(10-02) 10:04 PDT WASHINGTON, (AP) —

Blackwater chairman Erik Prince vigorously defended his private security company on Tuesday, rejecting charges that his staff acted like a bunch of cowboys immune to legal prosecution while protecting State Department personnel in Iraq and Afghanistan.

“I believe we acted appropriately at all times,” Prince, a 38-year-old former Navy seal, told the House Oversight and Government Reform Committee.

His testimony came as the FBI is investigating Blackwater personnel for their role in a Sept. 16 shootout that left 11 Iraqis dead. The incident and others, including a shooting by a drunk Blackwater employee after a 2006 Christmas party, has raised pointed questions by lawmakers about whether the government is relying too heavily on private contractors who fall outside the scope of the military courts martial system.

“Privatizing is working exceptionally well for Blackwater,” said Rep. Henry Waxman, D-Calif., committee chairman. “The question for this hearing is whether outsourcing to Blackwater is a good deal to the American taxpayer, whether it’s a good deal for the military and whether it’s serving our national interest in Iraq.”

Waxman said he agreed not to probe for specifics of the Sept. 16 incident during Tuesday’s hearing, upon request by the Justice Department that Congress wait until the FBI concludes its investigation. But Waxman said it was still appropriate to probe Blackwater’s company policies, and whether the State Department helped Blackwater cover up Iraqi deaths.

In particular, Waxman said he was concerned to learn the State Department advised the company on how much to pay the family of an Iraqi security guard shot by a drunken Blackwater employee in 2006. Internal e-mails later revealed a debate within the State Department on the size of the payment, Waxman said.

“It’s hard to read these e-mails and not come to the conclusion that the State Department is acting as Blackwater’s enabler,” Waxman said.

Administration officials, speaking on condition of anonymity to describe an ongoing investigation, said the incident had been referred to federal prosecutors in Seattle, where the former Blackwater employee now lives, but there has been no public announcement of any charges.

Prince said the individual was immediately fired and fined.

“But we as a private organization can’t do anything more. We can’t flog him, we can’t incarcerate him,” said Prince, adding that he would be “happy to see” further investigation by law enforcement.

The Blackwater chairman said he also supports legislation that would guarantee Blackwater employees and other private security companies working for the State Department are subject to prosecution in U.S. courts. The House was expected to pass such a bill, sponsored by Rep. David Price, D-N.C., later on Tuesday.

Waxman also cited a November 2004 crash in Afghanistan of a plane piloted by Blackwater pilots as an example of what he said is the company’s cavalier attitude about how it operates.

The crash of flight “Blackwater 61″ killed the Blackwater crew and three U.S. military personnel who were passengers. According to information gathered by Waxman’s staff, the Blackwater pilots lacked experience flying in Afghanistan, yet they were joy riding through a valley before crashing into a canyon wall.

Prince acknowledged pilot error led to the crash, but also said his company’s aviators often fly missions in difficult conditions. He said the military violated its own rules by loading people and explosives on Blackwater 61. But Blackwater flew the mission anyway because that’s what its government customer wanted.

“There is no FAA in Afghanistan,” he said.

Throughout the hearing, Prince defended his staff as courageously defending U.S. diplomats overseas. He said 30 Blackwater contractors have been killed in action and no Americans have died while in its protection.

“We’re the targets of the same ruthless enemies that have killed more than 3,800 American military personnel and thousands of innocent Iraqis,” he said, sitting alone at the witness table.

Directly behind Prince sat Stephen Ryan, an attorney with the law firm McDermott Will & Emery.

Rep. Tom Davis, R-Va., the committee’s top Republican, said the State Department is “trying to get it right,” but its oversight of security contractors “seems to have some blind spots as well,” according to his opening statement.

There’s little data on contractor performance, Davis said, “so it’s impossible to know if one company’s rate of weapons related incidents is the product of a dangerous ‘cowboy’ culture or the predictable result of conducting higher-risk missions.”

Davis said concentrating only on Blackwater won’t answer the complex questions surrounding the use of security contractors.

“Nor are we likely to learn much by focusing on one sensational incident still under investigation,” Davis said.

Prince rejected a claim in a congressional report released Monday, saying Blackwater does not engage in “offensive or military missions, but performs only defensive security functions.”

He also disputed the math that concludes security contractors cost far more than American forces to protect U.S. diplomatic personnel. In its report, Waxman’s committee said Blackwater charges the government $1,222 each day for a single security contractor, which works out to $445,000 on an annual basis. That’s six times the cost of a U.S. soldier, the report said.

Prince said there’s a large amount of expensive training for military personnel that the government pays for, but is not calculated in these unflattering estimates of what his company charges.

“That sergeant doesn’t show up naked and untrained,” Prince said.

Blackwater, founded in 1997 by Prince and headquartered in Moyock, N.C., is the largest of the State Department’s three private security contractors with nearly 1,000 personnel working in Iraq. The others are Dyncorp and Triple Canopy, both based in Washington’s northern Virginia suburbs.

Blackwater has had more shooting incidents than the other two companies combined, according to Waxman’s report.

Among the Monday report’s most serious charges was that Blackwater contractors sought to cover up a June 2005 shooting of an Iraqi man and the company paid Д with State Department approval Д the families of others inadvertently killed by its guards.

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Associated Press writer Anne Gearan contributed to this story.

«oversight.house.gov»

A JUDGE today set bail at 10 million dollars for Kenny Richey as he awaits a retrial after his death sentence was overturned.

His lawyers immediately said they would try to raise the 500,000 needed to secure his immediate release. Bail laws in Ohio mean prisoners have to come up with 10 per cent of the full bail figure to be freed.

Judge Alan Travis also ordered that the 43-year-old, from Edinburgh, must be placed under 24-hour house arrest if he is released from the county jail where he is being held in Ohio.

Richey faces a new trial over the death of two-year-old Cynthia Collins, who died in an apartment fire in 1986.

His lawyer Ken Parsigian said today that Richeys family did not have the bail money needed.

But he added: Were going to try to raise the money.

Richey came within an hour of being executed 13 years ago, after being convicted of starting the fatal fire.

He was sentenced to execution, but after a long legal fight a federal appeals court threw out his conviction and death sentence in August.

Richey spoke only once during todays hearing to confirm that he understood that if he was released, he was not to have any contact with witnesses.

Richey told the judge: Yes sir, his Edinburgh accent still apparent.

Later, as he was led out of court in handcuffs, Richey declared: Pretty good day.

Putnam County prosecutor Gary Lammers argued that Richey should not be granted bail or it should be set at 25 million dollars (12.5m).

He said that Richey threatened witnesses and law enforcement officers during his previous trial, and has since made other, similar threats.

Richeys father, James, earlier said nothing had changed in the courtroom where his son was sentenced to death over the years, and his sons position was still the same.
He didnt start the fire, he didnt kill the little girl. Hes not about to admit to anything like that, he said.

Prosecutors plan to try Richey again on aggravated murder, aggravated arson and child endangering charges.

No trial date has been set.

During the last trial, prosecutors said Richey set the blaze to get even with his former girlfriend, who lived in the same apartment building as the girl who died.
He was convicted of aggravated murder and sentenced to die for setting the fire that killed the toddler.

Some of the girls family members came to court today wearing T-shirts and buttons with her picture, but refused to speak to reporters.

Richeys case has drawn support from MPs and the late Pope John Paul II.

During the hearing in Putnam County Common Pleas Court, Richey appeared clean-shaven and paunchy, in contrast to the thin, handsome man with a moustache who was tried more than 20 years ago.

He never smiled, even when his family mouthed words of encouragement and tried to make him laugh.

Mr Parsigian, defending Richey, used the hearing to lay out a snapshot of his defence, saying the states case has become much weaker over the past 20 years while Richeys case has grown stronger.

He told the court he can easily dispute evidence that showed the fire was set on purpose and suggested that the victim may have been the one who started it.
He said the child had twice before started fires that had to be put out by the fire department.

She was fascinated with matches, Mr Parsigian said. That never came up at trial.

August 28, 2007 — Investors who put money into two Bear Stearns hedge funds that blew up because of bad bets on subprime mortgages still might get a chance to recover a bit of their investment.

A federal judge in Manhattan yesterday temporarily blocked investors from seizing the assets of the two funds, but said he is considering allowing U.S. lawsuits.

The Bear Stearns hedge funds had asked U.S. District Court Judge Burton Lifland to recognize the Cayman Islands as the main jurisdiction for the proceedings under Chapter 15 protection, which would bar U.S. lawsuits during the liquidation process.

The two funds were registered in the Cayman Islands, but operated mainly out of New York.

Judge Lifland expects to rule on the matter within 10 days.

Even if he decides in favor of U.S. investors and allows the suits, investors don’t have much hope of recouping much.

Liquidators unwinding the funds are estimating potential recoveries of only $25 million and $50 million for each - a fraction of the funds’ roughly $1.5 billion worth before they imploded.

That makes Bear Stearns itself the better target for investor claims.

“The funds have little or no assets left, so investors would just be spinning their wheels by going after the funds themselves,” said Ryan Bakhtiari, whose securities litigation law firm Aidikoff, Uhl & Bakhtiari is representing investors who lost money on the hedge funds’ collapse.

Bakhtiari said investors were misled about the level of risk.

“The fund was sold as having AAA- and AA-rated investments,” he said. “It’s stunning to think that that kind of credit quality could . . . lose 90 percent . . . of its value in just 60 days,” he said.

Bakhtiari said his firm is representing individual investors, hedge funds and institutions.

“Investors that we have spoken to are very upset,” he said. “They’ve lost significant sums of money.”

Bear Stearns spokeswoman Elizabeth Ventura said the firm intends “to vigorously defend” itself in court against any lawsuit.

“These funds catered to sophisticated investors who were made well aware of the risks involved,” she added. janet.whitman@nypost.com