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InsideErikPrince’sTreacherousDrivetoBuildaPrivateAirForce

ECHO PAPA EXPO S ED

JeremyScahill MatthewCole

Apr.112016,12:50p.m.

ONACRISPSATURDAYinNovember2014,ablackMercedesSUVpulledontothetarmacofanAustrianspecialtyaviationcompany30milessouthofVienna.Employeesofthefirm,AirborneTechnologies, which specialized in designing and equipping small aircraft with wirelesssurveillanceplatforms,hadbeenorderedtoworkthatweekendbecauseoneofthecompany’sinvestorswasscheduledtoinspecttheirlatestproject.For fourmonths,Airborne’s teamhadworkednearlynonstop tomodifyanAmerican‐madeThrush510Gcropdustertotheexactspecificationsofanunnamedclient.Everythingabouttheprojectwascloakedinsecrecy.Thecompany’sexecutiveswouldrefertotheclientonlyas“EchoPapa,”andinstructedemployeestousecodewordstodiscusscertainmodificationsmadetotheplane.NowtheemployeeswouldlearnthatEchoPapaalsoownedmorethanaquarteroftheircompany.A fit, handsome man with blond hair and blue eyes got out of the Mercedes and enteredAirborne’shanger.EchoPapa,whowasoftenjustcalledEP,shookhandswithadozenAirborne

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employeesandlookedovertheplane.“Hewasthesun,andallthemanagementwereplanetsrotatingaroundhim,”saidonepersonpresentthatday.

OneoftheThrush510GbeingmodifiedatAirborneTechnologies’hangarinWienerNeustadt,Austria.Princeownsatleast25percentofthecompany.

One of themechanics soon recognized Echo Papa from news photos – hewas Erik Prince,founderoftheprivatesecurityfirmBlackwater.SeveraloftheAirbornestaffwhisperedamongthemselves,astonishedthattheyhadbeenworkingforAmerica’sbest‐knownmercenary.Thesecrecyand strangemodification requestsof thepast fourmonthsbegan tomake sense. Inadditiontosurveillanceandlaser‐targetingequipment,Airbornehadoutfittedtheplanewithbulletproofcockpitwindows,anarmoredengineblock,anti‐explosivemeshforthefueltank,andspecializedwiringthatcouldcontrolrocketsandbombs.Thecompanyalsoinstalledpodsfor mounting two high‐powered 23 mm machine guns. By this point, the engineers andmechanicswereconcernedthattheyhadbrokenseveralAustrianlawsbutwereadvisedthateverythingwouldbefineaslongastheyallkeptthesecret.

ErikPrince,or“EchoPapa,”thefounderofBlackwaterandchairmanofFrontierServicesGroup,apubliclytradedlogisticsandaviationcompany.Photo:MarkPeckmezian

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Princecongratulatedeveryoneformakingtheplane“rugged”andthenleft.TheplanewasdueinSouthSudan,whereitwasurgentlyneededtosalvagePrince’sfirstofficialcontractwithhisnewcompany,FrontierServicesGroup.PrincewaseagertogettheThrush510Gintheair.TheconversionofcropdustersintolightattackaircrafthadlongbeenpartofPrince’svisionfordefeating terrorists and insurgencies in Africa and theMiddle East. In Prince’s view, thesesingle‐enginefixed‐wingplanes,retrofittedforwarzones,wouldrevolutionizethewaysmallwarswerefought.Theywouldalsoturnasubstantialprofit.TheThrushinAirborne’shangar,oneoftwocropdustersheintendedtoweaponize,wasPrince’sinitialstepinachievingwhatonecolleaguecalledhis“obsession”withbuildinghisownprivateairforce.The story of how Prince secretly plotted to transform the two aircraft for his arsenal ofmercenaryservicesisbasedoninterviewswithnearlyadozenpeoplewhohaveworkedwithPrince over the years, including current and former business partners, as well as internaldocuments,memos,andemails.Overatwo‐yearperiod,Princeexploitedfrontcompaniesandcutouts, hidden corporate ownership, a meeting with Russian arms dealer Viktor Bout’sweaponssupplier,andatleastonecivilwarinanefforttomanufactureandultimatelysellhiscustomized armed counterinsurgency aircraft. If he succeeded, Prince would possess twoprototypes thatwould lay the foundation for a low‐cost, high‐powered air force capable ofgeneratinghealthyprofitswhilefulfillinghisdreamofprivatizedwarfare.

Photo:MarwanNaamani/AFP/GettyImages

FROMTHEEARLYDAYSofthewaronterror,PrinceaggressivelybuiltupanaviationwingatBlackwaterandsuppliedaircraft to theCIAandothergovernmentagencies.His “littlebird”helicopters–witharmedcommandoshangingfromtheirframes–becameanotorioussymbolof the U.S. occupation of Iraq. By 2013, after scandals, investigations, and a $42 millionsettlement with the Justice Department, Blackwater had been broken up, with its piecesrenamedandPrincelargelyexcludedfromtheiroperations.Buthisvisionofcreatingaprivateairforceendured.Inearly2014,PrinceandCiticGroup,China’s largeststate‐owned investment firm, foundedFrontierServicesGroup,apubliclytradedlogisticsandaviationcompanybasedinHongKong.FSGofferedservicessuchasshippingminerals,charteringflightsforexecutives,andoccasionalmedevacsfromremoteAfricanlocations.Overthepasttwoyears,PrincehasgiveninterviewsandspeechesdescribinghisvisionofFSG.“Thisisnotapatrioticendeavorofours,”Princesaidofhisnewcompany. “We’rehere tobuildagreatbusinessandmakesomemoneydoing it.”China,hesaid,“hastheappetitetotakefrontierrisk,thatexpeditionaryriskofgoingtothoseless‐certain, less‐normal markets and figuring out how to make it happen.” But while he

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burnished his new image as chairman of a public company, hewas secretly overseeing theclandestineattackaircraftprogram.Princeexploitedfrontcompanies,aconnectionwithViktorBout’sweaponssupplier,andatleastonecivilwarinanefforttosellhiscustomizedarmedaircraft.Prince, together with a small group of loyal deputies, hid this effort from the corporateleadershipatFSGbymeansofnon‐companyencryptedemail,aliases,andoutrightdeception.WhenPrincepitchedlogisticscontractstoAfricangovernmentsonbehalfofFSG,heandhisteamsimultaneouslydevelopedplansforparamilitarycontractswiththosesamegovernments.In2013,whenFSGwasbeingcreated,Princeandhisteamwerealreadydevelopingasecretblueprint for weaponized crop dusters to target terrorists and assist counterinsurgencyoperationsinAfrica.Originallydraftedinlate2013,theplanwasupdatedmorethan100timesthrough the end of 2015. The goalwas to offer affordable, high‐powered air superiority toPrince’sclientsthatcould“breaktheparadigmofattritionwarfareinlowintensityconflict.”Prince’splanpredictedstrong“globalmarketability”forthesmallattackplanes.

Theaircraft,whichtheblueprintsuggestedcouldbeproducedinamannerthatwouldbypassexport “restraints,”would bemodified to carry both precision‐guidedmunitions aswell assimplerweaponssystems.But,theplannoted,“Guns,RocketsandDumbBombsofferthemostcosteffectiveweaponloadforthetargetset/threatenvironment.”Theplaneswouldcontainarmoredcockpits,engines,andairframes,sophisticatedreconnaissanceequipmentsimilartothatusedondrones, aswell asnight‐vision capabilities.Theblueprint envisioned targetinggroupsof insurgents,boats,vehicles,andstaticpositions.According to theplan, theaircraftwouldhave12hoursofendurancetoconductoperations.The modified light attack aircraft “offers affordable ability [to] raise, train and sustain thecapabilityforthe‘longwar’necessaryinCounterInsurgency,”accordingtotheblueprint.ButthisaspirationwasnotonethatPrincewouldopenlysharewiththepeoplehewasrecruitingtobuildhisnewpubliccompany.BYTHESUMMERof2013,PrincewasalreadyputtingtogetherateamtorunFSG.AmongtherecruitswasGreggSmith,anoldfriendandformerMarine,whowouldeventuallybecomethecompany’sCEO.SmithwasaninvestmentbankerwhohadhelpedguidePrincethroughthesaleofBlackwaterandotherentitiesaftertheU.S.governmentbeganinvestigatinghiscompanies.ThatJuly,astheydiscussedtheirnewventure,PrinceandSmithtookatriptotheborderofBurkinaFasoandNigerinWestAfrica,wherePrincewasconsideringinvestinginamagnesiummine,accordingtoSmith.ThemenlandedatanairstripcontrolledbyFrenchforces.NigerwasadangerouscountrywithcivilunrestandaregionalalQaedaaffiliate.

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Astheysurveyedthemine,thetwodiscussedtheadvantagesofaddingsurveillancecamerastosmallcivilianplanestoflyoverminingoperationsoroilfields.Suchplaneswouldbeusefulforalertingminingcompaniesandgovernmentforcesofapossibleattackbyinsurgentsorbandits.“Ifyou’reinaconflictzoneandyouhaveanextractivemine,orevenoilandgas,youwanttoknowwhat’sgoingonaroundyouandthat’snotalwayseasyinthosetypesofareas,”saidSmithinaninterview.“HavingtheabilitytoputanaircraftintheskythathasgoodISR[intelligence,surveillance,andreconnaissance]capabilitiesandmonitortheradiusaroundyou,that’sgoodstuff.”Princeusednon‐companyencryptedemail,aliases,andoutrightdeception.SuchsurveillanceaircraftwouldberelativelyinexpensivetooperateandcouldprovidewhatSmithandPrincebothbelievedwouldbeniceprofitsfortheirfledglingcompany,whichtheyagreedshouldhaveafleetofaircraftcrisscrossingtheAfricancontinent.“WhenwesetupthecompanyandhaddiscussionsaboutwhatFSGwouldandwouldnotbe,wewereveryclearitwouldnotbeasecuritycompany,itwouldnothavearmedpeople,”SmithtoldTheIntercept.However,PrinceandFSGdidcontemplateofferingintelligenceandsurveillanceservices,aswellasnon‐lethallogisticalsupport,inwarzones.Princewas legendary forpushing theriskenvelope,particularlywhendefiningwhat legallyconstituted military or security services. Those contracts could require licenses andauthorizationfromtheU.S.government,andFSG’snewexecutivesstronglydoubtedtheycouldobtainthemwithPrinceasthecompany’schairman.InFebruary2014,amonthafterPrincebecamechairmanofFSG,heauthorizedthepurchaseoftwoThrush510GcropdustersmadeinAlbany,Georgia.Eachaircraftcostapproximately$1million.Prince toldofficialsatFSG that thepurchasewasurgentbecausehehadreceivedagreen light foraproject tosupport thegovernmentofMali in itsbattleagainstaregionalalQaedaaffiliate.Theplanwastohavetheplanesfittedwithaerialsurveillancegearwithadatalinktoagroundstation,sothattheaircraftcouldprovidereconnaissanceforforcesoperatingontheground.PrinceclaimedthatProjectMike,asitwascalledinternally,“wasagoandaspartof that we were going to be providing the ISR support and we would need those ASAP,”accordingtoasourcewithdirectknowledgeofFSG’sinnerworkings.

SCARPodonamodifiedThrushairplane.PhotoobtainedbyTheIntercept

Prince arranged for theplanes tobe equippedwith cameras andother surveillance gear atAirborneTechnologies inAustria.Airborne, founded in2008, isbest‐knownforproducinga

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proprietary device, known as a SCARPod, thatmounts on small aircraft and enables aerialsurveillancecamerastowirelesslydeliverlivevideoandotherdata.Inpromotionalmaterial,Airbornecallsit“surveillanceoutofthebox.”What FSG’s executives did not know at the timewas that Prince, through one of his veiledcorporateentities,owned25percentofAirborne.DorianBarak,Prince’spersonalattorneywhohandled his investments, brokered Prince’s ownership stake in Airborne in early 2013 andrepresented Prince on the company’s board. In preparing the deal, Barak suggested thatAirbornewasopen toexpanding into the securitybusinesswithPrinceproviding “strategicguidance,”contacts,andsales,accordingtoamemopreparedforPrince.Barakdidnotrespondtoarequestforcomment.Princedidnotrespondtomultiplerequestsforcomment.

Christiaan“Serge”Durrant,aformerAustralianspecialforcespilot,ranFSG’s“specialtyaviationdivision.”Photo:LinkedIn

PrinceandhisteammadeplansfortheaircrafttobeflownfromtheU.S.directlytoAirborne’shangaratWienerNeustadtEastairport,southofVienna.TheofficialcontractwithAirbornewastomodifytheplaneswithsurveillanceequipment,includingaForwardLookingInfrared(FLIR)camerasimilartothoseusedonU.S.attackandspydrones.In May 2014, both Thrush planes were flown from the U.S. across the Atlantic Ocean toAirborne’s hangar. Once they arrived in Austria, Prince asserted effective control over themodificationsandanabilitytomakedecisionsforbothFSGandAirborne.TheThrushprojectwasmanagedbyPrince’s longtimeassociateChristiaan“Serge”Durrant.PrincehadenlistedDurrant,aformerAustralianspecialforcespilot,torunFSG’s“specialtyaviationdivision.”Bythatpoint,PrincewasbrokeringasecretarrangementwithexecutivesatAirbornetoturntheplanesintoparamilitaryaircraft.

TheAirTractorcropdusterwasweaponizedbytheCIAforuseinColombiaintheearly2000s.Photo:Lowvelder

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THEIDEAOFarmingagriculturalplanesforattackdidnotoriginatewithPrince.Intheearly2000s,aclassifiedprogramrunbytheCIAinColombiaemployedadifferentU.S.cropduster,theAirTractor.Duringtheday,onaStateDepartmentcontract,theplaneswouldspraycocafieldswithherbicide.ButtheaircrafthadbeenmodifiedwithISRequipmentandhardwareformountingweapons,accordingtoa formerU.S.official familiarwiththeprogram,sothat theplanescouldbeusedfornightbombingmissionsagainstFARCrebelsandcocainecartels.Princewasnot involvedwith thatprogram,but in2008,hedidpurchaseaSuperTucano,aBrazilian‐made light attack aircraft. Prince then leased that plane to the Pentagon as aprototype, and nearly a decade later, the U.S. began providing armed Super Tucanos toAfghanistan’sairforce.HealsotriedpitchingalightattackplanetotheCIAforcloseairsupportinIraqandAfghanistan,accordingtotwoformercolleaguesofPrincewhowereinvolvedintheoffer.Theplaneswerecheap,durable,andrelativelydiscreet.InPrince’sview,accordingtoseveralsourceswhoworkedcloselywithhimforyears,hisideahad been stolen by the U.S. government and his competitors, one of which has a licensedcontractwiththegovernmenttosellweaponizedThrushplanes.ButPrincedidnotabandonhisambitions,andtheThrushmodificationshewasnowcoordinatingheldgreatpromise.Theplaneswerecheap,durable,andrelativelydiscreet.MonthsbeforeembarkingonthesecretworkattheAustrianhangar,PrinceandhisalliesatAirborne began strategizing about how to confront a potentially project‐ending obstacle:Austriandefenseexportregulations.TheyknewthegovernmentwouldviewthecustomizedThrushplanesforwhattheywere:militarizedaircraft.Austria,whichplayedacentralroleinstartingtwoworldwars,hasafirmpolicyofneutralityandstringentregulationsthatwouldapplytotheexportofanAustrian‐manufacturedparamilitaryaircraftforuseinacivilwar.Thiswasnotanewchallenge forPrince.Throughhis formerBlackwaterenterprise,hehadacquiredextensiveexperiencedefyingorsidesteppingU.S.defenseexportregulations. InanefforttoavoidAustrianandEuropeanexport laws,PrincelookedsouthtoBulgaria,anationknownforitslaxdefenseexportregulationsandroleasahubforinternationalarmstraffickers.“It’sverydifficulttomanufacture[suchaircraft]inAustriaandkeepeverythingquiet,”saidaformerAirborneemployeewhoworkedontheplane.“It’stooriskyforthem.SotheideawastogotoBulgaria.”

KristofNagl,chieffinancialofficerofAirborneTechnologies,helpedPrincesetupaBulgarianfrontcompany.Photo:AirborneTechnologies

InMay2014,KristofNagl,Airborne’schieffinancialofficer,wrotetoPrinceexplicitlydiscussingthe creation of a front company in Bulgaria to disguise the production ofweapons‐readied

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aircraft.NaglcitedearlierdiscussionswithPrinceandDorianBarakandconfirmedforPrincethat theyweremoving forwardwith “the foundationof” aBulgarian companynamedLASAEngineeringLtd.“LASAshallmeanlightarmedsurveillanceaircraft,”Naglwrote.Inthememo,Nagl described a structure for LASA in which Prince “provides customers and know how.”Airborne, according to Nagl, would acquire Thrush aircraft and do the reconnaissance andsurveillancemodifications.LASA,however,would“beusedformarketing”and“sellingoflightarmedairbornesolutions,” thoughitspromotionalmaterialswouldnotdirectlymentionthewordThrush.Thisomission,NaglwrotePrince,wouldbedone“accordingtoyourwish.”Under the proposed arrangement, LASA would purchase the Thrush aircraft modified byAirbornedirectlyfromthecompanyatitsstandardprice“soallmarginwillstayasalwayswith”Airborne.ThetransformationoftheplanestolightattackaircraftwouldbelaunderedinSofia.LASAwouldgetthenecessaryexportlicensesfromtheBulgariangovernmentsothattheplanescouldbesoldordeployedabroad.“LASAshallmeanlightarmedsurveillanceaircraft,”Naglwrote.Theadvantageofthecorporatefront,accordingtoNagl,wasthattheycouldget“indirectaccesstopotentialclientswhichwehavetorefusenowandthe‘exportrisk’iscoveredby”thenewlyformed Bulgarian entity. He also proposed that the partners involved in the deal put up apercentageofthecostofcreatingLASA,which“willnotneedanysignificantinvestment.”InresponsetodetailedquestionsfromTheIntercept,alawyerrepresentingNaglandAirborneclaimed that theassertions in thisarticleare “incorrectexcept for the fact thatourclient isofferingtothemarketISRmodificationsonvariousaircraft,includingThrush.”Headded:“Ourclientobtainedallrequiredexportlicensesinallpasttransactionsandwillkeepdoingsoalsoin the future.” The lawyer asserted that Nagl and Airborne “strictly follow all relevant andapplicableexportcontrollawsandregulations.”Thefirmthatsenttheletter,Specht&Partner,hasalsorepresentedPrinceinAustria.Afterthedeadlineforthisarticle,Airborne’slawyersentfurthercomment,writingthatthecompanynevermanufacturedorsoldanarmedaircraftand“doesnothold(directlyorindirectly)sharesinacompany”thatdidso.PrincemadearrangementstovisitBulgariainMay2014foranAirbornemeetingandatourofthe Arsenal factory in Kazanlak. Arsenal is the largest armsmanufacturer in Bulgaria, andPrincewasinterestedinviewingitslineof“aerialweaponry,”includingguns,rockets,bombs,andweaponsmanagementsystemsforaircraft,accordingtoaninternaldocumentreviewedbyTheIntercept.

ShawnMatthews,anFSGcontractorandformerAustralianspecialforcespilot,servedasSergeDurrant’sdeputyontheThrushprogram.Photo:LinkedIn

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Thenextmonth, according to internal documents, ShawnMatthews, an FSG contractor andformerAustralianspecialforcespilotwhoservedasDurrant’sdeputyontheThrushprogram,wenttoBulgariatomeetwithPeterMirchev,aBulgarianarmsdealerwhosuppliedViktorBout.(Boutiscurrentlyservinga25‐yearprisonsentenceintheU.S.forattemptingtosellweaponstotheFARCinColombia.)WhenanFSGofficiallearnedthatMatthewshadmetwithMirchev,he instructed Matthews and Durrant to cease all contact with him. It is not known whatMatthews and Mirchev discussed, but the FSG official warned Prince’s men not to pursuearming the Thrush aircraft, saying that it would be a clear violation of U.S. law. Matthewsdeclinedtocommentontherecord.Durrantdeclinedtocomment.AccordingtotheformerAirborneemployeeandasecondcompanywhistleblower,almostallofthemodificationswould actually be performed in Austria. By the time the aircraft reachedBulgaria,anengineercouldcompleteasimpleinstallationofhardware.“ThefinalinstallationoftheweaponswouldbedoneinBulgaria,”saidtheformeremployee.

ArsenalisthelargestarmsmanufacturerinBulgaria.Princesaidhewasinterestedinviewingitslineof“aerialweaponry.”Photo:GoogleMaps

FORNEARLYTWOdecades,Princehassteadilybuilta labyrinthinenetworkofentitiesandsupply‐chainbusinessesinhisquesttoprovidefull‐spectrum,“turn‐key”military“solutions.”Withanownershipstake inAirborne,anda frontcompany inBulgaria,Prince,aidedbyhislawyer Dorian Barak, was buying in to and expanding an entire ecosystem of paramilitaryservices: surveillance, weapons, engineering, and a clandestine apparatus for bypassingnationalandinternationaldefenseregulations.TwocommonthreadsemergewhenexaminingmanyofPrince’srecentmilitaryproposalsandoffshorecompanies:Heownsmultiplepartsofthesupplychainsforthedeploymentofprivatearmedforcestoforeigncountries;and,sinceatleast2012,hehasfailedtoimplementthem.The plan that Prince and his team devised to weaponize the Thrush crop dusters was anengineeringnightmare.Prince’smentreatedAirborne’shangarastheirprivateFrankensteinlaboratorywheretheydirectedengineersandmechanicsinaperilousexperimenttotransformanagriculturalairplaneintoajerry‐riggedflyingtank.AndPrincewanteditdonefast.TheIntercepthasrevieweddozensofdocumentsrelatingtothemodificationsoftheThrushaircraft in Austria. The former Airborne employee, who played a central role in themodificationsperformedontheThrush,agreedtospeakwithTheInterceptontheconditionofanonymity because of the sensitivity of the program and fears of retaliation by Prince andAirborne.ItwasclearalmostassoonastheThrushplanesarrivedatthehangaroutsideViennathatthegoalwastocreatemilitary‐gradeattackaircraft,accordingtotheformeremployee.HesaidthatNagl,Airborne’schieffinancialofficer,andWolfgangGrumeth,thefirm’sCEO,musthaveknownthat the modifications they were performing would likely be prohibited under Austrianregulations. Airborne’s employees, who had worked on sensitive projects for variousgovernments,wereledtobelievetheywereengagedinasecretbutlegitimatecontract.

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AtPrince’sdirection,Airborne’sengineersinstalledbulletproofglassonmodifiedThrushaircraft.PhotoobtainedbyTheIntercept

Grumethdidnot respond toa request for comment,butAirborne’sattorneystated that thecompany is “strictly following all Austrian as well as international applicable laws andregulationsinconnectionwiththeirbusiness.”Work began in Austria on one of the Thrush planes in July 2014. Durrant’s deputy, ShawnMatthews,embeddedat theAustrianhangar tooversee themodifications,whichAirborne’semployeeswereinstructedtodescribeusingcodewordssuchas“aeromagnetic”and“sensor”toreplacediscussionofweapons.

InsideahangarinAustria,theThrushwerestrippeddownandrebuiltasparamilitaryaircraft.PhotoobtainedbyTheIntercept

TheinitialmodificationsinvolvedattachingtheSCARPodandsurveillancecamera.Inadditionto the cameras and other reconnaissance systems, according to the former employee, theyinstalledheavyarmorontheplane,replacedtheThrush’swindowswith19mmthickballisticglass,andlinedthecockpitwithKevlar.Theyplacedspecialmeshinginthefueltanksothatitwouldnotexplodeifstruckbybulletsorshrapnel,andattachedacameramountthatallowedthesurveillancepackagetobeloweredoncetheplanewasaloftsoitcouldbeusedasalaserplatformtoassisttargeting.It was already apparent to most of the staff working on the plane that the modifications,requestedbyacompanytheyknewonlyasFrontier,weredeeplyproblematic.“Itwasclearthey

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didn’tcareaboutcertification,”theformerAirborneemployeesaid,describingtheattitudeofPrince’s team. “If youmake amodification to an aircraft and youdonot certify it, then theoperationoftheaircraftiscompletelyillegal.InEurope,itisveryillegal.Youarebreakingalotof laws.” He recalled one of Prince’s deputies saying that the aircraft would be used forsurveillance operations in Africa and “no one there cares about certifications.” The formeremployee said he and other personnel working on the Thrush project were told thatcertificationand licensingwere theaircraftowner’sproblem.Themessagewas: “Wedonothaveariskaslongaseveryonekeepsquiet.”

ThemodifiedThrushaircrafthadretractablesurveillancecamerassimilartothoseinstalledonU.S.attackdrones.PhotoobtainedbyTheIntercept

INAUGUST2014,amonthafterNagl’scommunicationwithPrinceaboutestablishingLASA,thecompanywasofficiallyopenforbusinessinSofia–orrather,anentitynamedLASAfiledpaperswiththeBulgariangovernment.Prince’smaninBulgariawasZacharyBotchev,aU.S.‐educatedbusinessmanwhoseprofessionalbiographystatesthathecreatedthelargestceramictileproducerintheBalkansandstartedajetairlinecompany.BotchevwasaninitialinvestorinAirborneandatonepointcontrolledathirdofthecompany’sstock.BotchevandNaglhadworkedtogetherbeforethefoundingofAirborne,accordingtotheformeremployee. “The idea,”hesaid,was thatBotchevwouldeventually “buyanairfield inBulgariaandtheywouldweaponizetheplanesthere.”Botchevdidnotrespondtomultiplerequestsforcomment.InthememoNaglsenttoPrinceoutliningtheplanforestablishingLASA,hestatedthatBotchevwouldprovidelocalcontactsinBulgariaforexportlicensesand“products.”Hewasalsotaskedwith selecting LASA’smanaging director. Itwas Botchevwho arranged Prince’s tour of theweaponsfactoryinBulgaria.BotchevisaconvictedfelonwithawarrantoutforhisarrestintheU.S.,accordingtocourtfiles.HewasfoundguiltyoffelonyburglaryforstealingtradefilesfromanemployerinTexaswhilelivinginDallasinthe1990s.BotchevviolatedthetermsofhisprobationandfledtheU.S.AccordingtoLASA’scorporatefilingswiththeBulgariangovernment,itsofficialaddressandphonenumberarethesameasaBulgarianaviationcompany,controlledbyBotchev,thatclaimsa“closepartnership”withAirborne.OnLASA’ssparsewebsite,thecontactemailgoestoasalesaddress for Botchev’s company. LASA’s founding documents and other forms filedwith theBulgariangovernmentdonotmentionPrince,Airborne,FSG,ortheThrushaircraft.Onpaper,LASAwasestablishedbyaconsortiumofBotchev‐linkedbusinessesthatsharedahandfulofcommonaddressesandphonenumbers.

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OneofLASA’sreportedofficesinSofia,Bulgaria.Photo:GoogleMaps

Inanemail,alawyerforLASAwrotethatthecompanywas“infullcompliancetoallrespective”lawsandcouldnotcommenton“commercialarrangements.”Botchev’sassociates,whopopulateamurkynetworkofBulgariancompanies,constitute100percentofLASA’sownershipandmanagement.AmongtheaddressesprovidedtotheBulgariangovernmentbyLASAandotherBotchev‐affiliatedcompanies isagraffiti‐coveredbuilding inSofia and an office in a blighted strip mall. In its filings, LASA described its business asengineering inBulgaria and abroad, obtaining licenses, technologybrokering, domestic andforeigntrade,“aswellasanyothercommercialactivitynotprohibitedbylaw.”Therewasnomentionofweaponizingormodifyingaircraft.InSeptember2014,DurranttoldFSGthatsomeofthemodificationsandtestingoftheThrushwouldneedtobeperformedinBulgaria,andthathehadadealforLASAtobethevendor.WhenFSGbeganvettingLASA,itfoundalmostnopubliclyavailableinformationthatwouldindicateLASAhadeverdoneanybusinessofanykind.Thecompanydidnotappeartohavepreviouscontractstomodifyaircraft,nordidithaveafactoryorstafftoperformsuchwork.Accordingtoits2014financialfilingsinBulgaria,LASApaidlessthan$5,000insalaries.OneFSGofficerinvolvedwiththereviewsaidLASAlookedlikea“papercompany.”Princeandhisdeputieswere“deliberatelyvague,”theofficersaid, inexplainingthenatureoftheadditionalmodificationsandtestingandwhyitwasnecessarytohireLASA.

InitsfilingswiththeBulgariangovernment,LASAlistedthisgraffiti‐coveredbuildinginSofia,Bulgaria,asoneofitsoffices.Photo:GoogleMaps

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KRISTOFNAGLINFORMEDAirborne’sThrushteaminAustriathatSeptemberthattheywouldhavetoworksubstantialovertimetofinishthemodifications,accordingtotheformeremployeeandtheotherwhistleblower.PeoplewhoworkedforFSGontheprojectwithPrincedescribedhimasrunningtheThrushprogramasthoughFSGwerenotapubliccompanywithaCEOorshareholders, but rather his private enterprise. One described Prince directing Airborne toequiptheThrushwith“moretoys”withoutalertinganyoneatFSG.“Wewereverybusywiththisaircraft,”theformerAirborneemployeesaid.“Therewasnotimeforthinking,justforworkbecausewehadtomakealotofmodificationsontheseaircraft.Wewereworkingdayandnight,SaturdayandSundaynights.”Prince’s team told Airborne’s engineers they wanted the ability to mount 23 mm Russianmachinegunsonbothsidesoftheplane.ThosegunscreateapowerfulrecoilthatAirborne’sengineersstruggledtooffsetwithcomplex,additionalmodifications.Theyworkedaroundtheclock and replaced the airplane’s entire electrical system. As the deadline for the Thrush’sdeployment grewnear, Prince’smen faced a new challenge: Theywere unable to purchasepylons,thehardwarenecessaryformountingbombsandrocketsonplanes.

AdditionalmodificationstosupportmachinegunsmountedontheThrushaircraft.PhotoobtainedbyTheIntercept

After failedattempts toacquire themthroughmultiplecountries, theyconcededdefeat.Theplanewouldhavetodeploywithoutthepylons.ButtheyinstructedAirbornetobeginbuildingcustomizedpylonscapableofcarryingbothRussianandNATOmunitionsthatcouldbeaddedlater. According to Prince’s original Thrush blueprint, the aim was to patent a new pylon.Creatingsuchadevicewasachallenge,butAirborne’sengineerswouldeventuallysucceedinbuildingit,accordingtotheformerAirborneemployee.“Itwasreallyanimpressiveengineeringaccomplishment,” he said, pointing out thatWestern andRussian bombs required differentmounts.“Youcouldarmthoseaircraftwithanyweapons–NATOorWarsawpact–withthepylonswebuilt.Itwaskindofincredible.”InOctober2014,PrincefinallyprevailedingettingFSGtosignacontracttohaveoneoftheThrushaircraftfurthermodifiedandtestedbyLASAinBulgaria,withworksettocommencethefollowingspring.“Thebosswantsthis,”oneofthepeopleinvolvedwiththedealsaidhewastold by Serge Durrant. The boss was Prince, though the exact nature of the additionalmodificationsremainedvague.Bythatpoint,Airbornehadalreadyattachedmorethan1,500poundsofequipmenttooneoftheThrushplanes.TheengineersweretoldthattheplaneneededtobesenttoAfricarightaway

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– they had been led to believe the destinationwas Kenya. Under pressure fromAirborne’smanagementandPrince’smen,theformerAirborneemployeesaidtheyhastilyorganizeda30‐minutetestflightinAustria.Itwasadisaster.“Afterallthesemodifications,wehadonlyonetestflight.Wehadnomaintenanceguywhosignedoffonit,nopaper,justjumpinginandflying,”hesaid.“Wefound30problemsandweonlyhadtwodaystofixtheproblemsbecausetheyneededtoferryittoAfrica.”“Wearenotjustdoingsomethingrisky,wearedoingsomethingcompletelyillegal,”saidaformerAirborneemployee.Despitea rangeof safetyconcerns fromAirborne’s technicians,a fewdays later, theheavilymodifiedThrushtookoffforAfrica.Butthepilothadtoabortthejourneyandmakeaprematurelandingbecauseofadamagedfuelpump.Aftertheplanewasrepaired,itwasflowntoMalta,whereaplanespottersnappedapictureoftheaircraft.TheThrush,accordingtoitstailnumber,hadbeen registered in theEuropeanmini‐stateof SanMarino.Thephoto theplane spotterpostedonahobbyistwebsiteshowedanarmoredaircraftwithadistinctlymilitaryappearanceand clearly visible drone‐style surveillance gear. Eventually the aircraft was flown back toAustria,whereAirborneworkerswouldspendthreeweeksrepairingit.

AfterthisphotooftheThrushaircraftwaspostedbyaplanespotterinMalta,aviationauthoritiescanceledtheplane’sregistration.Photo:BurmarradCamenzuli/Flickr

AsstaffworkedontheaircraftoneSaturdaythatNovember,accordingtotheformerAirborneemployee,Naglannouncedtheywereexpectingaspecialvisitoron‐site.Nagldidnotnamethevisitor, the former employee said, but described him as “something like an owner of ourcompany”whowas“veryimportant.”Thevisitor,arrivingintheblackMercedesSUV,wasthemysteriousEchoPapa.“Wehadnoideawhothisguywas.Whenheenteredthehangar,Iknewhisface,butIcouldn’trecallhisname.”OneofhiscolleaguestoldhimthemanwasErikPrinceofBlackwater.TheformeremployeehadreadaboutPrinceyearsearlierinthelocalpaper,andheimmediatelyGoogledhimatacomputer in thehangar. “ErikPrince is theco‐ownerofourcompany?”herecalled thinking indisgust.Thatwas themomentherealized that theThrushhehelped tomodifywasnotintendedforwhatheandhiscolleaguesconsideredalegitimateclient,“buthadbeenbuiltforErikPrincestuff.”The formeremployee said that learningofPrince’sownership stakeand role in theThrushprogramledhimtoconclude,“Wearenotjustdoingsomethingrisky,wearedoingsomethingcompletelyillegal.”SeveralAirborneemployeeswouldeventuallyquitoverconcernsabouttheprojectandPrince.“Aprivatearmoredplane?It’sformecompletelyunthinkabletodothat.”

– 15 – 

 

By the timePrince toured thehangar thatSaturday, the firstThrushwasalmostcompletelyreadyforfullweaponization.“Ninety‐ninepercentofthehorribleworkhadalreadybeendone,”saidtheformerAirborneemployee.Theplanehadaretractablecamerathatcouldbeloweredbelow the propeller for lasers to support the targeting of bombs and rockets, as well as awirelessdatalinksystemthatcouldenablefiringmunitionsremotely,similartohowanarmeddronefunctions.“IfImakeamilitaryaircraftandit’sdeliveredtotheSwissortoGermany,Ihavenoproblemswiththat,”theformeremployeesaid.“Butaprivatearmoredplane?It’sformecompletelyunthinkabletodothat.”

AirbornetechniciansinAustriaworkonthesurveillancegearattachedtooneoftheThrushairplanes.PhotoobtainedbyTheIntercept

FORSIXMONTHS,FSG’sexecutiveshadheardalmostnothingaboutProjectMike,theMalijobtosupportacampaignagainstalQaedathatPrincecitedasthereasontoexpeditethepurchaseoftheThrushaircraftinearly2014.Thatdidnotsurprisetheexecutives.Theyknew,fromhishistory,thatPrincewasalwayslookingforthenextdealandoftenmergedhisaspirationalplanswithconcreteones.“AlltheseprojectsthatEriktalkedaboutwhereFSGwouldparticipateinthemneverhappened,”saidthesourcewithdirectknowledgeofthecompany’sinnerworkings.“Erikwasalwaysrunningaroundtalkingaboutthingsthatcouldhappen,butnoneofthemwerehappening.”Then,inthesummerof2014,PrincebroughtaprojecttoFSGthathebelievedcouldserveasatestrunforthenewlymodifiedThrushplanesandhelpgettheinfantcompanyonitsfeet.ItinvolvedSouthSudan,wherePrincehadalongtrackrecorddatingbacktotheBlackwaterera.PriortoSouthSudan’sindependencein2011,BlackwaterwasfinedbytheU.S.governmentforbrokeringdefenseservicestosouthernChristianrebelswithoutaStateDepartmentlicense.In2006,ignoringexplicitU.S.governmentinstructions,Blackwaterproposedasecuritycontractwithforces loyaltorebel leaderSalvaKiir,adevoutChristianandthefuturepresidentofanindependentSouthSudan.Nearlyadecadelater,whenPrincebrokeredFSG’sdeal,SouthSudanwasruledbyKiir,whosetrademarkcowboyhatwasagiftfromPresidentGeorgeW.Bush.Inthesummerof2014,theyoung,oil‐richcountrywasseveralmonthsintoacivilwarthathadreducedoilproductionbyathird,andKiirneededPrince’ssupport.But,aswasthecasewithmanyofPrince’sproposals,theservicesheclaimedhewasofferingstoodinstarkcontrasttohisrealplan.FSG,accordingtotheproposalPrincepresentedtothecompany,wouldprovideSouthSudan’sMinistryofPetroleumandMiningwithlogisticalservicestohelpgetthecountry’soilfieldsandrefineriesbackonline.The12‐monthcontract,whichcompanyofficialssaidwasworth$150million, called forFSG tooperateoverflight surveillanceof severaloil fields inSouthSudan,

– 16 – 

 

buildandsupplycampsnexttothefields,andferryworkersandengineersbyhelicopterandplane.

SalvaKiir,adevoutChristianandthepresidentofSouthSudan,hasarelationshipwithErikPrincethat’sspannedmorethanadecade.Photo:AFP

Willingness to operate in a civil war reflected the new company’s appetite for risk; FSGrecognizedanopportunityforprofitinpartsoftheAfricancontinentwherecompetitorswereafraidtoventure.Prince,aschairmanandfounderofthecompany,sawhimselfasopeningthedoorforbusinessontheAfrican“frontier.”But,accordingtomultiplesources,theservicesFSGunderstooditwouldprovidetoSouthSudanneverincludeddefenseassistance.Thecompanyhad not applied for, nor did it possess, the required defense export licenses from the U.S.government.“Thisisnotsupportingthearmy,”GreggSmithtoldBloombergNewsinDecember2014.“ThecontractisclearlywiththeMinistryofPetroleumandMiningtosupporttheoilfieldservicesandtomakesuretheproductionofoilkeepsflowing.”In Austria, Airborne had already drawn up blueprints detailing how different weaponsconfigurationswouldaffecttheThrush’sfuelconsumptionandflighttimes,accordingtoacopyof the plans. The blueprints offered three configuration options: mixed‐attackmission, ISRmission, and bombmission. All of them involved arming the planeswith a combination ofmachineguns,bombs,orrockets.

OneoftheconfigurationsdevelopedbyAirborneTechnologiesforweaponizingtheThrushaircraft.

– 17 – 

 

CONTRARYTOWHATtheAirborneemployeeshadbeentold,theThrushwasnotintendedforaKenyanoperation.TheplanewasultimatelyflownfromAustriatoJuba,SouthSudan.Inthemeantime,SanMarinoaviationauthoritieshadseenthepictureoftheThrushpostedbytheplanespotterandcanceledtheaircraft’sregistration.TheyinformedFSGthattheplanedidnotappeartobethecivilianaircraftforwhichtheyhadissuedanoperatingcertificate.Withinafewweeks,theThrushwastransportedfromJubatoanairhangarinanotherEastAfricannation,whereitremainstothisday.By the end of 2014, the South Sudanese government had stopped paying FSG. When FSGexecutivesinquiredwiththeoilministry,theSouthSudanesewereevasive,sayingtheywouldonlyspeakdirectlytoPrince.“Theyquitpayingandtheywouldn’ttalktoanyoneandtheysaid,‘YouneedtohaveErikPrincecomeuphere,’”recalledthesourcewithdirectknowledgeofthecompany’soperations.“Theywouldn’ttalktous,wouldn’tpayus,wouldn’tdoanything.”“Theysaid,‘YouneedtohaveErikPrincecomeuphere.’”FSGdispatchedpersonneltoJubatodeterminewhythecontractwasfallingapart.Althoughthegovernmentwouldn’ttellFSGwhattheproblemwas,oneSouthSudaneseofficialtoldanFSGemployee in the country that Prince had promised to provide the government with attackaircraft.TheSouthSudanese, according to apersonwithknowledgeof the encounter,wereinitiallyconfused,andthenangry,whenthemilitarizedplanesneverarrived.“[TheSouthSudanese]thoughttheywerebuyingattackaircraftthatcouldgoaftertherebelsinaveryseriousmanner,”saidthesourceknowledgableaboutFSG’s internalaffairs.“Erikhadpromisedthingstotheseguys,capabilitiesthatwedidn’thaveandthatwewerenevergoingtohave.”PrincehadpromisedtheSouthSudangovernmentaforeignmercenaryforceifithiredFSGtoprovidelogisticsandaerialsurveillance.PrincedidnotinformFSGexecutivesofthissidedeal,claiminghehadofferedonly“monitoringtheoilfields,monitoringanyactivityinandaroundthem,togivethegovernmentlineofsightsotheycouldkeeptheoilflowing,”accordingtothesourcefamiliarwithinternalFSGmatters.“Erik promised them ISR, planes that drop bombs, attack helicopters, medical evacuationcapabilities, a strike team, and training for 4,000 soldiers,” said the second person withknowledgeoftheplan.“Thecontractwasfor logisticalsupportandcampbuilding, thingstosupporttheoilfields.[Prince]verballypromisedtherest.”Inthemeantime,oneofPrince’slieutenants,aretiredSouthAfricanspecialforcesofficer,beganbuildingaproposalforPrincethatcouldbepitchedtoPresidentKiir.Code‐namedProjectIronFist,theproposalstatedthatPrinceandhiscolleagueshadbeen“invited”bySouthSudanto“designaproposal”for“oilfieldsecuritytraining,securityinterventionandprotectionsupportservicestothegovernmentofSouthSudan.”

– 18 – 

 

Prince’sassociatesexplicitlyplottedabusinessstructureforthecontractthatwouldexposenotraceable connection to them, according to a document reviewed by The Intercept. TheybelievedthiswouldenablethemtohideviolationsofU.S.andinternationaldefenseregulations.Atthetimetheplanwasbeingprepared,theUnitedNationsSecurityCouncilwasconsideringasetofsanctionsandanarmsembargoagainstSalvaKiirandhispoliticalrival’sarmedfaction.Prince’s$300millionproposaltoaidKiir’sforcesexplicitlycalledforgroundandairassaults,initiallytobeconductedbya341‐personforeigncombatunit.Prince’sforceswouldconduct“deliberate attacks, raids, [and] ambushes” against “rebel objectives,” to be followed by“continuousmediumtohighintensityrapidintervention,”whichwouldinclude“search[and]destroymissions.”Variousdraftsoftheproposal,obtainedbyTheIntercept,revealmeticulousplanning,downtotheexactnumberofmunitionsandspecifichand‐heldradiosthatwouldbepurchased. Iron Fist called for the acquisition of at least 600 bombs, 3,500 rockets, 7,500mortars,andmorethan30millionroundsofammunition.Amongtheaircraftofferedintheplanweretwoweaponizedandsurveillance‐equippedThrushplanes.

Iron Fist represents – more than any other known document – Erik Prince’s vision ofcontemporarywarfareontheAfricancontinent,wherethemerepresenceofanarmedcropduster offers an opportunity to defeat a rebellion, terror group, or insurgency. While theproposal’s overt focuswasonprotecting South Sudan’s oil industry, twopeoplewithdirectknowledge of Prince’s efforts said his actual intentwas to provide a foreign force, loyal toPresidentKiir, tobeusedinacivilwarfought largelyonethnicandreligious lines. IronFistpromisedthattherebelswouldbe“neutralized.”Accordingtooneofthepeoplewithknowledgeof the project, Prince and his team then planned to establish and train a force to defendPresidentKiir’sagenda.Theywouldalsooffer“spin‐offs”oftheoriginalforeignmercenaryunit,accordingtotheIronFistproposal.AfterFSG’slogisticscontractfellapartandthegovernmenthalteditspaymentstothecompany,PrincetraveledalonetoSouthSudanseveraltimesinearly2015inanefforttosalvagethedeal.FSGofficialssaidthatPrinceneverbriefedthecompanyonhismeetingsandtheywerenevergivenaformalexplanationofwhattheyhadfailedtoprovidetheSouthSudanesegovernment.“WenevergotpaidandImadethedecisiontoshutitdown,”saidSmith.

– 19 – 

 

SlidesfromPrince’soriginalplantoweaponizetheThrush510G.

INMARCH2015,PrincetraveledtoaCentralAsiannationwherehewaspursuingacontract.HefloatedtheideaofusingtheThrushforthatjob,asuggestionshotdownbyFSGexecutivesconcernedaboutpossibleviolationsofU.S.defenseexportregulations.Bythen,thecompanyhadalreadybegunexploringthesaleofthetwoThrushaircraft.AfterthefailureinSouthSudan,FSG’sleadershiphaddecidedthatprovidingsurveillanceaircraftwouldnotbepartofthecompany’sfuturebusinessmodel.Inanefforttoassessthevalueoftheplanes,inApril2015,FSGbeganreviewingthecostsofthemodificationsmadetoitsaircraft.InJune,PrincetoldFSGthatAirbornewasinterestedinpurchasingtheaircraft.FromtheperspectiveofFSG’sleadership,thetwoThrushaircraft–onestuckinEastAfrica,theotherhousedinAirborne’shangarinAustria–werebecominganuisanceandtheywantedtogetthemoffthecompany’sbooks.FSGhadapreliminaryinspectionperformedontheplaneinAfrica in an effort to determine its value. Following that inspection, FSG executives wereinformedthatithadbeenmodifiedbeyondthesurveillancecapabilitiestheyhadbeenbriefedon. “Wesaid, ‘Holy crap,maybewedon’tknowwhatwehave.’Wenever laideyeson theseaircraftphysically,”saidthesourcewithdirectknowledgeofFSG’soperations.“Nobodyhad,exceptErikandSergeandtheguys”whodidthemodifications,headded.“Holycrap,maybewedon’tknowwhatwehave.”WhentheinspectorsreportedtheirfindingstoFSG,thecompanyunderstoodithadapotentiallyserious problem with U.S. defense export regulations. The first Thrush, according to theinspection,hadhardpointsonthewing,anarmoredcockpit,nosearmor,ballisticglass,night‐visioncapabilities,andotherparamilitaryenhancements.AfraidthatFSGcouldbeinviolationofU.S.governmentregulations,thecompanyturnedtolegalcounsel.Theywereadvisedthat,tobecautious,FSGshouldviewtheplaneasa“foreigndefensearticle”–aflyingweaponthatthecompanyhadnolicensetosell.ThelawyersalsoconcludedthatevenifFSGrightfullyownedthemodifiedplane,anyU.S.citizenattemptingtobrokeritssaleorusebyaforeignpowercouldbeviolatingU.S.law.Theirlegalopinionwasthattherewasa “material risk” that thegovernmentwoulddetermine thatPrinceandotherFSG staff hadengaged in unauthorized brokering. The lawyers were so concerned that they advised thecompanytoconsiderself‐reportingtheissuetothegovernment.FSG began an internal review. Its auditors soon discovered a series of orders and otherarrangements that Prince and Durrant had pushed through without fully informing thecompanyoftheirtruepurpose.Bythen,PrincewaspressuringFSGtoselltheThrushplanestoLASAinBulgaria.LASA,inturn,wouldsellthemtoPrince’sbuyerinCentralAsia.DocumentsshowPrincewantedtosellthetwoplanesfor$16million.Smithsaidhebecameconcernedthatselling the planes to a company they could find almost no information about in a country

– 20 – 

 

renownedforarmstraffickingcouldendbadly.Behindthescenes,PrinceattemptedtopressureanFSGofficerreviewingthepotentialdealtorubberstampit.Hewasrebuffed.DespiteFSG’sstateddesiretoselltheaircraft,Prince,Airborne,andLASAforgedaheadwiththeireffortstocompletetheweaponizationofthesecondThrush.Earlierin2015,Airbornehadsent twoemployees toUkraineandBulgaria to visitweaponsmanufacturers in aneffort toassessthehardwarethatwouldbenecessarytofinishthejob,accordingtotheformerAirborneemployee.TheThrushatAirborne’shangarinAustria,whichhadbeenmodifiedinanalmostidenticalmannertotheonestrandedinAfrica,wasflowntoBulgaria.“Allofthemodificationsweredone inAustriaexcept themountingof thepylons,whichwas intended tobedone inBulgaria,”theformeremployeesaid.Behindthescenes,Prince’smenwerepanicking.InSeptember2015,FSG’sboardwasnotifiedthatitsplanegroundedinEastAfricahadbeenmodifiedforweaponsandwouldlikelybeconsideredaforeigndefensearticleintheeyesoftheU.S. government. A second inspection was ordered, this time to assess the FSG aircraft inBulgaria.WhenPrince’sinnercirclecaughtwindoftheimminentinspection,theyengagedinaconspiracy to thwart the investigators’ efforts and to conceal the true extent of themodifications.Accordingtotwoinsidesources,Princeandhisdeputieshidthefactthattheywere preparing the Thrush to be weaponized, with one charging they had “deliberatelyconcealed”theeffort.Behind the scenes, Prince’s men were panicking. Matthews, the Thrush pilot, privatelyexpressedconcernstoacolleaguethatthecompany’sCEOdidn’tseemtounderstandwhatwasgoing on, and asked whether the company understood the extent of themodifications. Headvocated postponing the inspection of the plane in Bulgaria so they could surreptitiouslyremove themilitary equipment. At the time they learnedof the inspection, theThrush hadalreadybeenequippedforweaponstesting.Theplanehadbeenretrofittedtoastatewhere“inoneweekyoucouldhaveturnedthisaircraftintoaweaponizedplane,”accordingtotheformerAirborneemployee.Inadvanceoftheinspection,oneofPrince’sdeputiesdescribedtapingoveraweaponscontrolpanelthathadbeeninstalledinthecockpit.WhenFSG’sinspectorsarrivedinBulgariainlateSeptembertoexaminetheThrush,accordingtotwosourcesbriefedonthereport,theyfoundarmorontheplane’sframeandnose,laser‐targetingequipment,ballisticglass,andananti‐explosivemechanismbuiltintothefueltank.They also discoveredmodifications inside the cockpit for controllingweapons systems andhardwareforarmingtheaircraftwithbombs,rockets,andmachineguns.TheinspectorsnotedthattheBulgarianfacilitywherethemodificationshadallegedlytakenplacedidnotappeartohavetheequipmentorpersonnelcapableofdoingthework.ThediscoverysparkedaninternalbattlewithinFSG.SeniorexecutivesaccusedPrinceofplacingthecompany’sexecutivesandofficers–includingaretiredfour‐staradmiral–inlegaljeopardywiththeU.S.government,withoneseniorexecutiveallegingthatPrinceran“asecretprogramdeepwithinourorganization.”Smithorderedafullreviewofthecompany’sinternalcommunicationsandcomputernetworktodocumenthowandwhytheplaneshadbeenmodified,accordingtothreepeoplewithdirectknowledge of the events. FSG officials found records, including invoices that did notmatchsignedcontracts,indicatingthatPrinceandDurranthadsecretlyauthorizedapproximately$2million in additional modifications. “There was a concerted effort to downplay themodifications. There’s a difference between modification and weaponization,” said an FSGinsider.“DidGreggSmithknowtheywerebeingmodified?Ofcoursehedid.Whethertheywereweaponizedisadifferentquestion.Thatwasdeliberatelykeptfromseniormanagement.”

– 21 – 

 

Airbornetechniciansworkoninstallingretractablesurveillancegear.PhotoobtainedbyTheIntercept

LASTOCTOBER,FRONTIER ServicesGroupheld itsbiannualboardmeeting inHongKong.GreggSmithdeliveredtheresultsoftheinternalinvestigation,whichleftlittledoubtthatPrince,FSG’s chairmanand founder,hadusedhisposition in the company topay forandbuild theprototypeforaprivateairforce.Prince already knew what he’d face at the meeting. FSG executives had forced his closelieutenantSergeDurrantintoanadministrativeleavebasedonevidenceDurranthadhelpeddirecttheunauthorizedefforttoweaponizetheThrushandthenconcealitfromthecompany’sleadership.PrinceformallydisclosedhispartialownershipofAirbornebutdeniedhehadanyconnection to LASAEngineering.Theboard also learned fromPrince for the first time thatanotherofhiscompanieshadbeenpaidforconstructionequipmentusedtobuildoneoftheoilfieldcampsinSouthSudan.Inaddition,Princedisclosedfourotherentitiesthatheownedorcontrolled,allofwhichhadreceivedpaymentsfromFSGforservices.Smith and the board voted to shut down the specialty aviation division entirely and firedDurrant,Matthews,andseveralotherPrincehires.Inall,morethan20employeeswerepushedout.Theboardformallydecidedtowriteoffthe$8millionexpenditureofthetwoThrushcropdusters and theirmodifications. The planes would either have themilitarized componentsuninstalled,inanefforttosellthem,ortheaircraftwouldbesoldforscrap.The board stripped Prince of any authority over the day‐to‐day operations of thecompany.TheboardalsostrippedPrinceofanyauthorityovertheday‐to‐dayoperationsofthecompany.“TheCompanyreiteratesitspolicynottoacquireormodifycontrolleditems”underU.S.defenseexportregulations,statedaboardresolutionreviewedbyTheIntercept.ItaddedthatFSGwouldnot“engageinactivitiesthatrequire”U.S.governmentlicenses.FSG’sgrowthprojectionsfor2016werestrong,andthecompany’sexecutivesbelievedtheyhadsuccessfullyputtheirchairman’stroublebehindthem.AfinalresolutionreiteratedthatFSG’sbusinesswasintransportationandlogistics–andthatanybusinessoutsidethatdescriptionrequired approval from a “high risk” committee headed by FSG’s most prominent boardmember,retiredfour‐starAdm.WilliamFallon.But Prince persisted with unsanctioned activities, including a secret meeting with ChineseintelligenceinBeijingandtheestablishmentofabankaccountatBankofChinainMacau.ByJanuary2016,executivesatFSGhadgrownincreasinglyalarmed,andPrince’seffortsinChinahad become part of an investigation by the U.S. government into his defense‐brokeringactivities.VictoriaToensing,oneofPrince’slawyers,toldTheInterceptthatherclient’sChinesebankaccountcompliedwithU.S.regulations.

– 22 – 

 

In February, according to multiple people with direct knowledge of the events, FSGrepresentativestraveledtoWashingtontomeetwithofficialsfromtheDepartmentofJustice.Atthemeeting,theydisclosedevidencepertainingtothemodificationsoftheThrushaircraftandtheattempttobrokerasaleinCentralAsia,aswellasPrince’smeetingsinChina.AmongtheofficialswithwhomFSGrepresentativesmetwere theheadof the JusticeDepartment’sNationalSecurityDivisionandaseniorprosecutorforexportcontrolinitscounterespionagesection.

AirborneTechnologiesbrochurefeaturingthemodifiedThrush510G.Photo:AirborneTechnologies

NoneofthisseemstohaveslowedthemodifiedThrushprogram.Airborne’sprizedAmericanco‐ownerhadindicatedthattherewasgreatinterestfrombuyersintheMiddleEastandAfricafor themodifiedThrush,according toasourcewithdirectknowledgeofAirborne’s internalmeetings.Thefutureproductionof100to150oftheplaneswasmentioned.InFebruary,AirborneshowcasedthecustomizedplanesatadefensetradeshowinSingapore.ThecompanyalsopostedonitswebsiteanessaywrittenfromtheperspectiveoftheThrushaircraft.“I’mcharacterizedbyaruggeddesignincombinationwithlong‐rangeendurance,thismakesmereliableandrobustduringchallengingtimes,”readtheessay.“Icomealongwithasteeledbody, so I amused to carryingheavy loadswithout effort. I amable toworkunderpressureandIstandmygroundwhenothersflyatme.All inallIamtheperfectworkhorseanywhereandinanysituation.”AnoteaftertheessayreferredtotheThrush’s“tank”armorand

– 23 – 

 

“ruggedized” frame. “Due to its incredibly robust, durable and reliable design features theThrush aircraft is ready to use when others reach their limit,” said Wolfgang Grumeth,Airborne’sCEO.Onitswebsite,AirbornebeganactivelypromotingthesaleofmodifiedThrushaircraft.ItfeaturedaphotoofoneofFSG’smodifiedplanes.AnAustrian lawmaker,whohas investigatedarmstraffickingforyears, is in thepreliminarystages of what he believes will become a criminal investigation into Prince and AirborneTechnologies.PeterPilz,amemberoftheAustrianParliament,saysheplanstopresentapublicprosecutor with documentary evidence on the Thrush modifications and the plans toweaponizetheaircraft.“Wearedefinitelysurethatitisagainstourlawsofneutrality,”PilztoldThe Intercept. He said the investigationwould also examine possible violations of Austriandefenseexportregulations.“Princeandalltheothersarenotguiltyuntilthere’sbeenacaseanda trial. But this case is strong enough. It’s going to be a criminal case definitely.” CitingBlackwater’shistoryinIraqandthe“soldieroffortunebusiness,”Pilzsaid,“ItisunacceptableforustohavepeoplelikeErikPrinceinAustria.Wehavetomakethatveryclear.”Airborne’shangarisastone’sthrowfromwhatwasoncetheWienerNeustadtaircraftfactory,whichtheNazisusedtomanufacturewarplanesduringWorldWarII.AlliedbombersrepeatedlytargetedthefactoryandultimatelyreducedtheentirecityofWienerNeustadttorubble.“Thecrucial thing is that a company inWienerNeustadt is onceagainbuilding fighter airplanes,whilecombatairplaneswereoncethereasonwhythiscitywascompletelydestroyed,”saidtheformerAirborneemployee.Thisfact,accordingtoPilz,willnotbelostonthecity’sresidents.“IthinkthatwhenpeopleinWienerNeustadtareinformed[about]what’sgoingonintheareaoftheircity,itwillbeamajorpoliticalscandal,”Pilzsaid.

KristofNaglandWolfgangGrumethwithWienerNeustadt’smayoratthegroundbreakingceremonyforanewAirborneTechnologiesfacility.Photo:AirborneTechnologies

Airbornedoesnot appear concerned. In earlyMarch, its executivesbroke groundon anewfacilityatWienerNeustadtairportinAustria.Thelocalmayorwasonhandtocelebrate,alongwithNaglandGrumeth.AnAirbornepressreleaseannouncedthatthecompanyhadrecentlywon “a number of significant orders from international Police and Military forces.” Thecompanypredictedunprecedentedgrowthandasubstantialexpansionofitsworkforce.AmongthestructuresitintendstobuildbySeptemberisalargehangartohousesensitiveprojects.ArecentLASAbusinessproposaldeliveredtoaforeigngovernment,reviewedbyTheIntercept,offered to provide heavily modified, weapons‐readied Thrush aircraft. It advertised thecapabilitytoequiptheplaneswithmissiles,bombs,andmachineguns,thoughitnotedthattheweaponswerenotincludedaspartofthespecificpackage.ThesalespitchcontainedmultiplephotosofamodifiedThrushinflight.ItstailnumbermatchedtheFSGplanegroundedinEastAfrica.

– 24 – 

 

ThisThrushaircraft,originallypurchasedbyFSG,iscurrentlygroundedatahangarinEastAfrica.PhotoobtainedbyTheIntercept

INTHEWEEKSprecedingFSG’sboardmeetinginMarchinHongKong,acivilwarwasragingwithinthecompany.OnonesidestoodSmithandAdm.Fallon,ontheother,ErikPrince,backedbytheboardmembersrepresentingtheChinesegovernment’sstakeinthecompany.AstheU.S.leadership of FSG met with government officials and others, several of them had beenencouragedtoseverbusinesstieswithPrince.Thegovernmentinvestigationwasexpanding,theyweretold,anditcouldaffectFSG’sbusiness.FromtheperspectiveofSmith’sfaction,theboardmeetinginHongKongwoulddecidewhetherthecompanytheyhadbuiltcouldbesalvaged.Intheirview,FSGwasneverintendedtoventureinto the security business. A publicly traded company run by the best‐known Americanmercenary,intheirestimation,wouldnotbeabletoobtainthelicensesandpermissionsfromthe U.S. government necessary to operate in the privatemilitary industry servicing foreigngovernments.InHongKong,therewouldbeamomentoftruth:EitherPrincewoulddeclareanewdirectionforthecompany,orSmithandtheotherAmericansPrincehadrecruitedthreeyearsearlierwouldsolidifytheoriginalFSGmission.

FSG’smostprominentboardmember,retiredAdm.WilliamFallon.Photo:Bloomberg/GettyImages

– 25 – 

 

In the last days ofMarch, the board gathered at FSG’s offices on the 39th floor of an officebuildingoverlookingKowloonBayinHongKong.FSG’sChineseboardmemberswastednotimeindeclaringtheirallegiancetoPrinceandanewvisionforthecompany.Prince’sexperienceandreputation,theysaid,wouldassistthecompanyinofferingsecurityandtrainingservicesas well as anti‐terrorism consulting for Chinese businesses, according to a former U.S.intelligenceofficialbriefedafterthemeeting.FSG’sChineseboardmemberswastednotimeindeclaringtheirallegiancetoPrince.Theboarddidn’tevenneedtovote.Prince,theChinesegovernmentinvestors,andhisalliesontheboardcontrolledenoughofthecompanytocalltheshots.FSG,theAmericansweretold,hadbeencreatedtosupportChina’sglobaleconomicplan.Logisticsandaviation, itseemed,hadbeenasideshow.ThedecisionwasacompleterebukeoftheU.S.leadershipofFSG,specificallySmithandAdm.Fallon.Princehadwonthebattle.But, with an expanding U.S. government investigation into his activities and a businesslandscaperiddledwithburnedbridges,asignificantquestioncontinuestohauntPrince:Willhewinthewar?“Brilliantidea–logisticsinAfrica–Princehasbeentalkingaboutthatfortenyears,”saidtheformerU.S.intelligenceofficial,whohasworkedextensivelywithPrince.“HecouldhavemademoneywithFSGwithhiseyesshut.Everybodyagreesandhedidn’tdoit.Why?Becauseitwasgoingtobeboring.”