BILL MOYERS::Welcome to the Journal.

You could not miss Erik Prince this week. The founder and top gun of Blackwater usually keeps a low media profile. But there he was all over the place, in acarefully orchestrated campaign to put the best face on a bad situation.

Erik Prince is the man who assembled a private army in Iraq with tax dollars, provided by the U.S. Government — you. Earlier this month, after some of his soldiers of fortune gunned down 17 innocent Iraqis and wounded 27 others in what the Army first called an unprovoked attack, Prince was called before Congress to give an accounting. Here's one of the exchanges.

REP. DANNY K. DAVIS (D-IL): You do admit that Blackwater personnel have shot and killed innocent civilians, don't you?

MR. PRINCE: No, sir. I disagree with that. I think there's been times when guys are using defensive force to protect themselves, to protect the packages, trying to get away from danger, there could be ricochets, there are traffic accidents, yes.

REP. D. DAVIS: According to a document we obtained from the State Department, on June 25th, 2005, Blackwater guards shot and killed an innocent man who was standing by the side of the street. His death left six children alone with no one to provide them support. Are you familiar with this incident?

MR. PRINCE: I'm somewhat familiar with that incident. I believe what happened, that was a car bomb — or a potential car bomb had rapidly approached our convoy. I believe our guys shot rounds at the car, not at the driver, to warn them off.

REP. D. DAVIS: State Department described the death as, and I quote, "the random death of an innocent Iraqi." Do you know why Blackwater officials failed to report this shooting and later tried to cover it up?

MR. PRINCE: I can clarify that fully, sir. Thanks for asking that question. There was no cover-up.

BILL MOYERS: Soon after Prince had ducked and weaved his way out of the Congressional line of fire, Iraqi officials were calling for Blackwater to leave their country. Prince's P.R. advisers then launched a round of press interviews where Prince, armed with this video of his men rescuing a Polish diplomat in Baghdad, could make his case on his terms.

ERIK PRINCE: "I'm an American working for America. Anything we do is to support U.S. Policy. You know the definition of a mercenary is a professional soldier that works in the pay of a foreign army. I'm an American working for America...."

BILL MOYERS: Lara Logan frequently puts herself in harm's way, covering the war in Iraq. Erik Prince proves as elusive as the insurgents.

LARA LOGAN: So why is it so wrong then? Why is there this perception that exists about Blackwater?

ERIK PRINCE: General misunderstanding because we've not been able to communicate what we do and don't do these last few years.

CHARLIE ROSE: Do you think there has been knee-jerk reporting about what happened on September 16?

ERIK PRINCE: Absolutely.

BILL MOYERS: As he was spinning the story to the press, he was also blaming the press.

ERIK PRINCE: I don't know that the media has given them due process the last couple of weeks...You know that when the guys get it right 99 times out of 100...

BILL MOYERS: Prince stuck to his well-rehearsed talking points, no matter where he showed up.

ERIK PRINCE: You have to understand, bad things in Iraq generally don't happen by themselves...Bad things don't usually happen by themselves in Iraq...In hundreds of other attacks against us, bad things generally don't happen by themselves...

BILL MOYERS: In the game of spin, repetition is the winner...

LARA LOGAN: You want more oversight...

ERIK PRINCE: We absolutely want more oversight. We welcome the accountability...We support accountability as long as there is due process.

BILL MOYERS: One subject he evaded time and again was his close ties to people in high places who hand out the government contracts that pay for his private army.

CHARLIE ROSE: You give a lot of money to the Republican Party, fair amount.

ERIK PRINCE: Relative to a lot, not very much but -

CHARLIE ROSE: This is America. You are allowed to do and support whoever you want to. Your sister, her husband ran for governor of Michigan. Your mother is a very enthusiastic supporter of causes as well as, I assume, the Republican Party as well. Your sister supported George Bush 41. And you supported Pat Buchanan. Why was there that split?

ERIK PRINCE: You know, I was at Hillsdale College as an economics major, very much a free market guy. And I would say it was mostly a disagreement over taxes.

BILL MOYERS: So what was and wasn't said in this spectacle of spin? For some answers we turn to a one-man truth squad who has been reporting on Blackwater and Erik Prince's influence. Jeremy Scahill is an independent investigative journalist who wrote this recent bestselling book: Blackwater: The Rise of The World's Most Powerful Mercenary Army.

Jeremy Scahill is a Puffin Foundation Writing Fellow at The Nation Institute. He's reported from Iraq, the Balkans and Nigeria, among other places, he's a co-winner of the George Polk Award For Investigative Reporting. Good to see you.

JEREMY SCAHILL: Thanks, Bill.

BILL MOYERS: From watching the interviews, what was the message that you think Prince was trying to get out?

JEREMY SCAHILL: Well, let's remember, this is a guy who prior to the September 16th shooting in Baghdad had only done one television interview ever. And it was right after 9/11 on Fox News with Bill O'Reilly. And during that interview, he said that after 9/11, the phone's been ringing off the hook at Blackwater.

Other than that, this is a guy who hasn't really appeared in public. So, it was unusual to see him, A, appear before the Congress. And B, do this blitzkrieg of interviews. I think the message was very clear. He was trying to say we're a patriotic American company. That we're Americans protecting Americans. We want accountability for our industry.

But there is also something that sort of reminded me of Jack Nicholson in A Few Good Men where he's talking about "I eat my cereal, you know, meters away from Cubans who want to kill me. Where Erik Prince uses terms like the bad guys and our blood runs red, white and blue.

BILL MOYERS: And nobody talks like that in normal life do they — our blood runs red, white and blue.

JEREMY SCAHIL: Right. It's almost I think part of the point here was to say, look, you don't understand really, American people, what we're doing for you. While you're enjoying comfort here in the United States, we're over there protecting our men and women in uniform, our diplomats. I think that there's a way that he wants to increase the mystique about the company and the operations of Blackwater.

BILL MOYERS: But do you think he was motivated and his PR firm was motivated in part because he didn't do that well before Congress at the recent hearings into this investi -- into this shooting?

JEREMY SCAHILL: I think that Blackwater has made a very serious strategic error in how they've handled their publicity for years. And now, we're seeing the company go on the offensive. I think Erik Prince held his own in front of the Congress. And I attribute it largely to the fact that it appeared as though the Democrats didn't really do their homework on him.

I mean, here you have the man who owns the company providing the largest private army on the US government payroll in Iraq. A billion dollars in contracts. Twenty-seven of his men killed in Iraq. We don't know how many people he killed. No private actor in the occupation of Iraq has had more of a devastating impact on events in Iraq than Blackwater. And I just felt watching that hearing, and I went down for it, that many of the Democrats hadn't done their homework.

BILL MOYERS: Well, they were reading the report at the time that he was testifying, right?

JEREMY SCAHILL: Right. And you see them flipping through the pages. And it appeared as though a lot of the members were just sort of paging through it while Erik Prince was testifying.

BILL MOYERS: If you go to the CBS News Web site reporting on Lara Logan's interview with him, what the headline says is "Blackwater chief welcomes extra oversight". Could that have been the message? Hey, look, this was a terrible thing that happened over there. But we really want you, the State Department, government, military, to hold us more accountable.

JEREMY SCAHILL: Right. But I mean, there's a very Orwellian vibe to all of this. I mean, let's remember here, Blackwater says they're not a mercenary company. They're in the peace and stability industry. We're in the business of peace because peace matters.

BILL MOYERS: Peace and stability. Is this how the industry promotes itself?

JEREMY SCAHILL: Oh, yeah. The mercenary trade association, Blackwater recent left it. But they've been a leading member and funder of it. It's called the International Peace Operations Association. And their logo is a cartoon sleeping lion. I mean, it's so incredibly Orwellian.

And I think this idea that they want accountability, this has been a line they've been pushing for years. I mean, Erik Prince said it was excellent that the democratic legislation passed through the House that was allegedly about contractor oversight. And the reason why Blackwater endorses it is because it looks great on paper. There are gonna be laws that govern the use of private military companies. But in reality, it's totally unenforceable.

BILL MOYERS: Why?

JEREMY SCAHILL: Well, the idea behind it is that US civilian law is going to apply to contractors on the battlefield. And the Democratic plan says, let's send an FBI field office over in Baghdad monitoring 180,000 contractors. I mean, there are more contractors in Iraq right now than there are US soldiers. And so the idea is that the FBI is gonna go around Iraq. They're gonna be investigating crimes of contractors. Interviewing witnesses, presumably in very dangerous places. And then, they're going to arrest the individual in question. Bring them back to the United States. And then, prosecute them in a US civilian court. All of this coming from the Bush Justice Department. I mean, I've never heard a more insane plan. And so, what that bill will give Erik Prince and other mercenary companies the opportunity to do is to sit down and say, there are laws that govern us. We're accountable under US law. But they know well that it only exists on paper. And that there will be a few token prosecutions. It's impossible to monitor the activities of 180,000 personnel.

BILL MOYERS: Prince says he welcomes the investigation the investigate by the State Department and the FBI. But Blackwater has guarded, is guarding the State Department and has guarded the FBI. How can they --

JEREMY SCAHILL: Well Bill, listen. when Nancy Pelosi goes over to Iraq, she's guarded by Blackwater. I mean, Blackwater's guarded, I think, 90 Congressional delegations -- when they go over there. And so, if you wanna go over and you wanna investigate a company as a member of Congress and you wanna look into the role of these companies and you're being guarded by them, what is that gonna do to the integrity of your operation?

BILL MOYERS: We're gonna have to pause a moment and say right here...As you talk, I realized just how much you have studied this group and it's in your book very well posed. But what got you interested in this as a journalist?

JEREMY SCAHILL: Well, I had gone -- I started going to Iraq in 1998. And I went in in the weeks leading up to the Clinton administration's attack on Baghdad in December of '98. And I had actually spent a fair bit of time in the city of Fallujah. In fact, I had camped out there in the desert just outside of Fallujah in the summer of 2002 was the last time I'd been in the city. And it was a place that I knew well. And on March 31st, 2004 when four Blackwater operatives were ambushed and killed in Fallujah, their bodies dragged through the streets, burned, strung up from a bridge.

BILL MOYERS:I remember seeing those and they're horrifying. And the American public recoiled.

JEREMY SCAHILL: Right. And I mean, and initial reports on it were that civilian contractors had been killed. And the image that was portrayed was that these were sort of like water specialists or engineers that were being dragged through the streets. And then, it emerged that in fact they were these mercenaries working for a private company called Blackwater USA. And we watched as the Bush administration then began to escalate the rhetoric. And it became clear that they were gonna lay siege to the city of Fallujah. And what happened in the aftermath is well known. The US military was ordered to destroy the city. Hundreds of Iraqi civilians were killed. A number of US troops. And I began from a very simple question. How on earth were the lives of four corporate personnel — not US soldiers, not humanitarian workers. But how were the lives of these four corporate personnel worth the death of an entire Iraqi city? That siege had an incredibly devastating impact on events on the ground in Iraq. It gave rise to the Iraqi resistance. Fueled it. Attacks escalated against US forces. And it was -- it was really the moment that the war turned over the deaths of these four Blackwater guys.

BILL MOYERS: Now, how would our diplomats be protected if it weren't for the private security contractors? The army is stretched thin. Isn't there a role for these people?

JEREMY SCAHILL: Well, I think that the fact is that the US military has not historically done the job that Blackwater is doing. That was done through diplomatic security. And the role for these companies is envisioned as protecting diplomats in all these countries around the world. But in Iraq, you're talking about an occupation of a country. And without these private sector forces, without companies like as Blackwater, Triple Canopy and Dyncorp, the occupation wouldn't be tenable.

BILL MOYERS: Why?

JEREMY SCAHILL: Well, right now in Iraq, there are 180,000 contractors operating alongside 170,000 US troops. So it's effectively a doubling or more than doubling of the occupation force.What this does is it subverts the citizenry in the United States. You no longer have to have a draft. You don't have to depend on your own citizens to fight your wars. You can simply hire up the poor of the world to work for American and British companies occupying another country.

BILL MOYERS: What do these private contractors, their guys, make compared to American soldiers on the ground?

JEREMY SCAHILL: Well it varies widely depending on the company, depending on their role, depending on their nationality.If you're a former Navy Seal or a Delta Force guy working for Blackwater, you can make about 600 dollars a day for your work in Iraq. I mean, we're talking six figure salaries. Some of these guys working for private military companies make as much as General Petraeus if not more.

BILL MOYERS: Which is?

JEREMY SCAHILL: He makes about $180,000 a year. Average troops in the ground, some of these kids are being paid forty thousand dollars a year to be in the exact same war zone as Erik Prince's men from Blackwater. And they're wearing the American flag on their shoulder, not the Blackwater logo.

BILL MOYERS: Didn't I read somewhere that one of our generals said we couldn't be here without Blackwater and these other companies? We couldn't be occupying. Or something to that effect?

JEREMY SCAHILL: Yeah. I mean, well, General Petraeus himself has been guarded by private contractors in Iraq. I mean, what message did that send when the general who's overseeing the surge in Iraq is guarded at times not by the US military, but by private forces.

BILL MOYERS: What message does that send?

JEREMY SCAHILL: Well, I think it sends a message that the United States military is essentially a subservient player to a corporate army in Iraq.

BILL MOYERS: I don't read that. I read it that Blackwater is the corollary to the -- complement to the the military.

JEREMY SCAHILL: Well, Erik Prince likes to describe Blackwater as the sort of Federal Express of the national security apparatus. He says if you want a package to get somewhere, do you send it through the post office or do you send it through FedEx? But the fact is, the US military is the junior partner in the coalition that's occupying Iraq to these private companies. There are over 170 mercenary companies like Blackwater operating in Iraq right now. That's almost as many nations as are registered at the UN. And I think this isn't just about Iraq. It's also looting the US treasury.

BILL MOYERS: What does it say that this industry has become so essential, this peace and stability industry — these mercenaries as you call them.

JEREMY SCAHILL: Right. Well, I think we're in the midst of the most radical privatization agenda in our nation's history. We of course see it in schools. We see it in the health care system, in prisons. And now, we're seeing it full blown in the war machine. What I ultimately see as the real threat here is that the system of the very existence of the nation state I think is at stake here. Because you have companies now that have been funded with billions of dollars in public money using that money to then build up the infrastructure of private armies some of which could take out a small national military. And the old model used to be if a company wants to go into Nigeria for instance and exploit oil, they have to work with the juntas forces in order to do that. Now, you can just bring in your own private military force.

BILL MOYERS: Is it conceivable to you that these private contractors could be -- could wind up fighting the war against drugs in Columbia? Fighting the terrorists --

JEREMY SCAHILL: They already are.

BILL MOYERS: They are?

JEREMY SCAHILL: Dyncorps for years, which is a massively publicly traded mercenary outfit, has been in Colombia for years. They've been in the Balkans. They're all over the place.

BILL MOYERS: Under contract to...?

JEREMY SCAHILL: Under contract with the US government. The Colombian government receives 630 million dollars a year to fight the so-called war on drugs. Of that 630 million dollars, half of it goes to US war contractors. They're in Bolivia. They're in Ecuador. They're in Colombia. Blackwater recently won a fifteen billion dollar contract that it's gonna share with four other companies to fight terrorists with drug ties.

BILL MOYERS: Look, these -- the journalists we saw, all good journalists, some of them my friends. I admire them. But I was struck that no one confronted Prince about the specifics of his private army. How do you explain that?

JEREMY SCAHILL: Well, I'm not sure why they didn't do it. I feel like some of these interviews that have been done with him would make the barons of the Soviet media empire blush with embarrassment for how this was handled. I mean, this is a man who is building up nothing short of a parallel national security apparatus. He not only has his Blackwater Security which is what's deployed in Iraq. He has a maritime division, an aviation division. He recently started his own privatized intelligence company called Total Intelligence Solutions — that's headed by a thirty year veteran of the CIA, the man who led the hunt for Osama bin Laden, Cofer Black, who oversaw the extraordinary rendition program. This is the man who promised President Bush that he was gonna have his operative in Afghanistan chop off Osama bin Laden's head, place it in a box with dry ice and then have it hand delivered to President Bush. He's now the number two man at Blackwater USA. He's the vice chairman of the company. Blackwater has just won a 92 million dollar contract from the Pentagon to operate flights throughout central Asia. This is a company that is manufacturing surveillance blimps and marketing them to the Department of Homeland Security. Their own armored vehicle is called the Grizzly. I mean, Blackwater's gonna be around for a very long time.

BILL MOYERS: And yet, Prince told Charlie, in effect, you know, we're just a very robust temp agency. Sort of like Kelly girls.

JEREMY SCAHILL: I really don't know what to say to that. I mean what, are they just answering phones somewhere? No, these are guys that have worked inside of Afghanistan. They've been responsible for so much death and destruction in Iraq. And it's sort of -- it's the sanitizing of the role of Blackwater. Well, I mean, Erik Prince likes to portray Blackwater as this sort of apple pie operation, all-American operation. And yet, his company has recruited soldiers from all around the world and deployed them in Iraq. Chilean commandos some of whom trained and served under Augusto Pinochet.

BILL MOYERS: The dictator.

JEREMY SCAHILL: The dictator of Chile, were hired up by Blackwater. They worked with a recruiter who had been -- a Chilean recruiter who had been in Pinochet's military. And they hired up scores of Chileans, brought them to North Carolina for evaluation and then sent them over to Iraq. Chile was opposed to the occupation of Iraq. Was a rotating member of the security council at the time of the invasion opposing it. It said no. We won't join the coalition of the willing. And so, Blackwater goes in and hires up soldiers from a country who's home government is opposed to the war. And deploys them in Iraq. That's a subversion of the sovereignty of the nation of Chile. Blackwater has hired Colombian soldiers and paid them 34 dollars a day to be in Iraq as well. They've hired Bulgarians, Fijians, Poles. So, I'm not quite certain what Erik Prince is talking about. In fact, his very definition of mercenary describes Blackwater, which is a professional soldier serving a foreign power. That's the definition Prince provides.

BILL MOYERS: But he objects to that term, mercenary, doesn't he?

JEREMY SCAHILL: He says its slanderous.

BILL MOYERS: I was intrigued to learn that the PR agency that is handling Prince, Burson-Marsteller , is also the guy who heads -- the CEO is also Hillary Clinton's top strategist, Mark Penn.

JEREMY SCAHILL: Mark Penn.

BILL MOYERS: Mark Penn. Sort of -- he's been called Hillary's Rove. What -- I know something about how this system works. How a PR company comes to you and says hey I've got this client that would like to be on air here. Here's how we'd like to do it. And then, you see the same thing in being repeated from show to show to show — like Hillary Clinton was on all five of the Sunday morning talk shows recently. What have you learned about how the system works between the political and media elites?

JEREMY SCAHILL: Well, I mean, PR companies are also mercenaries and I know oftentimes work for the highest bidder. I think it's interesting that --

BILL MOYERS: They're not shooting people though.

JEREMY SCAHILL: No, no, no. But they're mercenaries in the sense that they'll rent their services out to anyone. And once you're defending Erik Prince, you're working for him, then you become part of his sort of mercenary operation. I also think that it was a strategic choice to go with the company with Mark Penn because of his connection with the democrats and Hillary Clinton. But let's, lets remember here we're talking about Blackwater right now because we have a Republican administration. For so many years, we had a Republican dominated Congress. Blackwater is certainly the beneficiary of the Republican monopoly in government. But this system has been bi-partisan for a very long time. When Hillary Clinton's husband was in the White House, he was an aggressive supporter of the privatization of the war machine. Bill Clinton used mercenary forces in the Balkans. Who do we think gave Dick Cheney's company all of those contracts during the Nineties? We talk about Halliburton. It was Clinton. It was the Clinton administration. And Blackwater may be an extraordinarily Republican company. But they're gonna be around when there's a Democrat in office.

BILL MOYERS: None of these -- none of my colleagues seem to want to press Prince on his, deeply on his political connections. What can you tell us about those connections?

JEREMY SCAHILL: Well, there are two things at play here. There's the funding of congressional candidates. And Erik Prince has given over a quarter of a million dollars to Republican candidates. He's also given money to the Green Party to defeat Democratic candidates in the 2006 election cycle. So, he's a pretty committed supporter of the Republican party. But what I think is more interesting is Erik Prince's connection to radical religious right organizations. I mean, he comes from a family where his father built up a very successful manufacturing empire called Prince Manufacturing. And the invention that they were best known for is the now ubiquitous lighted sun visor. You pull down the visor in your car and it lights up. You have a bit of Blackwater history riding around in your vehicle. And so, Prince grows up in this household where he watches his father using that business as a cash generating engine to fuel and fund the rise not only of the Republican revolution of 1994, but also of several of the core groups that make up the radical religious right. His dad gave the seed money to Gary Bauer to start the Family Research Council. They were very close to James Dobson and his Focus on the Family Prayer Warrior Network. Erik Prince was in the first team of interns that Gary Bauer took on in Washington at the Family Research Council. And Erik Prince's sister Betsy married Dick Devos, heir to the Amway Corporation fortune, the owners of the Orlando Magic basketball team. And together, these two families merged in a kind of marriage that was commonplace in the monarchies of old Europe. And together, they formed this formidable behind the scenes power player in radical right wing politics in this country. And Erik Prince as a young man goes down, he interns in George H. W. Bush's White House but complains it's not conservative enough for him. And so, he backs Pat Buchanan in his insurgency campaign in 1992. So, these are sort of the people that peppered the landscape of young Erik Prince's life. He also interned for Dana Rohrabacher, a former speechwriter for Ronald Reagan.

BILL MOYERS: Now a congressman from California.

JEREMY SCAHILL: And now a congressman from California. In fact, what's interesting is Rohrabacher issued a defense of Erik Prince after his congressional testimony and said that Erik Prince is gonna go down in history as a hero, just like Oliver North.

BILL MOYERS: You say in your book, what is particularly scary, you acknowledge that the Democrats play this game, too, Clinton and so forth. But you write, "What is particularly scary about Blackwater's role in a war that President Bush labeled a crusade is that the company's leading executives are dedicated to a Christian supremacist agenda." Now, you go on and off with the evidence for that in the book. But when I read that, I thought, is that just a coincidence? I mean, Blackwater is not the result of his Christian or religious impulses. I mean, it's a business operation, isn't it?

JEREMY SCAHILL: Well, I mean, I believe that Erik Prince is an ideological foot soldier. And I do believe that he's a Christian supremacist. And I think it's very easy to explain that. I mean, look, this is the guy who gave a half a million dollars to Chuck Colson, the first person to go to jail for Watergate who's now becoming a very prominent evangelical minister and an advisor to President Bush, one of the people behind the safe face initiatives. And Chuck Colson has said things like when Mohammed wrote the Koran, he had had too many tamales the night before. Also one of the leading executives of Blackwater, Joseph Schnitz is an active member of the Military Order of Malta, a Christian militia dating back to the Crusades. And I believe that these men do have an agenda that very closely reflects adherence to a sort of crusader doctrine.

BILL MOYERS: You just mentioned something that was obvious as I read your book. I mean, this is the revolving door. Cofer Black, head of counter intelligence at the CIA leaves the government, goes to work as the number two man at Blackwater. Guys leave the Pentagon go to work for him.

JEREMY SCAHILL: It's not a revolving door. It's a bridge. They go back and forth.

BILL MOYERS: I mean, it's not unique? This is true of so many of these companies, right?

JEREMY SCAHILL: Right. But Blackwater has emerged sort of as the -- it's almost like an armed wing of the administration in Iraq. Because it doesn't work for the Pentagon. It works for the State Department. And the fact that Blackwater is such a politically connected company I think explains why you see this big push back. Because if I was Ambassador Ryan Crocker, I wouldn't want to come within ten countries of the Blackwater body guards. I mean, when your body guards become more of a target than you, maybe it's time to get a different security detail. So, why is it so important to the US government that they keep Blackwater on the job in Iraq? I think part of it is an institutional loyalty. Blackwater is very fond of saying we've never lost a principle. No US diplomat has died under our watch.

BILL MOYERS: He said that over and over on these interviews.

JEREMY SCAHILL: Oh, yeah. Yeah. And of course, and, you know, the Republicans in Congress during the hearings said that's the statistic that's most important. But the question needs to be asked, at what price? When you ride into a village and you shoot at cars that come too close to you, that has a ricochet effect that where, the people whose vehicle you shot at now have a perception of what happens when US diplomats come around. And then, they go and they tell someone else. And maybe you're one of the families of a victim of the Nisour Square shooting where 17 people were killed and over 25 others were wounded. So, yes, Blackwater can walk around bragging about how they haven't lost a single principle. All of their nouns have been kept alive, as they call it. But at what price? And at what price to the US soldiers in Iraq? You know, I've heard from so many soldiers, veterans who say, you know, we're in a village somewhere. And things are going fine with the Iraqis. And we've reached the point where they're not attacking us anymore. And we feel like there's some good will that's been generated.' And in fact, this is an exact story that a translator attached to a special forces unit told me in an e-mail recently. And he said, you know, and then the PSD guys, the personal security detail guys, they come whizzing through with their VIP and they shoot up the town. And the Iraqis in town don't understand that there's a difference between the private forces and the military. And then they conduct revenge attacks against us. And so, it's having a blow-back effect on the active duty military. The misconduct of these forces.

BILL MOYERS: Isn't it also true that some of our soldiers in Iraq are, quote, going Blackwater?

JEREMY SCAHILL: Yeah. I mean, that's, I learned recently that that's the slang. Even if you're going to work for Triple Canopy or Dyncorps, any company --

BILL MOYERS: Other companies, right?

JEREMY SCAHILL: Right. You've got other companies operating in Iraq. The slang of the day is going Blackwater.

BILL MOYERS: Which means?

JEREMY SCAHILL: Which means that you're jumping from the active duty military to the private sector. You know, you're gonna be in the same war zone, but you're gonna make a lot more money. And, you know, the troops I talked to also say that these guys are sort of like the rock stars of the war zone. They've got better equipment than us. They have better body armor. I mean, I talk to these kids. And some of them say, you know, I was in Ramadia at the worst time in 2004. And I never stepped foot in an armored vehicle. And we're bolting steel plates and putting down sand bags on the ground to protect against IADs. And we know it's not gonna really do anything, but we need it for our psychology. And then, they see the Blackwater guys or others whiz by with their six figure salaries and their bulging arms and their wrap around sunglasses. And they're the ones sort of bossing around military officials. And there's two reactions. They either resent them and they say, what message is my country sending me when I'm sitting over here, forty thousand dollars. My mom's back home trying to raise money to buy me some real body armor. And then, I see these guys whiz by with their six figure salary wearing the corporate logo instead of the American flag. Or the other reaction is, I want to be like that. I don't want to be over here working for, you know, the third infantry division. I want to go and work for Blackwater or Triple Canopy.

BILL MOYERS: You know, I had a scary thought during the night as I was thinking about talking to you. And I know some people --

JEREMY SCAHILL: That happens to me a lot. [laughter]

BILL MOYERS: The thought was, you know, suppose we had a national emergency. Suppose the terrorists struck again. And a President, President Hillary Clinton, or President Barack Obama declared marshal law in order to try to deal with this threat. And there was a private army of twenty thousand soldiers that I could call upon to throw a ring around the capital and make sure that the Congress didn't leave town or didn't get back to the capital if -- how far fetched is that?

JEREMY SCAHILL: Well, I mean, I was in New Orleans in the aftermath of Hurricane Katrina. And I think we saw a real window into the possible future. You know, I was standing on a street corner in the French quarter on Bourbon Street. And I was talking to two New York City police officer who had come down to help. And this is just a couple of days after the hurricane had hit. And this car speeds up next to us. No license plates on it, a compact car. And three massive guys get out of it. And they have M-4 assault rifles, bullet proof vests, wearing khakis, wrap around sunglasses, baseball caps on. And they come up and they say to the cops, "Where are the rest of the Blackwater guys?" And my head sort of started, you know, I didn't even hear the answer. I couldn't believe what I was hearing. Where are the rest of the Blackwater guys? So, they get back in their vehicle and they speed off. And I said to this cop, Blackwater? You mean the guys in Iraq and Afghanistan? They said, oh, yeah. They're all over the place down here. And so, I said, well, I'd like to talk to them. Where are they? And they said, you can go either way on the street, implying that they're everywhere. So, I walked a little bit deeper into the French quarter. And sure enough, I encountered some Blackwater guys. And when I talked to them, they said that they were down there to confront criminals and stop looters.

BILL MOYERS: Who called them in?

JEREMY SCAHILL: Well, this is an interesting story. Erik Prince sent them in there with no contract initially. About 180 Blackwater guys were sent into the Gulf. They got there before FEMA. I don't even know if FEMA's there yet. But they got there before FEMA, before there was any kind of a serious operation in the city at all.

BILL MOYERS: On Prince's own decision?

JEREMY SCAHILL: Well, so Prince sends them in. Within a week, Blackwater was given a contract from the Department of Homeland Security Federal Protective Service to engage in security operations inside of New Orleans. At one point, Blackwater had six hundred men deployed down there stretching from Mississippi through -- from Texas through Mississippi and the Gulf. They were pulling in $240,000 a day. Some of these guys though had just been in Iraq two weeks earlier guarding the US ambassador. Now, they're in New Orleans. They say, oh, we do this sort of as a vacation. One was complaining to me that there wasn't enough action down here. And when I talked to them, they told me they were getting paid 350 dollars a day, plus a per diem.

BILL MOYERS: By homeland security?

JEREMY SCAHILL: Well, they were being paid by Blackwater. When I got Blackwater's contract with the Department of Homeland Security, it turns out that Blackwater billed US taxpayers 950 dollars per man per day in the hurricane zone.

BILL MOYERS: A profit margin of 600 dollars.

JEREMY SCAHILL: Well, I mean, the math on this stuff is always complicated. And Erik Prince and his men are very good at drawing up charts and sort of, you know, just saying, well, there's this detail and this detail. The Department of Homeland Security then did an internal review and they determined that it was the best value to the taxpayer, at a time when the poor residents of New Orleans were being chastised for how they used their two thousand dollar debit cards that often didn't work, the ones provided by FEMA. But what was even scarier than seeing the Blackwater operatives on the streets of New Orleans was, I encountered two Israeli commandos who had been brought in by a wealthy businessman in New Orleans and set up an armed checkpoint outside of his gated community. And they were from a company called Instinctive Shooting International. ISI, which is an Israeli company. I mean, and I went up and I talked to them. And they tapped on their automatic weapons and said, you know, over in our country, when the Palestinians see this, they're not so afraid because they're used to it. But you people, you see it, and you're very afraid. They were almost proud of the fact that I was sort of in awe seeing Israeli commandos patrolling a US street, operating in fact an armed check point.

BILL MOYERS: I mean, once upon a time, companies and others hired Pinkerton guards, private guards. But never on this scale, right?

JEREMY SCAHILL: No. I mean, you know, it was like Baghdad on the bayou down there in New Orleans. And -- I mean, this is the point I'm making. The poor drowned. They are left without food. They're called looters when they take perishable goods out of a store when they've been systematically neglected. The rich bring in their mercenaries to guard their properties or their businesses or their hotel chains. And I think it's a window into what happens in a national emergency. And in this country, the poor are left to suffer and die and the rich bring in their mercenaries.

BILL MOYERS: Just the other day, The Wall Street Journal had a big story that said Erik Prince is laying plans for an expansion that would put his gunmen in hot spots around the world doing far more than guard duty. What, how do you read that?

JEREMY SCAHILL: They view themselves as peace keepers. They call themselves the peace and stability issue. They certainly have intimated that they would be willing or want to go into Darfur. But they've been pushing this for a while. And I think this is a gateway. And Blackwater executives said, "You send us in, and it'll be Janjaweed be gone."

BILL MOYERS: But suppose they could go in there as mercenaries and bring an end to that conflict. And get food in for those refugees in a way that the United States government can't do.

JEREMY SCAHILL: Well, what does that say though about the structure of the world? What does it say about nation states and international institutions? I mean, the Bush administration has so maligned the United Nations and rendered it irrelevant and pulled the rug out from under it in so many ways. And I think that the last thing that is needed in Darfur is more private guns. I mean, who's to say that's what would happen if Blackwater gets sent into Darfur in the first place? I mean, who's gonna be monitoring them and overseeing them? I don't buy that the mercenaries are the solution to the crisis in Darfur. I --

BILL MOYERS: But Erik Prince told all of these journalists, "We want more accountability. We welcome it."

JEREMY SCAHILL: This is one thing that I find fascinating. When Blackwater was sued -- for wrongful death from the four guys killed in Fallujah in March of '04 and then Afghanistan plane crash, the legal argument that Blackwater put forward is quite an interesting one. "We can't be sued." What they said is, "We should enjoy the same immunity from civilian litigation that's enjoyed by the U.S. military." At the same time, their lobbyists and spokespeople are waxing poetic in the media about how it would be inappropriate to apply the uniform code of military justice, the court marshal system, to Blackwater because we're civilians. So, when it's convenient, we're part of the U.S. total force, part of the war machine, and should be treated like the military. And when it's convenient, oh, we can't be subjected to military law. Because we're actually civilians.

BILL MOYERS: But to whom are they accountable? Who can hold them to judge them?

JEREMY SCAHILL: Well, no one apparently has held them to any kind of accountability thus far. Not a single one of them has ever been charged with any crimes whatsoever.

BILL MOYERS: Isn't there something in the contract?

JEREMY SCAHILL: In fact, when Erik Prince -- well, they talk about -- "Oh, there's contracts overseeing this way. And they go through our papers and we're audited." But on life or death issues, not a single thing has ever happened to a Blackwater contractor, except what Erik Prince said. They're given a choice, window seat or aisle seat. And that's -- and they're fired. Look, one of the really disturbing stories that's come out of Iraq in the last year involving Blackwater was that last Christmas Eve inside of the heavily fortified green zone, a drunken, off-duty Blackwater contractor allegedly shot and killed a bodyguard for the Iraqi Vice President, Adel Abdul-Mahdi. In the aftermath of that shooting, this individual was whisked out of Iraq, within 36 hours after that shooting. And then he actually returned back to the region working in Kuwait for another contractor with the Pentagon. The killing happened, December 24th 2006. February of 2007, this individual is back in the Middle East working for another U.S. military contractor and worked there until August. He hasn't been charged with any crime whatsoever. We understand now that the Justice Department is investigating it. The Iraqis clearly labeled it a murder. And it created a major rift between Baghdad and Washington. Imagine if an Iraqi bodyguard shot and killed a bodyguard for Dick Cheney and then the Iraqis just whisked him out of the United States. I mean, what would happen? What message does this send? What does it say that in four years of occupation, hundreds of thousands of contractors, not a single one of them has been prosecuted? Either we have tens of thousands of -- mercenaries in Iraq who are actually Boy Scouts, or something is fundamentally rotten with that system.

BILL MOYERS: What about these suits that had been filed by some of the loved ones of the four contractors who were killed in Fallujah, before Fallujah? What about those lawsuits? Where are they going?

JEREMY SCAHILL: You know, when I read the 60 Minutes transcript and they mentioned the four men who the killed at Fallujah and then they said well -- Blackwater has a memorial for them on the compound, I was waiting for them to say, "And the four families of the men are suing Blackwater for wrongful death." I mean, this--

BILL MOYERS: That wasn't in the piece though, was it?

JEREMY SCAHILL: It was not in the piece.

BILL MOYERS: No. I mean, I saw that Lara Logan and Erik Prince were walking by that memorial --

JEREMY SCAHILL: Right.

BILL MOYERS: -- in North Carolina I think on their home base. And nothing was said about the fact that this suit is happening.

JEREMY SCAHILL: And I, you know, I've gotten to know those four families very well -- over these years of working on this story. And they're interesting. They're military families. They consider themselves to be very patriotic. Some of them are pretty conservative Republicans. And these men were all -- veterans of the U.S. Military, Navy SEAL. Scott Helvenston was one of the youngest people ever to complete the Navy SEAL BUDs training program. He was one of the guys killed there. And, you know, what happened after that, these guys were killed on March 31st, 2004. The families of these men didn't presume any malice on the part of Blackwater. They thought that it was a patriotic American company and that their loved ones were continuing their military service, but doing it through the private sector in Iraq. And some of them disagreed with the war. Some of them supported it. So, when they were killed, they wanted answers as to what happened. And they began calling Blackwater. And they say that the vibe was creepy. That it seemed as though somebody was hiding something, that they weren't being straight with them. And they asked, some of the families asked to see a copy of Blackwater's incident report, the company's investigation of that incident. And Donna Zovko the mother of Jerry Zovko -- they're Croatian immigrants -- she sat down with Blackwater executives at their compound in North Carolina. And when she asked to get that document and look at it, she claims that a Blackwater representative stood up at the table and told her it's a classified document and you'll have to sue us if you wanna see it. And so, Donna Zovko, whose son Jerry was killed in Fallujah, starts becoming close friends with Kathy Heluenston, whose son Scott was killed in Fallujah. And the two of them begin comparing notes. And there's scouring media reports. And then they start to look at the photos. And they realize they weren't really in armored vehicles there. They start to put together pieces. And what emerged was a lawsuit. In January of 2005, the families of those four men -- Wesley Batalona, Michael Teague, Jerry Zovko, and Scott Helvenston, filed a groundbreaking wrongful death lawsuit against Blackwater, charging that the company had sent those men into what was arguably the most dangerous city in the world at the time in unarmored vehicles, short two men, without heavy weaponry and without the opportunity to do a 24-hour risk assessment, all of which they said were in the contract governing their mission that day. And so, Blackwater fought back ferociously. Fred Fielding was one of the original lawyers on the case, more rec --

BILL MOYERS: He had served Richard Nixon's White House. And he's now the counsel to President Bush, right?

JEREMY SCAHILL: That's correct. They've had many law firms. And they've tried to have the case thrown out. They've appealed all the way to the Supreme Court. And twice, the Supreme Court rejected Ken Starr's appeals. And the case is sort of caught up in a little bit of legal limbo right now. But it's being watched very closely by all of the other war companies. Because it's like the tobacco litigation of the '90s. If that one domino goes down, it starts off a chain reaction. And so, a lot of people are paying very close attention to this.

BILL MOYERS: Doesn't Erik Prince as a businessman have to worry about finding new markets? Because the State Department has said when his contract outside the green zone in Iraq expires next May, Blackwater's not likely to be a contestant for a new contract. I mean, there seems to be a tacit understanding between Blackwater and the government that given the shootings in September and all the controversy that's been created, they'd just sort of quietly slip away.

JEREMY SCAHILL: You know what though? In the midst of all of this chaos and crisis and the sort of crisis of image for Blackwater, the company continues to win very lucrative government contracts. The business in Iraq, it can come and go for Blackwater.I don't even think it represents the most lucrative aspects of the company's business. It's just the highest profile. Blackwater also has an affiliate company that they started called Greystone which was registered offshore in Barbados. And that's sort of being portrayed as an actual sort of traditional mercenary outfit. And they're pushing their services to Fortune 500 companies. I mean, that's the target market of their intelligence division.

BILL MOYERS: Fortune 500 companies

JEREMY SCAHILL: Sure. Absolutely. I mean, you look at the guest list of the kickoff ceremony for Greystone, this affiliate of Blackwater that Erik Prince owned. And it's like all of these governments: Croatia, Uzbekistan. It's governments. It's International Monetary Fund. It's corporations. I mean, I think yes. The government business for Blackwater is tremendously important. They do an enormous volume of business in training, of law enforcement, of the military. And they certainly have been involved with training foreign forces as well. They've trained Jordanian attack helicopters. They've been deployed in Azerbaijan. But corporate to corporate, I think the business to business is gonna be a major part of Blackwater's future.

BILL MOYERS: You're a reporter, not a prophet. But what does this foreshadow for our world?

JEREMY SCAHILL: I think it's really scary. I mean, I think that the U.S. government right now is in the midst of its most radical privatization agenda. Seventy percent of the national intelligence budget is farmed out to the private sector. We have more contractors than soldiers occupying Iraq. I think that what this does is it takes -- it sanitizes it also for the American people. There's not a draft. There's been, you know, almost 4,000 U.S. soldiers killed in Iraq; we don't know how many private contractors. But that's a relatively small number compared to Vietnam, for instance, where we talked about 65,000 body bags coming home. And already, people are outraged at it. And I see this as a real subversion of democratic processes in this country and a subversion of sovereignty of nations around the world.

BILL MOYERS: But isn't it a way to keep protest at home against the war in Iraq and other wars from rising to the level of --

JEREMY SCAHILL: Absolutely. Oh, absolutely. I mean, it masks the human cost or the human toll of the war in terms of American lives. Because the contractor deaths are not counted in the official tolls nor are the injuries of them.

And it also masks the true extent of the occupation when over half of your occupation force comes from the private sector. Bush almost never talks about it. He doesn't have to own it in front of the American people. He's having enough trouble owning the 170,000 troops that are over there right now. And the story is starting to slip out. But you're absolutely right. It keeps the death toll down-- in terms of what's being reported. And it keeps protests down as well.

JEREMY SCAHILL: What I see in the bigger picture here is what the real revolution is in terms of U.S. politics is that they're taking billions of dollars in public money. And they're privatizing it.

You know, the Pentagon can't give campaign contributions. The State Department can't give campaign contributions. Blackwater's executives can give contributions. DynCore's, Ratheon, Northrop Grumman. And so what they're doing is, they're taking billions of dollars. And it's making its way back into the campaign coffers of the very politicians that make the meteoric ascent of these companies possible. I really view this through the lens of it tearing away at the fabric of American democracy as well.

BILL MOYERS: Jeremy Scahill, thank you very much for joining me and for writing Blackwater: The Rise of The World's Most Powerful Mercenary Army.

JEREMY SCAHILL: My pleasure, Bill.