The Al Capone Solution for the Blackwater Problem

By David Isenberg
Author, Shadow Force: Private Security Contractors in Iraq

Despite years of arguing, the state of legal frameworks for private military companies remains unclear. This is for a variety of reasons; using inapplicable laws, such as those for old style mercenaries, questions of jurisdiction, lack of resources, and questions of political will.
To try and clarify the existing, confusing, legal status quo a number of news laws and amendments to existing laws, both nationally and internationally, have been proposed in recent years. Some are undoubtedly beneficial, while others are yet to be tested by inevitable appeals.

But just when one thinks that everything that can be proposed has been along comes a new idea. As the saying goes, out of the mouths of babes. In this case the babe is André M. Penálver, a student at Cornell University Law School.

He writes in the current issues of the Cornell University Law Review:

In the aftermath of the Nisour Square tragedy, in which seventeen Iraqi civilians died as a result of actions by Blackwater USA, a security contractor, the United States was confronted with a loophole in its criminal law. While the responsible Blackwater guards would face stiff penalties under the Foreign Corrupt Practices Act for any accounting fraud committed abroad, there was no obvious criminal statute that would cover the senseless act of violence in Nisour Square. With the growth of military contractors specifically and the spread of globalization generally, violent acts by corporations proliferate.
This note aims to show that a criminal statute with extraterritorial jurisdiction is the proper solution to the Blackwater problem and the plague of corporate human rights abuses abroad. The Foreign Corrupt Practices Act (FCPA) already holds corporations criminally liable for accounting and bribery crimes committed overseas. Congress need only amend the FCPA to address a larger scope of crimes, including human rights abuses, to hold corporations such as Blackwater responsible for their actions. That our statutes make a crime of a corporation's over- seas accounting fraud but not overseas murder is an absurdity that demands change.

His note "Corporate Disconnect: The Blackwater Problem and The FCPA Solution" is doubtful about the ability of international law to address the issue of legal accountability for PMC. He writes a solution rooted in international law is also problematic. "First, there is the ongoing debate over whether international law really is law at all. International law lacks the backing of a legislature, an executive body, and a judiciary with compulsory jurisdiction. These qualities have led some to conclude that international law is more 'positive morality' than law."

And, even if international law is law, there is another concern in finding a forum to apply it. Even if international law did provide all the necessary tools to address something like the Blackwater problem, it does not address whether the United States would ever subject itself or its citizens to such an international criminal trial. To date, the United States has resolved not to let the International Criminal Court try its citizens.

Congress cites the lack of constitutional protections available in the ICC. This same concern would apply to any international tribunal; thus, one could conclude that the United States would not fully cooperate with any international criminal court.

The situation is little better in U.S. courts. In practice, American judges give short shrift to international law in their courtrooms. Using the many rules available under the doctrine of "judicial provincialism," judges may find ways to prevent a hearing on international law cases, to prevent international law from providing the rule of decision in a case, or to hinder the proper handling of international law.

Even if U.S. judges decide to use international law in their decisions, supplanting domestic law with international law raises yet another constitutional concern.

Penálver also explains why recent efforts, such as the amended Military Extraterritorial Jurisdiction Act is inadequate. He writes:

Although MEJA offers a "significant expansion of American criminal law over crimes committed on foreign soil," and although the United States has attempted to indict the Blackwater guards under MEJA, it is not a clear solution to the problem at hand for three reasons.
First, and most importantly, MEJA would only apply to the individual guards: Blackwater USA itself cannot be prosecuted under MEJA. Second, it remains to be seen whether a conviction of the guards is even possible: the government's initial indictment under MEJA has been dismissed.

To date, there has been only one successful prosecution of a contractor under MEJA, and this involved child pornography.

Moreover, MEJA has never applied to contractors working for the State Department, as with the Blackwater guards at Nisour Square. Third, a prosecution under MEJA will not likely clarify the law in the least. If there is a prosecution under MEJA, it will be by twisting the statute into a "an unprecedented use of the law," likely producing protracted, technical arguments aimed at scuttling the case well before a jury has the opportunity to evaluate the guards' actions." Criminal law deserves more clarity than this extension of MEJA can provide. Finally, setting aside this dubious application of MEJA, it would certainly not address any of the other human rights abuses that corporations commit overseas.

Using the FPCA offers certain advantages. It is unique in its extraterritorial jurisdiction. The FCPA applies to issuers, domestic concerns, and -- since 1998 -- "any person." As applied to U.S. issuers and persons, there is no requirement of a territorial nexus between the corrupt act and the United States.

The FCPA may reach foreign agents and employees who have little contact with the United States. Likewise, the FCPA could create liability for a domestic concern through the actions of one of its foreign agents, even if that agent has no contact with the United States.

And unlike the case with MEJA the Justice Department and the SEC have enforced the FCPA with frequency and severity. In recent years, there has been an increase in the number of investigations by the SEC, and both the SEC and DOJ have sought larger penalties.

In 2004, for the first time, the SEC required a company to disgorge profits of unlawful FCPA activities; that practice is now routine.

More proactively, corporate self-monitoring to ensure FCPA compliance has increased, as has voluntary disclosure arising from corporations' internal investigations.

While the FCPA landscape continues to evolve, all signs point to heightened scrutiny and graver consequences for violators.

In other words, there is nothing like the threat of taking away a corporation's profits to get its attention. This is somewhat akin to convicting Al Capone for tax evasion instead of murder.

According to Penálver, "The power of private corporations that governments have wrestled with for centuries takes on new importance in the context of globalization. While powerful governments such as the United States have learned to manage the world's largest corporations, globalization puts giant interstate corporations into contact with relatively weaker states that have little experience in dealing with the accompanying problems."

To put this in proper context Penálver notes that the modern state is just one of several types of corporations. He writes:

"There have been times that states have been so weak, or business corporations have been so strong, that such corporations have supplanted the state altogether. Not long after Hobbes articulated the source of a state's power, private corporations posed their first challenge to state authority. Beginning in the seventeenth century, European trading monopolies operating in India, North America, and Africa formed the foundations of private empires.

Those monopolies include such historic brand names as the East India Company, Hudson Bay Company, and the British South Africa Company.

However, for the FPCA to be used in regard to PMC it will need to be amended so that corporate law is as much concerned with murder as accounting fraud.


For all the FCPA's success in combating bribery, it is also the source of a conundrum. Although Congress enacted the FCPA to prevent "ethically repugnant" behavior by corporations, the Act ignores human rights abuses while throwing the book at corporate fraud. Had Blackwater officials knowingly changed the figures in its accounting books, the corporation would face a fine of up to $25,000,000 and its employees could spend up to twenty years in jail. But as it happens, because Blackwater guards wrongfully killed seventeen civilians and undermined U.S. interests in Iraq, they and their corporation find them-selves in a legal loophole with no certain criminal liability.
It is not hard to see the disconnect in U.S. extraterritorial law. While U.S. law severely punishes the relatively harmless act of accounting fraud, it offers no remedy for a corporation's acts of brutal violence.

Penálver believes that all that is presently necessary to address human rights abuses by corporations such as Blackwater is political will. Congress could remedy the problem by expanding the scope of the FCPA.

He concludes;

Much of the necessary language may come from existing domestic and international legal concepts. Substantively, Congress could seek to create criminal liability for corporations that aid and abet or perpetrate a crime against peace, a war crime, or a crime against humanity. Congress could define such terms by looking to the language of international law, particularly the Nuremberg Principles. First, crimes against peace are the "planning, preparation, initiation or waging of a war of aggression or a war in violation of international treaties, agreements or assurances; or participation in a common plan or conspiracy for the accomplishment" of any of the same. Second, war crimes are "violations of the laws or customs of war which include, but are not limited to, murder, ill-treatment or deportation to slave labor or for any other purpose of the civilian population of or in occupied territory; murder or ill-treatment of prisoners of war or persons on the seas, killing of hostages, plunder of public or private property, wanton destruction of cities, towns, or villages, or devastation not justified by military necessity." Third, crimes against humanity are "murder, extermination, enslavement, deportation and other inhumane acts done against any civilian population, or persecutions on political, racial, or religious grounds, when such acts occur in execution of or in connection with any crime against peace or any war crime.