Erik Prince, chairman of the Prince Group, LLC and Blackwater USA testifies before the House Oversight and Government Reform Committee hearing on 'Private Security Contracting in Iraq and Afghanistan,' October 2, 2007 on Capitol Hill.
Erik Prince, owner and CEO of Blackwater USA, deflected questions about his company's profitability during the House Oversight Committee's hearing on private security contracting Tuesday, but ultimately agreed to provide written responses to specific questions about its earnings.
Part of the hearing's stated purpose was to assess the cost to US taxpayers of the employment of private contractors, and a number of members of the committee questioned Prince about his own income, profit margins on contracts, and the overall earnings of his company.
The company had prepared an assessment of its Worldwide Personal Protective Service contract for the State Department, which indicated the profit margin on that particular contract was approximately 10%, but when asked for a general estimate of his company's overall profitability, Prince demurred.
He reminded the panel of the price-savings benefits of competition between corporate entities, stressing the "private" aspect of private enterprise, implying that Blackwater's profit was none of the government's business.
But members of Congress tasked with oversight do not like being given limitations on their reach.
Rep. Chris Murphy (D-CT) confirmed that Prince had reported 90% of Blackwater's revenue came from government contracts, paid for by taxpayer money, and expressed disbelief that a corporate entity that owed its existence to the American public could withhold such information.
After a short consultation with his legal team, Prince changed track and said that he would provide written responses to specific written questions about profitability.
When pressed to provide an immediate general estimate on the company's profit-level, the CEO said he didn't actually know, trying to assuage the committee members' disbelief by explaining, "I am not a financially-driven guy."
Regardless of Prince's own express motivations, the exchange highlighted something that will likely be revisited as Congressional leaders move forward in their debate over the use of private contractors--transparency in accounting.
Prince buckled under pressure today by agreeing to provide answers to questions about company profits, though it remains to be seen if he responds to requests for information with a useful level of detail.
But Congressional investigators have come up against the corporate financial firewall in many of their investigations of contractor abuses, so legislating greater transparency for any company who wants to work for the US could be an eventual outcome of this process.
Iraqslogger's Robert Young Pelton is doing the rounds of DC media today and will post his own perspective on the hearing tomorrow morning.
For further reading now, here is Erik Prince's prepared statement for the hearing.
Erik Prince's Prepared Statement statement.of.erik.d.prince.pdf