Posts Tagged Erik Prince

Industry Talk: Simon Mann At Oxford Union

Thanks to James over at Facebook for finding this one. Oxford did a similar question and answer session with Erik Prince awhile back, and these talks are quite good. Great questions and a receptive audience.

Now onto some of the things that Simon Mann brought up that were of interest to me. For company news, he talked a little about New Century and their work in Mexico. That is something to look into. He also mentioned his new book called Kass, which is written from a woman’s point of view. Interesting…

He also talked about working with Vice in North Sudan, so I am sure we will see that video coming out soon. The really interesting bit was him and Erik Prince paling around, for Vice! Like a PMSC hang out session or something. So we will see how that goes. Another cool deal is that he is involved with a virtual reality training company.

At about 18:30 in the video below, he gets a really interesting question from the audience about leadership and discipline in the PMSC world. It was very cool to hear him talk about that element of Executive Outcomes, and what the problems were, and what worked. Unit cohesion is gold for a PMSC, and especially for the kinds of operations EO was involved with. Definitely check that out.

For some lessons learned about his coup attempt and imprisonment in Equatorial Guinea, he really emphasized timing. Meaning the operation was in limbo and open for an entire year before implemented. That is a lot of time for leaks to get out. He said he was pressing to do the operation quickly to minimize leaks, and his higher ups just didn’t get that. He also mentioned regret for not calling a halt to the whole thing in time. They certainly paid the price in prison…

Finally, he mentioned China, which is something I have been writing about here. That eventually, China would probably want to use their own PMSC’s and not western PMSC’s. At this time, they are dependent on western PMSC’s to accomplish OBOR projects, because these companies have so much experience with operations. China does have security companies, and eventually they will get to the same level as western companies. It is a matter of time, and especially with so much money on the line with development.

Great talk and we will see whom else Oxford Union can grab for a good chat. –Matt

 

 

 

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China: OBOR, Africa And China’s Growing PMSC Industry

Members of the Ever Victorious Army, a mercenary army in China, during China’s Taiping Revolution. Led by American Frederick Townsend Ward and later Charles Gordon.

Every once in awhile, someone writes a good article on the state of some of these foreign markets that I really don’t have a good grasp of. For example, I do not speak Chinese, I do not work in the PMSC market in China, and I have had no interaction with Chinese contractors here at the blog or on Facebook. That’s not to say that they are not reading the blog or my FB stuff, but still, it is extremely difficult to get a good read on what is going on with that industry.

So I have to depend upon open source stuff that comes out, and try to put the pieces together. I also use my background as an armed security contractor to sift through what is interesting and what is not. With that said, I found these two articles below, to be very interesting.

The first talks about some key incidents that have fueled some movement in the Chinese PMSC market. In South Sudan last summer, there was a typical African ‘wild fire’ that broke out between the warring political factions there, and Chinese companies and their personnel were trapped. A PMSC named DeWe was called upon to rescue these folks, and their operation lasted over 50 hours. Here is a quote.

On the evening of July 8, the streets of the South Sudanese capital of Juba were raked with gunfire as an uneasy truce between warring political factions broke down. Inside the offices of DeWe Security, a Chinese private security firm, phones started ringing. Panicked Chinese oil workers employed by the China National Petroleum Corp, the main client of DeWe (pronounced DeWei) in South Sudan, were calling an emergency number to say they were in harm’s way and awaiting instructions. For Kong Wei, head of DeWe’s Juba office and a veteran of the People’s Liberation Army who retired five years ago, it was the start of a 50 hour-marathon without sleep as he and his colleagues executed an evacuation plan. “Bullets and shells flew over our compound all day and night”, says Mr Kong. The contractors soon realized that their tin-roofed cinder-block building couldn’t stop bullets ” just one of the many lessons they would learn.
In all, 330 Chinese civilians, stranded at 10 locations across the city, were instructed to hunker down until the airport could reopen. Some moved into shrapnel-proof metal containers. It was only on the fourth day of the fighting, once the government had blasted the rebels out of Juba, that the trapped workers were evacuated to Nairobi, the capital of Kenya.

I have no idea how many CNPC personnel were killed or if they all made it out alive, but the point being is that this was a major security nightmare, and it sounds like they were not that prepared for such an event. Chinese companies are not that responsible in that regard, and they are also going about it security in a very naive kind of way. For example, you should not be doing security in places like Iraq without a gun. Nor should you be providing security on boats without weapons. It’s just stupid and I continue to see this learning curve–they fear an liability of arming folks, then a bloody incident occurs where folks are killed and the security failed in protecting everyone, and then you get the backlash from the families of the deceased and from your citizens back home. Then eventually, they come to the logical point of arming their security. Remember, your threats out there could care less about your views on weapons and they will exploit your weaknesses if unarmed.

It kills me when this lesson had to be learned in the beginning stages of the Marsec industry when piracy was peaking, and unarmed guards were actually jumping ship as ‘armed’ pirates had their way with the client and their vessel. Well, the Chinese are learning this as well.

The other thing that needs to be brought up when talking about China, is their economic policy. OBOR or One Belt One Road is a Silk Road 2.0 type economic policy that China is currently trying to implement. It is said to be worth well over a trillion dollars. What is also driving OBOR is China has a manufacturing surplus, and it needs more trading partners and routes bad. Especially when they are now dealing with a Trump administration that has not been that favorable towards China.

As for the PMSC element of OBOR, Erik Prince and FSG just recently announced strategic alignment with OBOR. In one of the press releases, FSG mentioned that they were setting up two FOBs in Yunnan and Xinjiang province. China has some issues in these regions, and they have been clamping down on muslim extremists big time in places like Xinjiang or Yunnan. (on a side note, Xinjiang is Frontier in english…which makes you think that FSG was formed all along to deal with Xinjiang. It explains why they would bring on Prince, who is well known to jihadists)

Another point to bring up with OBOR is that the land component of this strategy has muslim extremists to contend with. TIP is one group of concern, and their members are getting more operational experience in places like Syria. They will be coming home, and that knowledge will be coming with them. Also, as China’s dealings with their muslim populations has been known to be extreme. But because journalists are really not able to cover that very well, I have no idea how bad the relationship really is. My guess is that it is bad, and the fear of a population being sympathetic to extremists is legitimate. So if OBOR is directed at building roads, pipelines and power lines in these areas, they will probably have issues. Here is a quote I found from one article that talked about actual numbers.

For China’s “One Belt, One Road” (OBOR) initiative, Islamic risk is also a prominent political danger. According to the broadest definition, OBOR involves 64 countries, 33 of which are Muslim countries, accounting for more than half the total. Among the remaining 31 non-Muslim countries, 10 countries have obvious existing Muslim unrest and are at risk of terror attacks. In total, 44 countries have Islamic risk, making up 69 percent of the total number of countries along OBOR.For example, Pakistan, China’s iron-core brother, is a country with serious Islamic extremism. From 2012 to 2013, violent terrorist incidents in Pakistan caused 11,590 deaths, which included 6,008 civilians, 1,408 policemen and 4,174 militants.

So there is OBOR and then there is also their expansion in Africa and their dealings in the middle east. I have written about that stuff in the past, and that is not new. But OBOR is something else, as far as scope and cost, and we will see how that works out.
Another deal that was mentioned in the articles below, from an industry news angle, is the growth of Chinese PMSC’s and the fact that they are unionizing. The first quote is about growth and it sounds like DeWe is making it’s moves. Also, it is interesting to know that HXZA has the monopoly on Chinese MarSec.

DeWe’s profile rose dramatically last summer when Chinese Poly-GCL Petroleum Group Holdings hired it to manage security at a $4bn LNG project in Ethiopia” the largest project that the Chinese private security industry has been asked to protect. Some other companies appear to have friends in high places. HXZA, for example, has a near-monopoly on security for Cosco Holding and China Shipping Container Lines, China’s two largest state-owned shipping groups. “They clearly have very solid relations to the state, considering how loyal their customer base is. And they are not that cheap,” says one foreign private contractor.

That LNG project in Ethiopia is huge! Here is a quick snippet of what that involves.

Development of the Hilala and Calub gas fields in southeastern Ethiopia may finally be getting underway, more than 40 years after their discovery.Project developers laid the foundation stone in early March for a $4 billion project to export gas from the fields to China. The project, which is being funded and developed by Chinese joint venture Poly-GCL Petroleum Group Holdings, involves the construction of a 700 km gas pipeline to transport up to 12 billion cubic metres of gas per year from the Ogaden Basin to the port of Damerjog in Djibouti, where the Hong Kong-based independent will build a 3 mtpa LNG export plant. The plan is to eventually expand the plant’s capacity to 10 mtpa.Construction should start in August and is expected to take three years to complete, a PR representative for the Djibouti government told Natural Gas Daily.

The reason why they need robust security for this operation is because of groups like Ogaden National Liberation Front. These folks attacked a Chinese assets in Ethiopia before, and no doubt, they will make things difficult for them again.
The final quote that was interesting as well, was this deal on numbers of PMSC’s and the fact that most are not armed. That is a bad combination, and I they are going to have quite a few incidents in the future if this is the attitude.

“About 3,200 Chinese employees of private security groups were based abroad last year”, says Liu Xinping, deputy director of the China Overseas Security and Defense Research Centre. “That compares with 2,600 Chinese troops deployed under UN mandates” China’s only foreign military deployments in conflict zones. Yet with a few exceptions the security contractors are usually unarmed. DeWe’s Chinese staff did not carry weapons during the fighting in Juba but led teams of armed locals. 7m Tonnes of oil destined for China said to be shut in by violence overseas each year Beijing is extremely cautious about the industry, partly due to the abuses of the type that have periodically plunged US occupations of Afghanistan and Iraq into crisis. In 2010, supervisors at a Chinese-owned coal mine in Zambia fired into a crowd of workers demanding higher pay, injuring 11 and triggering an anti-China backlash.
Two years later, a supervisor was killed at the site during a dispute over wages. One security company manager, who asked to remain anonymous, says all contracts they sign with Chinese state companies prohibit employees from carrying weapons.
“The government doesn’t want Blackwater,” he says.

They may not want the liability attached to arming their PMSC’s, but the threats out there could care less. They are armed, and to think anything other than an armed security professional will be able to stop these folks, is wishful thinking. It also does not match up with reality. China needs to take a hard look at what is happening worldwide, and know that it is a very dangerous world. If they care about their workers and countrymen, they should do the responsible thing and arm their security. Lives depend upon it.

This brings up another interesting point. Western PMSC’s have a distinct advantage when it comes to the armed security contractor game. Firearms are very much a part of the US culture. To not be armed is odd, if performing security functions. Plus, the US has a constitution that protects the rights of gun owners and our freedom of speech. In China, not so much. lol Matter of fact, these so-called Chinese PMSC’s, are really not private per se. They are state sponsored companies, and tightly controlled. They do not want these folks armed, because honestly, China has had a horrible time of uprisings in it’s history. Some of the most bloodiest rebellions and uprisings in the history of mankind, have happened in China. So they are very wary of losing any control or monopoly on the use of force. But their PMSC industry is going forward, and they are getting lethal because that is reality if they want to operate in places like Africa or the Middle East.

The question I always like to ask with this stuff, is where is the industry at, and where is it going in places like China? Hopefully this information helps the readership a little, and I will keep my eye out for any new movement with this stuff. –Matt

Chinese private security goes global

February 26, 2017

By Charles Clover

On the evening of July 8, the streets of the South Sudanese capital of Juba were raked with gunfire as an uneasy truce between warring political factions broke down. Inside the offices of DeWe Security, a Chinese private security firm, phones started ringing. Panicked Chinese oil workers employed by the China National Petroleum Corp, the main client of DeWe (pronounced DeWei) in South Sudan, were calling an emergency number to say they were in harm’s way and awaiting instructions.  For Kong Wei, head of DeWe’s Juba office and a veteran of the People’s Liberation Army who retired five years ago, it was the start of a 50 hour-marathon without sleep as he and his colleagues executed an evacuation plan. “Bullets and shells flew over our compound all day and night”, says Mr Kong. The contractors soon realized that their tin-roofed cinder-block building couldn’t stop bullets ” just one of the many lessons they would learn.
In all, 330 Chinese civilians, stranded at 10 locations across the city, were instructed to hunker down until the airport could reopen. Some moved into shrapnel-proof metal containers. It was only on the fourth day of the fighting, once the government had blasted the rebels out of Juba, that the trapped workers were evacuated to Nairobi, the capital of Kenya.

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Film: My Review Of The Somali Project

 

I finally got a chance to watch The Somali Project, which was originally called The Project. This documentary was purchased by The Vladar Company and the film is now available to buy or rent. With that said, I was able to rent the film through youtube, and it is fantastic! When you rent it, you get the film for 48 hours. You also have the choice to rent a High Definition version, and that is what I went with.

Now I had read about the film and how it did at the Tribeca Film festival, I blogged about it, and I watched the trailer. But I never got a chance to watch the whole thing. Here on the blog, I have also written about the Puntland Maritime Protection Force and about piracy off the coast of Somalia during the peak years of that problem. It was a horrible deal, with hundreds of folks taken hostage and just rotting away off the coast of Somalia in captured ships. My interest in the matter was getting armed guards on boats, so that these pirates would have friction at sea. On land, the PMPF was the answer to attacking the source of piracy.

The film starts off with the families of hostages who were from places like India. Heart wrenching to say the least. Basically these hostages were tortured, and treated horribly and their captors were negotiating with the companies that owned these captured vessels. Some companies paid the ransom, and others did not. Some companies just gave up on the whole deal and just left their employees/contractors to rot. Either way, there were multiple ships parked off the coast of Somalia that were captured and being held by pirates and no one was doing any rescues.

Next in the film, we see an individual named Roger Carstens who paid a visit to the PMPF camp in Somalia and accompanied the PMPF on their first mission. He was an observer that worked for The New America Foundation at the time. He was also prior special forces according to his LinkedIn profile and he provided a lot of the commentary in this film.

Now for the main stars of this film–Erik Prince was the idea guy, and EO veteran Roelf Van Heerden was the commanding officer of this operation. Erik had several cameos in this film and discussed some of the ideas behind ‘The Project” as it was called. Roelf was the CO of the entire operation, and his fellow South African mentors/trainers were heavily involved in training these Somalis. And what a process that was. It was also interesting to see a Somali American that was a member of the PMPF.

They did a great job in the film showing exactly how difficult it was to train these guys. We are talking about folks who don’t even know how to put shoe laces in boots, or what basic hygiene was or any of that stuff. The trainers mentioned how much of a challenge this really was. They were taking a very rough product and trying to make soldiers out of them. It was a challenge that any contractor or military guy that has been in this position, can appreciate.

We also get to see how well the PMPF camp was constructed. Within that camp, you get to see all the equipment they had, to include air assets. Here is what they had according to wikipedia and Defence Web.

The Puntland Maritime Police Force possesses both maritime and land security capacities. The force has three Ayres Thrush low-wing aircraft fitted with armored cockpits and engines to protect the crew and aircraft from hostile ground fire. It also operates an Antonov An-26 transport aircraft and a Aérospatiale Alouette III helicopter.

For naval capabilities, it operates three rigid-hull inflatable boats (RHIBs), which are armed with 12.7 mm DShK heavy machine guns.

I really like the use of the An-26 for paracargo operations. For long range operations on the ground, they were using this aircraft to drop fuel and supplies.

When they finished training their first batch of PMPF forces, they then went on to conduct their first operation, complete with air support. And this is where the film gets interesting… They go into detail about what exactly happened during the incident where one of the SA mentors was killed. His name was Lodewyk Pietersen and I do remember writing about this when it happened. This film shows exactly what went down, and how something like that could happen. Basically a nephew of a pirate, whom infiltrated the PMPF, instigated a mutiny of sorts, and executed this SA mentor as a means of putting a halt to the mission. The pirates knew that if they could kill a mentor, that the operation would stop and the Puntland government would want everyone to stop and get back. Which is what happened and I wrote about that as well. Roger Carstens mentioned that the pirates identified the ‘center of gravity’ of the PMPF, which were the mentors, and effectively attacked it.

What happens next though, is what I was impressed with. The contract at that point was buried and folks went home–except for a few volunteers that stayed behind. Roelf was one of them, and he continued to lead the PMPF in further operations. He and his team were definitely involved in combat, and definitely used their air assets. The film goes on to talk about all the rescue missions and raids that this team went on, and thanks to the leadership of Roelf, they were able to successfully free hostages! I talked about one of those operations awhile back (MV Iceberg) and it was impressive. Roelf was instrumental in keeping that unit operational and effective, and Roger Carstens was impressed with Roelf’s performance out there. Especially against such great adversity. ‘This is Africa’, the saying goes, and these men were definitely dealing with some African friction. lol

Other characters in the film included interviews with UN folks, and South Africans like Lafras Luitingh, another Executive Outcomes veteran.

Overall, this film is excellent and it is worth your time to watch. It puts into perspective what these men were up against for this contract and I have a lot of respect for what they did. This film brings attention to the complexities of modern warfare and what private industry can accomplish. It also brings attention to the sacrifice and hard work of those whom are on the ground, doing the job that no one else was willing to do or wanted to do. These men were absolutely responsible for the rescue of multiple hostages taken by pirates, and they definitely had an impact on the overall piracy problem of the time.

The results speak for themselves–piracy is at an all time low thanks to what has been done on land and at sea by private companies. It is a success story, and one that doesn’t get nearly enough attention. –Matt

 

Rent or Buy at Amazon, iTunes, Vimeo, Google, or Youtube, take your pick.

 

 

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Industry Talk: Erik Prince Discusses Libya And Europe’s Migrant Crisis

This is excellent and Erik Prince did a great job defending his former company in this interview with Becky Anderson. What I thought was very interesting was the discussion of Libya and the immigration crisis plaguing Europe right now.

I would agree with Erik that the EU does not have the political will to do what is necessary in Libya to actually lock down it’s borders. But one point needs to be made when it comes to PMSC’s in Libya–they are already there. Europe’s oil interests in Libya have required security in one form or another for years now. I wrote about all sorts of security related stories in Libya starting in 2011, so it should be no shock to any observer of that conflict that industry has provided services there, or has ‘offered’ solutions to frustrated clients. Hell, the CEO of a major French PMSC, Secopex, was killed in Libya.

I would also argue that any security plan like this, should also be coupled with a grand strategic plan for Libya. The border might be squared away under a contract like this, but that will not remove the cause of why people are wanting to leave. The war needs to end there, and reconstruction along with the rule of law needs to be reestablished if they want to stop this migrant crisis. Security on the border is just one piece to a plan like that. But private industry can provide a solution for that.

The other thing that was interesting in this interview was the mention of Erik and the Trump administration.(he is a supporter) The question was posed wether the new administration will be good for the PMSC industry. At 06:58, this is where the video get’s interesting. “Is Libya a quick win for a Trump administration?” the interviewer asks, and I will let the reader check out what Erik had to say….

So maybe Libya is a space to be watching in 2017? –Matt 

 

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Industry Talk: Prince Targets Aviation And Logistics In Africa

So is this Blackwater part 2?
“It’s similar,” Prince replied. “But we’re not here to serve government or defence projects, we’re not there to build their police force, nothing like that. We’re there to move an NGO, an advanced seismic crew or a drilling crew from a mining company, or if an oil operation needs their camp supported and built.”

The story of Erik Prince starting Frontier Resource Group and focusing on Africa is not new and I have blogged about that when it first came out. But what was missing were the details, or at least more than what was available at the time I posted that stuff. Thanks to the Civilian Warriors book and all the interviews, Prince has been able to talk a little more about this new venture.

So in the articles below, there are some great little details to pluck out and talk about. The first one that I thought was interesting, was the ‘a ha’ moment for Prince as to what area of business he wanted to get into in Africa.

Prince, who has flown since he was 16, said he realised the potential of operating a safe and reliable air service a year ago when the aircraft which was flying him back from a mine site in Burkina Faso nearly crashed.
“A scary moment but also one of clarity,” he said.

I mentioned in my review of his book that he is an entrepreneur and businessman, and he constantly looks at the world through this lens. His ‘a ha’ moment for the creation of Blackwater came from the realization that he needed to be home with his family, and the SEALs and other groups needed a consolidated, all in one training facility. So he identified a market weakness that he could exploit, and also saw the advantage for his personal well being.

He is also a pilot and has had a love for aircraft since he was younger. In his book, he was very proud of all the aviation ventures that BW got into, so this move towards aviation and logistics in Africa makes sense.

The other tidbit is the quote up top and what was directly asked in regards to security work. He was asked by the WSJ on whether this new venture would include armed security work or not? Here is the quote.

Such high costs also reflect the dangers of piracy and civil conflict, but Mr. Prince plays down his firm’s plans in the security realm. “We are not there to provide military training. We are not there to provide security per se. Most of that security”—say, if an oil pipeline or mining camp needs protection—”would be done by whatever local services are there,” including police and private firms. “We don’t envision setting up a whole bunch of local guard services around the continent.”
So the former Blackwater chief won’t employ guys with guns? Well, he says, “that would be the exception, certainly not the rule.”

I should remind the reader that Prince could easily contract the services of other security firms to help in security.  That would mean using Academi or any of the offshoots of his older company. But like he mentioned in the quote, using local police or security firms is more than likely the path, which is already what most Chinese investors and companies are doing.

Although the problem with this arrangement is if those local forces are dependable? Can they deliver services on time and under budget, or is it even a good service? Can they provide high level PSD services for the engineers and workers for those companies? That is where PMSC’s like Blackwater would come in. Also, someone needs to manage those local forces, or look out for the best interest of the client.

I am quickly reminded of the In Amenas gas plant attack in Algeria and how depending upon incompetent local security forces (provided by the government) was a contributing reason why the attack was so successful. You must have a competent security company watching over the local security force that companies are either forced to use, or use because of cost and choice. I look at it from a concentric rings of security view point, and your outer layer should be your least dependable force and your final ring of security should be your most dependable. Ideally all rings are dependable in a perfect world, but that just does not happen in the real world. Another way to put it, is you need security you can ‘trust’.

But back to the articles below, I think this quote speaks pretty loudly as to why dependable and highly capable services are in such high demand in Africa.

“If you’re drilling in some remote area and your rig goes down and you need a new part for your rig; that’s 10s if not 100s of thousands of dollars a day. How do you get that thing quickly and with no excuses?”

Time is money as they say, and guys like Prince can absolutely organize an effort to get that part or human out there.

This also reminds me of another potential problem for companies. What if their equipment gets caught up in a mess like what the Arab Spring has created in the Middle East? For that, a guy like Prince could organize the effort to secure equipment and people until it can be either flown out or convoyed out of that mess.  Those types of contracts remind me of what helped put Executive Outcomes on the map.

I am talking about the Ranger Oil contract that Executive Outcomes had in Angola. Basically things became unstable there and Heritage Oil and Gas turned to EO to save some equipment caught up in the mess. At the time, they were leasing some drilling equipment that was costing over $20,000 a day, and UNITA would not allow the company to get the equipment out of there. EO was contracted to secure that equipment, which they did.

It is also important to note that the Chinese account for the largest group of people kidnapped in Africa. I have talked about this demand for protective services by the Chinese in the past, and how the South African PMSC market has been filling that niche. Lot’s of money being spent on some risky projects–hence the need for security and folks who know what they are doing.

As long as we are talking about money, it is also interesting to pluck some of the quotes that discuss why Africa is so interesting to Prince. China is investing billions into development and resource extraction there.

Mr. Prince won’t share any revenue projections, but his prospectus notes that “China is Africa’s largest trading partner,” with annual flows of $125 billion. Most estimates put that figure closer to $200 billion, a meteoric increase from $10 billion in 2000 and $1 billion in 1980. The U.S., which was Africa’s top trade partner until 2009, registered $100 billion in annual African exchange at last count. China-Africa trade could reach $385 billion by 2015, according to Standard Chartered Bank.

Not only that, but the US is also delving more and more into Africa with it’s military ventures. So Prince is basically gunning to be the logistics and transportation ‘go to guy’ for Africa. If US strategy includes getting more involved with Africa, it will need companies in place that can provide a need wherever it presents itself.

Although he does have some competition, because there are numerous larger companies  that have already been working that angle in Africa. PMSC’s in Somalia and their support of AMISOM are one example. There is still room though, and investors are looking for folks that they trust can do the job. That is a key point here, because Prince has shown capability in the past by making things happen, and putting his money where his mouth is. He spent over 100 million on new products and services when he owned BW, and much of it never reached fruition. But some did, and really paid off for him. I imagine he will do the same with this company. This quote shows why investors would be drawn to him and what has provoked Prince to get into this market in the first place.

“As I was moving around Asia trying to raise money for this private equity fund, a lot of the big investors said, ‘It’s great that you want to be a fund manager, but what we really need you to do is to build a business like you had before. Not a defence services business, but one that can help us operate in the challenging areas and take away a lot of the uncertainty’.”

Pretty cool and I imagine he will apply the same mindset to this business as he did with BW. Research the region, find services that are lacking or non-existent but are needed, or see a coming need for a product or service, and create that service or product to meed those needs. That is how he built BW, and that is probably how he will build this company.

As to what kinds of aircraft he will purchase and bring to the market, who knows?  If you look at the aircraft that AAR has (former Presidential Airways and BW business unit), you can get an idea as to the kind of aircraft Prince might introduce into the game. Here is a quick run down from wikipedia as to what they have used.

Presidential operates CASA C-212 and CASA CN-235 turboprops. Recent contracts have added de Havilland Canada DHC-8 Dash 8 turboprop aircraft to the fleet. The company also operates turbine powered helicopters including Bell 214ST, Bell 412, MD Helicopters MD-530, Eurocopter/Aerospatiale SA 330J “Puma”, and Sikorsky S-61 rotorcraft.

The key for Prince is to invest in aircraft that can carry a lot, has robust fuel capacity, is durable, and can land on the really crappy air strips throughout Africa. The parts need to be cheap as well. I am sure he will find something that fits the bill. Either way, we will keep on eye on this. –Matt

Edit 04/02/2014: It looks like DVN (or it’s new name Frontier Services Group Limited) has acquired another percentage of an airline that operates out of Wilson Airport. Here is a clip from the news story about it.

News broke yesterday in Nairobi that DVN had apparently acquired a 49 percent stake in Phoenix Aviation which is based at Wilson Airport in Nairobi and engages in aircraft charters and aircraft maintenance, among other aviation services. First it was Kijipwa Aviation, based in Kilifi, a relatively small aviation company, in which DVN acquired a 49 percent stake in late February, then announcing that they were to bring on line as many as two dozen additional aircraft to boost the operational capacity of the firm. However, the acquisition of a similar share in Phoenix may change those plans as suggestions have been floated already among the aviation fraternity at Wilson Airport that the operations of the two local airlines may be consolidated or aligned under one umbrella or at least they will be working under one central command. While DVN reportedly dished out some 1.2 billion Kenya shillings to acquire the 49 percent stake in Phoenix, no confirmed value could be obtained for the acquisition of the Kijipwa shares. Both investments have been linked to the discovery of significant oil deposits in Kenya and the apparent need of international oil exploration companies to contract a range of services from local Kenyan companies, including aviation.

Frontier Resource Group website here.

Frontier Services Group website here.

 

 

Beyond Blackwater: Prince looks to resources in Africa
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Sun, Feb 2 2014
By Stephen Eisenhammer
After running one of the world’s biggest and most controversial private military groups, Blackwater founder Erik Prince is starting a new venture providing logistics for oil and mining companies in remote and dangerous parts of Africa.
China is increasingly looking to Africa to meet its ever growing demand for natural resources. Trade between the two reached an estimated $200 billion (121 billion pounds) this year. With 85 percent of Chinese imports from the continent being oil or minerals, Prince sees an opportunity.
He wants to use his experience of getting people and equipment in and out of remote places, where there is little or no infrastructure, to help companies looking to exploit abundant natural resources in places like Sudan or Somalia.
The 44-year-old former U.S. Navy Seal became chairman of Frontier Services Group (FSG) this month, a Hong Kong-listed company of which China’s state-backed investment fund Citic owns 15 percent. Prince himself has share options in the firm that would convert to a 9 percent stake.

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Books: My Review Of Civilian Warriors

I finally got a chance to read this book and I was not disappointed. Much of the book went over material that I was already familiar with because I have been blogging about this industry for quite awhile now. But it is cool to finally hear Erik Prince’s version of events and his thoughts on the industry.

So what I did with the book is make footnotes on things that I thought were interesting that I was not aware of. Like did you know that the guy that threw a shoe at President Bush during a press meeting, was tackled by a Blackwater guy and not the Secret Service? Or that it was BW that rescued Vice President Joe Biden, Secretary of Defense Chuck Hagel and Secretary of State John Kerry on a snowy mountain top in Afghanistan? That is crazy, and it is stuff like that, that I will bring up in my notes. I will also mention the books that Prince was influenced by or thought important enough to mention in his book.

The first book mentioned by Prince that inspired him for building Blackwater was called Entrepreneurs Are Made, Not Born–By Lloyd Shefsky. Prince read this book while posted on the ship USS America, and the ideas that came from this book helped him to formulate a plan on what he wanted to do when got out of the Navy. He was a businessman/entrepreneur at heart, just like his father, and he wanted to be closer to his family–hence why he wanted out of the Navy. This is where he got the idea for building a world class training facility that could fill a need for the government, and especially his Navy SEALs, whom were constantly on the road for training. What Prince wanted to do was get a centralized training facility in Moyock, North Carolina for multiple government and private clients that would have everything they needed to train. The courage and drive to take the risk to do this, came from the motivation Prince got from reading this book.

As to the name of the company, did you know that the original names being thrown around were the ‘Tidewater Institute for Tactical Shooting’ or the ‘Hampton Roads Tactical Shooting Center’? They went with Blackwater because as they built the ranges on their new property, they were constantly slogging through the peat stained black water mud. It had a better ring and meaning for them at the time I guess.

In the beginning of their business, training was not their big money maker. It was their targets they constructed and they used a tougher steel combined with a pop up mechanism to make targets that folks all over the US wanted. These targets accounted for 50 percent of their revenue in the early days of the company.

He also makes mention of the pride he had in his contractors and employees. One story he mentioned was about a wounded contractor in his company that I did not know about, but thought was really cool. His name is Derrick and his blog is called Small Victories, and it is about the process he has gone through as a severely wounded contractor.

The second book mentioned was Unrestricted Warfare, written by a couple of Chinese colonels back in 1999. This book documented the coming future of terrorism, and it is what woke up defense insiders–to include Prince, as to what was coming. What happened on 9/11 was not surprising to those who foresaw this type of unrestricted warfare or terrorism.

Prince made mention of Frank Gallagher as the first detail leader BW assigned for the task of guarding Bremmer in Iraq. That 36 man detail later grew to a massive operation protecting a multitude of DoS folks in Iraq and later Afghanistan. What is interesting though is that Frank and company were the guys making the innovations on the ground in Iraq when it came to close protection in war zones. (Frank is also coming out with a book)

Frank’s group were so good that their protection schemes would later be adopted by the US Government for protecting it’s highest risk personnel. Not only that, but Osama Bin Laden at the time was extremely frustrated that none of his clowns were able to get a shot at Bremmer. So OBL fired up some offense industry, and put a bounty out on Bremmer and his protective detail. Bremmer was worth 22 pounds of gold, and anyone on the PSD team was worth $30,000 dollars according to the book.

Another interesting aspect of the way Prince did business was in order to show capability, he would build it first with the hopes that clients would see how useful or important it is, and then contract it out. Prince would put his own money down on the venture as well.

A good example of this is Presidential Airways and the advent of using smaller scale paracargo in Afghanistan. In the early days of the war, the Air Force did not have a small scale paracargo capability. They would use large aircraft to drop 600 lb pallets, and do it way too high up in the air. It was Presidential Airways that recognized a deficiency–that the military needed small scale paracargo, and lots of it in order to meet the demand out there. They would go on to do a proof of concept and supply outposts, and then the government later set up a contract to continue using this service. This would later be called LCLA or Low Cost, Low Altitude and I have talked about this on the blog in the past. Thanks to Presidential Airways, I am sure many outposts received life saving ammunition supply drops or food drops. (Cofer Black’s son was actually resupplied by Presidential Airways when he was at an outpost, serving in the military in Afghanistan)

Then there are the other projects that Prince funded that did not get off the ground. Like the armored vehicle called the Grizzly or their blimp. Or the 1700 man peace keeping force called Greystone.

According to Prince, Greystone would have had it’s own air force, helicopters, cargo ships, aerial surveillance, medical supply chain, and combat group. It was Prince’s alternative to the ineffectual UN peacekeepers that we continue to see deployed all over the world. I remember he was wanting to send these guys to Darfur, Sudan if DoS was ok with it. They were not, and this project never got off the ground.

According to the book, Prince spent about 100 million dollars on various BW projects that never went anywhere. He had the attitude of if you build it, they will come. With his creations, he felt eventually someone in the government or in private industry would want this stuff, and he mentioned that if he threw enough darts at the board, they were bound to hit the bull’s eye. He said this is the price of continually innovating. Whatever the government needed, or what they might suddenly realize they needed, Prince would provide it. (kind of reminds me of Steve Jobs with his drive to create products that people didn’t know they wanted, but when made, they absolutely wanted and needed them)

And really, this is at the heart of what he was all about. His father was the same way, and I kind of got the impression that Prince was constantly trying to live up to what his father was all about. His father was very successful and had the same attitude of seeing a need or potential need, and filling it. He is the one that invented lighted mirrors in vehicle sun visors. But his father also had a lot of failures before that lighted mirror took off as a viable concept. Both men were visionaries and risk takers, and that is what you need in order to create something new. To create something that people want, or didn’t know they wanted, but do now.

In the book, Prince also talked about Executive Outcomes and how successful they were. So EO was an inspiration and it is always cool to hear about visionaries getting inspired by other visionaries and their creations.

Prince also made mention of his Libertarian roots and his ideas on contracting and free markets. He was a big fan of fixed cost contracts, versus cost-based or cost-plus. He felt that a contractor should be able to put their money where their mouth is when they say they can deliver something for a certain price. With cost based or cost plus, you are basically giving a contractor an open check to spend whatever they want to get the job done.

You see this theme throughout the book, and that Prince was all about funding a project in order to show proof of concept and viability, or that BW was interested in providing a good value for the tax payer’s dollar.

Speaking of which, BW funded their own rescue operation of folks off of roofs during the Katrina Hurricane disaster back in 2005!  BW also went on to provide effective security in the region after that disaster.

Another business unit that Prince mentioned was Total Intelligence Solutions. TIS was BW’s private intelligence firm that offered services to not only the government, but to private institutions. The Walt Disney Company was mentioned as one of those institutions.

TIS also had Cofer Black in it, and he was very much impressed with the way it operated compared to the government. Black mentioned that ‘every mid-level government official should spend a two-year sabbatical there to learn about efficiency and effectiveness’. My opinion on that is duh, private industry can be very efficient and effective compared to the government.

The third book mentioned was On War by Carl von Clausewitz. Prince’s father was the one that recommended this book to him before he joined the Navy. As to what lessons he learned from this book is hard to say. He mentioned a Clausewitz quote on courage and that is about it.

Moving along through the book, he mentioned stuff about the An Najaf attack. Travis Haley was mentioned multiple times in regards to this attack and it is cool getting some info on what happened during that deal. Travis was brought in by little bird after the attack began, and he was definitely a force multiplier during the fight. The video he and his team posted of the event has received many views over the years. One thing mentioned that I did not know is that his team did receive mortar fire that day. Accurate mortar fire, as we saw with the Benghazzi attack, can be very bad for the defense.

It is also interesting that General Sanchez did not want to acknowledge that Blackwater was so heavily involved with the defense of this facility. The reality is that if it wasn’t for the actions of BW, they would have lost that consulate in An Najaf. It would have been very embarrassing to Sanchez’s command, for it to get out that a contractor did so well, and in his AO.  Or that the US military was not in a position to defend it because it had so many other things going on at the time. This incident was also unique because there were military folks there, but BW was running the show.

It was interesting to find out how much WPS made for BW. Prince quoted well over a billion dollars. At the peak, BW had over a thousand men on the ground in Iraq performing the WPS mission. I am sure Frank Gallagher and others were pretty amazed at how big this thing got.

There was mention of BW’s perfect record of protection, and the most significant injury of a principal at the time was a ruptured ear drum. BW used Mamba armored vehicles in Iraq, which were manufactured in South Africa. An EFP was used by the enemy against one of BW’s Mambas, and everyone survived, to include that principal mentioned. A BW guy lost his arm in the deal as well. I have to say that is some serious luck and EFPs are no joke. I actually drove these same vehicles in Iraq and I can attest to the protective qualities of it–and that is awesome that these guys actually survived an EFP.

Prince also wrote a lot about the CPA’s Order 17, which was the 16 page document that outlined the rules and laws that folks were to follow in Iraq. In absence of a working country, the CPA had to come up with some rules to operate by until Iraq got itself in order. Contractors were often charged with having immunity in Iraq or not having any accountability for their actions because of what was in Order 17. Prince argues just the opposite, and that Order 17 did provide legal accountability.

Many critics of BW pointed to this so called lack of accountability, and because of the non-disclosure agreements BW signed with DoS and other clients, that they could not defend their position or correct the record. So Prince dedicated some space in this book to explaining why they were legally accountable.

The myth of pay rates was also dispelled in the book. You often heard about this $1,000 dollar a day contractor pay that everyone was getting in the company, in various books and articles. But that was not true with this company. According to Prince, the pay ranged from $450 a day to $650 a day, and averaged about $500 per day across the entire contractor force. He also goes on to compare the military’s ‘total military benefit’, which adds up to about $99,000 dollars a year for an enlisted member. The point here was to compare the compensation of soldiers versus contractors, and I have seen the same CBO stuff that he is talking about. Matter of fact, I blogged about it awhile back.

After the Nisour Square deal, Prince had to do a congressional hearing and that thing is floating around on youtube. What is interesting is that according to the book, Prince actually got advice from Oliver North on the whole process. North had to go through 45 hearings back in the day during the Iran Contra deal.

Prince made mention of the company’s process for growth. Gary Jackson was quoted as saying that they were always searching for the 80 percent solution now, as opposed to the 100 percent solution later. This is interesting to me because it is about being faster to market than the other guy. Get it out now and own that business, despite it not being perfect. Then work to continuously improve it later. Or something like that. Jackson was actually named by Harvard Business Review and Fast Company for his leadership and for the growth of the company. The 80/100 solution scheme is part of the reason for that rise.

Finally, at the end of the book Prince talked about the future of the industry, which I really liked. He also talked about another inspirational book that is significant for a number of reasons.

The book’s name is The Machine That Changed The World, By James Womack, Daniel Jones, and Daniel Roos. Prince was very much inspired by this book and he was in awe of Toyota’s managerial system of lean production. He referred to BW as a sort of factory that produced security specialists, much like how factories produced cars. The client requests ‘X’ amount of contractors, and the BW factory provides that amount just in time. Their ability to get the job done and deliver that product–be it a human or weapon or aircraft, to where the client needed it, and on time, was what made them successful.

Which is cool because I too am heavily influenced by Toyota and it’s concepts. I have a category called Kaizen, in honor of the continuous improvement principals that Toyota was so famous for. Kaizen is also mentioned in my Jundism page.

All in all, I really enjoyed the book and highly recommend it. My one take away with this is that Prince was a visionary and had the courage to go forth and make Blackwater happen. It is also a tragic story, because he basically had to let go of that in which he built and loved so much–all because of politics… Check it out and you will find his book in my book store on Amazon here. –Matt

Edit: 04/04/2014- Travis Haley just wrote about his experiences during the Battle of Najaf and you can read this story over at OAF Nation. Pretty cool and it expands upon what was said in Prince’s book. Especially the part about General Sanchez not sending a relief force to help, and how Ambassador Bremmer instructed Frank Gallagher to assemble a relief force to come to the rescue. Here is a quote from Travis’ story.

There was heated discussion between Ambassador Bremmer and General Sanchez, Commander of Coalition Ground Forces in Iraq. In the end, the Army was unwilling to dispatch a relief force to the Najaf compound. Bremmer then instructed Frank, “I am authorizing you, by any means necessary, to get our people out.”  With that, Frank sent me to round up the air team and to start pulling together weapons and munitions to bring on the flight. I hit the ready room and started pulling kit. My M4, magazines and a CS Rifle. The Counter Sniper Rifle was more of a moment of opportunity thing than a plan and Terry, one of our detail’s Counter Snipers, quickly fished through his gear to give me his dope card as I headed down to the air strip where the Little Birds were spooling up.

Edit: 04/07/2014- A blog named CIMSEC did a podcast with Prince that was interesting. Prince mentioned two more books that he has read recently and recommends. The first is Invisible Armies by Max Boot. The other is To Dare And To Conquer by Derek Leebaert.

 

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