perhaps some americans can be of help ;0)
ft.com
Blackwater founder Erik Prince eyes opportunities with ChinaMan who once fashioned private armies for US is now helping support Beijing’s ‘Silk Road’ policy
Erik Prince founded now-defunct Blackwater Security, which became synonymous with Bush-era military adventures © APErik Prince once fashioned private armies for the Pentagon. Now he is working with the US’s main geopolitical competitor, China.
The former Navy Seal and founder of the now defunct Blackwater Security, which became synonymous with Bush-era military adventures, late last year announced a push to sell logistics and security to support Beijing’s “Silk Road” strategy, which is seen as an effort to promote Chinese political influence across the Eurasian land mass using roughly $900bn of foreign investment.
But, speaking to the Financial Times, Mr Prince rejected the idea that he and his company, Frontier Services Group — listed in Hong Kong and partly owned by China’s Citic conglomerate — are advancing Chinese foreign policy or will be providing military services.
“We’re not serving Chinese foreign policy goals, we’re helping increase trade,” Mr Prince said in the interview in Hong Kong last month.
He described the Silk Road policy, which is dubbed “One Belt One Road” by Beijing, as a “fantastic initiative”. He added: “China trading with its neighbours and building infrastructure brings only benefits.”
We’re not serving Chinese foreign policy goals, we’re helping increase trade
Critics, however, say Mr Prince is simply proving what many suspected all along: instead of a patriot, he is a mercenary.
“Machiavelli would be amused, but not surprised” at Mr Prince’s new China business, said Peter Singer of the New America Foundation in New York. “It is fascinating to see someone, who was so quick to wrap himself in the flag whenever there was a controversy in the past, now go to work for a US adversary.”
Mr Prince also denied a report linking him to another US foe. The Washington Post reported that a meeting he had with an unnamed Russian individual in the Seychelles was an attempt to open a “back channel” to the Kremlin. Mr Prince admitted an “incidental” meeting but denied anything of consequence was discussed, blaming “permanent seditious bureaucrats” in the US intelligence community for leaking the information.
Mr Prince has been skirmishing with the US security establishment since his Blackwater days, when the company was routinely the subject of unflattering press attention, a number of congressional inquiries and at least one FBI investigation.
Associates say he is privately still furious at US authorities over their treatment of Blackwater. The company made an estimated $2bn in contracts with the American government during its heyday following the September 11 attacks, when the US needed to manage huge security projects in Iraq and Afghanistan. But four Blackwater guards were eventually tried in the US and imprisoned in the aftermath of a 2007 shooting in Baghdad that left 17 Iraqi civilians dead.
A Blackwater helicopter flies above the scene of a roadside bombing in Baghdad in 2005 © AFPIn his autobiography, Mr Prince writes of this and other scandals: “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.”
But he denies any grudge played a role in his courtship of China. Meanwhile, the political winds in Washington have changed in Mr Prince’s favour. He is an ardent supporter of Donald Trump and is the brother of Betsy DeVos, Mr Trump’s new education secretary.
Mr Prince, who since selling Blackwater in 2010 has been based in Abu Dhabi, said the “hype” around his former company was no hindrance to doing business in China.
“You pretty much remove the entire political texture from Blackwater when you come to China” he said. “What they look at is our 100 per cent success rate.” While 41 Blackwater operatives were killed in action throughout the history of the company, no one under Blackwater’s protection was ever killed, he added.
“If the Chinese are sensitive about anything, it’s not having their people die,” said Mr Prince, while stressing that his days as a military contractor were over. “This is not a Chinese version of Blackwater,” he said.
According to Mr Prince, FSG “is a logistics company, we are not a security company.” He added: “None of our people have been or will be armed. But security management is certainly part of the logistics process.”
However, an FSG press release in December raised eyebrows when it announced the company would create militaristic sounding “ forward operating bases” in two Chinese provinces — Yunnan in the south-west and Xinjiang in the west.
J David Whittingham, head of business development and investor relations, called the use of such military language “an unfortunate choice of nomenclature. Our idea in forward operating base is the idea that they are going to be closer to the customer.”
FSG is far from the only company offering security services to China. Phil Cable, chief executive of Mast Security, a UK company that puts armed anti-piracy guards on ships belonging to Chinese shipping giant Cosco, has described the global security industry as “non-partisan and detached from geopolitics”.
FSG has tight links to one of China’s largest global conglomerates, Citic Limited, which owns a 20 per cent stake. To bolster its credibility with prospective Chinese clients, FSG also last year named Dongyi Hua, a Chinese national who used to work for Citic, as its chief executive.
Beijing, meanwhile, has been treating Mr Prince’s China partnership as something of a propaganda coup. The Global Times, a normally hawkish official newspaper, cheered the venture in a glowingly positive article on March 21. “Some western media have the wrong idea that anything involving China is bad, so Prince's co-operation with China is also bad,” the article quoted an expert as saying.
Additional reporting by Emily Feng
Chance encounter
An accidental encounter with a Chinese businessman in Hong Kong four years ago led to a deal with one of China’s most aggressive global conglomerates and the complete transformation of Erik Prince’s business strategy.
Today, that business group, Citic Ltd, owns a 20 per cent share in Mr Prince’s Frontier Services Group, which provides logistics and security management services to companies overseas. FSG’s chief executive, Dongyi Hua, worked for Citic for more than a decade.
According to Mr Prince, it all came together in 2013, when he was raising money for a new Africa venture and passed through Hong Kong. There, he met entrepreneur Johnson Ko, who later suggested listing on the city’s stock exchange. Mr Ko found a defunct listed company named DBN for a “reverse listing”, a common practice in Hong Kong. Citic was a shareholder in DBN, said Mr Prince, and elected to stay in after checking the business plan.
As Mr Prince tells it, FSG’s focus on Africa and the developing world was an attraction for the Chinese.
Even before China’s “One Belt One Road” strategy, Chinese companies were ramping up investments in riskier countries. These have grown by at least 300 per cent during the past five years, said Andrew Davenport, chief operating officer of RWR Advisory Group, a risk consultancy. He added that the market for services to Chinese companies investing abroad — such as those in logistics and private security — was likely to flourish in a similar way.
Mr Prince said he hoped the One Belt strategy would translate into business for FSG. As for contracts with Chinese companies, “there are some big ones in development. But they are extremely sensitive about their names being mentioned,” he said
J David Whittingham, head of business development and investor relations at FSG, conceded that having Chinese leadership and shareholders “gives a lot of our Chinese customers comfort that their interests are being looked after and that we are a trustworthy partner”.
Despite its China contacts, however, FSG’s 2016 annual report shows that it still has no revenues from mainland China, with the vast majority coming from Africa, where it is the largest provider of medical evacuation services on the continent, according to Mr Prince.
The focus on China has not been without cost. Gregg Smith, a former chief executive, and William Fallon, a board member, left FSG, and were quoted by a BuzzFeed article as saying they had concerns about selling security services to the Chinese. Neither could be reached for further comment. “We do not want to comment on personnel issues,” FSG said in a statement. “[W]e now have the right China-based CEO and broader management team in place to deliver on our strategic objectives.” |
