountable for crimes they commit."
On September 16, 2007, employees of contractor Blackwater USA opened fire in a crowded Baghdad traffic circle at Nisoor Square. They killed 17 unarmed Iraqi civilians, including a 9-year-old boy who was riding with his father. Many more were injured.
The company, which derives much of its profits from government contracts, asserts that its guards did nothing wrong that September day. But an FBI inquiry determined that Blackwater employees engaged in the firefight unprovoked, and no witnesses have disputed that. Furthermore, investigations revealed a pattern of lawless behavior by Blackwater and no clear process of accountability. The contractors had immunity from Iraqi law, and it was unclear which American laws applied to their behavior. In response to the shooting, the Iraqi government demanded an end to immunity for private contractors.
Blackwater, which changed its name to Xe (pronounced "zee"), has not been charged in the case. The company has more than $1 billion worth of federal contracts and task orders, according to a May 2008 estimate by the US Department of State. In 2009, Xe lost its security contract at the US Embassy in Baghdad, but the company still has CIA contracts, including one to load bombs and rockets on Predator drones at secret bases in Pakistan and Afghanistan.
A month after the shooting, the estates of three deceased victims and one survivor filed a lawsuit against the company in US federal court, under the Alien Tort Claims Act. The Plaintiffs' complaint (Complaint in Abtan, et al. v. Blackwater Security Consulting) makes several claims, including that Blackwater murdered and severely injured many innocent civilians on September 16, 2007, that the company used excessive and unnecessary deadly force, and that Blackwater destroyed important evidence after the shooting occurred.
Additional charges were filed under the Racketeer Influenced and Corrupt Organizations Act (RICO) in July 2009 by Iraqi survivors of Nisoor Square. They accuse Blackwater and chairman Erik Prince of encouraging employees to engage in a series of illegal acts "in the company's financial interests," including murder, destruction of audio and videotaped evidence, distribution of controlled substances, tax evasion, child prostitution, and weapons smuggling. The Virginia federal court consolidated this case with five similar lawsuits against Blackwater from other victims of the Nisoor Square shooting. The case is pending and updates are available on the website of the Center for Constitutional Rights, an organization representing the plaintiffs: http://www.justice.gov/opa/pr/2008/December/08-nsd-1068.html.
In December 2008, following an investigation by the FBI, the US Department of Justice filed criminal charges against five of the guards. The guards were subsequently indicted by a federal jury. A sixth guard pleaded guilty to voluntary manslaughter. The criminal trial is set to begin in February 2010, and is expected to address important questions about the role of private military contractors in war zone environments.
In November 2009, reports surfaced that shortly after the shooting, Blackwater sent bribes to government officials in Iraq to protect the company's license to operate in the country. Although it is unknown whether the bribes reached Iraqi officials, Iraq revoked Blackwater's license in Spring 2008. As of this writing, the company still works on temporary projects in Iraq. The company or its executives could face charges of obstruction of justice and violating the Foreign Corrupt Practices Act, which bans bribes to foreign officials. An investigation by the US Attorney's Office is pending.
As this case illustrates, the contracting out of military services presents a significant challenge when things go wrong. Blackwater guards had orders from the US government to be in a different location than the Nisoor Square area the day of the shooting, but the government lacked an effective way to check up on the contractors' location or ensure that they were performing their assigned tasks. According to a former company official "Blackwater had cultivated a cowboy culture that was contemptuous of government rules and regulations." The lack of oversight of contractors' operations hampers the government's ability to manage the high risk situations that occur in wars.
Working on foreign soil, private military companies do not have to adhere to the same accountability system that the military services do. The court cases initiated to hold responsible parties accountable for the Nisoor Square killings represent a much slower judicial process than military hearings, which have set policies and procedures in dealing with criminal activity in the military. As of this writing more than two years after the shooting, there have been no final decisions in any of the Blackwater court cases. Part of the delay was caused by difficulty determining which American laws applied to crimes committed in the context of a government contract. Many laws relevant to military personnel or war crimes were not written with private contractors in mind, adding another hurdle to holding companies or their employees accountable. Both the oversight and accountability issues are increasingly important as companies are engaging in contracts that call for the performance of "core" military functions, such as the provision of security services.
The allegations that Blackwater sent bribes to Iraqi officials shortly after the shooting illustrate a classic example of corruption by private contractors. Because private military companies derive a large proportion of their revenues from government contracts, bribing and other corruptive behavior may become attractive options if the company fears losing government contracts.
The shooting at Nisoor Square was not the first time Blackwater has come under scrutiny for alleged abuses.
- After a lengthy federal investigation, the State Department in November 2008 found that Blackwater shipped hundreds of automatic weapons to Iraq without the necessary permits. Some of the weapons were believed to have ended up on the country's black market, but no criminal charges have been filed.
- A congressman investigating Blackwater charged that the company evaded tens of millions of dollars in Social Security, Medicare and unemployment taxes company evaded tens of millions of dollars in Social Security, Medicare and unemployment taxes by classifying its employees as independent contractors.