Look who's holed up in Hong Kong cozying up to the Chi-coms now

Erik Prince —ex-Navy SEAL, ex-CIA spy, ex-CEO of private-security firm Blackwater —calls himself an "accidental tourist" whose modest business boomed after 9/11, expanded into Iraq and Afghanistan, and then was "blowtorched by politics." To critics and conspiracy theorists, he is a mercenary war-profiteer. To admirers, he's a patriot who has repeatedly answered America's call with bravery and creativity.

Now, sitting in a boardroom above Hong Kong's Victoria Harbour, he explains his newest title, acquired this month: chairman of Frontier Services Group, an Africa-focused security and logistics company with intimate ties to China's largest state-owned conglomerate, Citic Group. Beijing has titanic ambitions to tap Africa's resources—including $1 trillion in planned spending on roads, railways and airports by 2025—and Mr. Prince wants in.

With a public listing in Hong Kong, and with Citic as its second-largest shareholder (a 15% stake) and Citic executives sitting on its board, Frontier Services Group is a long way from Blackwater's CIA ties and $2 billion in U.S. government contracts. For that, Mr. Prince is relieved.

"I would rather deal with the vagaries of investing in Africa than in figuring out what the hell else Washington is going to do to the entrepreneur next," says the crew-cut 44-year-old.

Gunning down seventeen Iraqi civilians in an incident the military has labeled "criminal." Multiple Congressional investigations. A federal grand jury. Allegations of illegal arms smuggling. Wrongful death lawsuits brought by families of dead employees and US soldiers. A federal lawsuit alleging war crimes. Charges of steroid use by trigger-happy mercenaries. Allegations of "significant tax evasion." The US-installed government in Iraq labeling its forces "murderers." With a new scandal breaking practically every day, one would think Blackwater security would be on the ropes, facing a corporate meltdown or even a total wipeout. But it seems that business for the company has never been better, as it continues to pull in major federal contracts. And its public demeanor grows bolder and cockier by the day.

Rather than hiding out and hoping for the scandals to fade, the Bush Administration's preferred mercenary company has launched a major rebranding campaign, changing its name to Blackwater Worldwide and softening its logo: once a bear paw in the site of a sniper scope, it's now a bear claw wrapped in two half ovals--sort of like the outline of a globe with a United Nations feel. Its website boasts of a corporate vision "guided by integrity, innovation, and a desire for a safer world." Blackwater mercenaries are now referred to as "global stabilization professionals." Blackwater's 38-year-old owner, Erik Prince, was No. 11 in Details magazine's "Power 50," the men "who control your viewing patterns, your buying habits, your anxieties, your lust.... the people who have taken over the space in your head."

In one of the company's most bizarre recent actions, on December 1 Blackwater paratroopers staged a dramatic aerial landing, complete with Blackwater flags and parachutes--not in Baghdad or Kabul but in San Diego at Qualcomm Stadium during the halftime show at the San Diego State/BYU football game. The location was interesting, given that Blackwater is fighting fierce local opposition to its attempt to open a new camp--Blackwater West--on 824 acres in the small rural community of Potrero, just outside San Diego. Blackwater's parachute squad plans to land at the Armed Forces Bowl in Texas this month and the Virginia Gold Cup in May. The company recently sponsored a NASCAR racer, and it has teamed up with gun manufacturer Sig Sauer to create a Blackwater Special Edition full-sized 9-millimeter pistol with the company logo on the grip. It comes with a Limited Lifetime Warranty. For $18, parents can purchase infant onesies with the company logo.

In recent weeks, Blackwater has indicated it might quit Iraq. "We see the security market diminishing," Prince told the Wall Street Journal in October. Yet on December 3 Blackwater posted job listings for "security specialists" and snipers as a result of its State Department diplomatic security "contract expansion." While its name may be mud in the human rights world, Blackwater has not only made big money in Iraq (about $1 billion in State Department contracts); it has secured a reputation as a company that keeps US officials alive by any means necessary. The dirty open secret in Washington is that Blackwater has done its job in Iraq, even if it has done so by valuing the lives of Iraqis much lower than those of US VIPs. That badass image will serve it well as it expands globally.

Prince promises that Blackwater "is going to be more of a full spectrum" operation. Amid the cornucopia of scandals, Blackwater is bidding for a share of a five-year, $15 billion contract with the Pentagon to "fight terrorists with drug-trade ties." Perhaps the firm will join the mercenary giant DynCorp in Colombia or Bolivia or be sent into Mexico on a "training" mission. This "war on drugs" contract would put Blackwater in the arena with the godfathers of the war business, including Lockheed Martin, Northrop Grumman and Raytheon.

In addition to its robust business in law enforcement, military and homeland security training, Blackwater is branching out. Here are some of its current projects and initiatives:

§ Blackwater affiliate Greystone Ltd., registered offshore in Barbados, is an old-fashioned mercenary operation offering "personnel from the best militaries throughout the world" for hire by governments and private organizations. It also boasts of a "multi-national peacekeeping program," with forces "specializing in crowd control and less than lethal techniques and military personnel for the less stable areas of operation."

§ Prince's Total Intelligence Solutions, headed by three CIA veterans (among them Blackwater's number two, Cofer Black), puts CIA-type services on the open market for hire by corporations or governments.

§ Blackwater is launching an armored vehicle called the Grizzly, which the company characterizes as the most versatile in history. Blackwater intends to modify it to be legal for use on US highways.

§ Blackwater's aviation division has some forty aircraft, including turboprop planes that can be used for unorthodox landings. It has ordered a Super Tucano paramilitary plane from Brazil, which can be used in counterinsurgency operations. In August the aviation division won a $92 million contract with the Pentagon to operate flights in Central Asia.

§ It recently flight-tested the unmanned Polar 400 airship, which may be marketed to the Department of Homeland Security for use in monitoring the US-Mexico border and to "military, law enforcement, and non-government customers."

§ A fast-growing maritime division has a new, 184-foot vessel that has been fitted for potential paramilitary use.

Meanwhile, Blackwater is deep in the camp of GOP presidential candidate Mitt Romney. Cofer Black is Romney's senior adviser on counterterrorism. At the recent CNN/YouTube debate, when Romney refused to call waterboarding torture, he said, "I'm not going to specify the specific means of what is and what is not torture so that the people that we capture will know what things we're able to do and what things we're not able to do. And I get that advice from Cofer Black, who is a person who was responsible for counterterrorism in the CIA for some thirty-five years." That was an exaggeration of Black's career at the CIA (he was there twenty-eight years and head of counterterrorism for only three), but a Romney presidency could make Blackwater's business under Bush look like a church bake sale.

At that point, charges Mr. Prince, Blackwater was "completely thrown under the bus by a fickle customer"—the U.S. government, and especially the State Department. He says Washington opted to "churn up the entire federal bureaucracy" and sic it on Blackwater "like a bunch of rabid dogs." According to Mr. Prince, IRS auditors told his colleagues that they had "never been under so much pressure to get someone as to get Erik Prince," and congressional staffers promised, "We're going to ride you till you're out of business."

Amid several federal prosecutions involving Blackwater employees, most of which fizzled, Mr. Prince resigned as CEO in 2009 and now feels "absolutely total regret in every way, shape and form for ever saying 'yes' " to a State Department contract.

Which brings him to Hong Kong and his new firm. "This is not a patriotic endeavor of ours—we're here to build a great business and make some money doing it," he says. Asia, and especially China, "has the appetite to take frontier risk, that expeditionary risk of going to those less-certain, less-normal markets and figuring out how to make it happen." Mr. Prince says "critics can throw stones all they want" but he is quick to point out that he has "a lot of experience in dealing in uncertainties in difficult places," and says "this is a very rational decision—made, I guess, emotionless."

At this point in the interview, Mr. Prince begins speaking more sharply, even bitterly, not simply as a critic of Washington policy but as a man betrayed. Which he was, in 2009, when he was outed publicly as a CIA asset.

For years while running Blackwater, it turns out, Mr. Prince was also using his personal wealth and expertise to recruit and deploy a world-wide network of spies tracking al Qaeda operatives in "hard target" locations where even the CIA couldn't reliably operate. This work remained secret until June 2009, when then-CIA Director Leon Panetta mentioned it in classified testimony to Congress. Within weeks, leaks hit the front pages.

"The one job I loved more than any other was ripped away from me thanks to gross acts of professional negligence at the CIA," Mr. Prince wrote in his memoir, "Civilian Warriors," published in November.

This background comes to mind as Mr. Prince makes the surprising claim that "there's very little advantage to being an American citizen anymore. They tax you anywhere in the world you are, they regulate you, and they certainly don't help you, at all."

His advice for Washington: "Stop committing suicide." Lawmakers should "get out of their heads this idea that they can recklessly spend money that they don't have," he says. "The United States government is too big in all areas. . . . It's time to make the entire thing a lot smaller." That would include doing everything from allowing Americans to buy incandescent light bulbs to reining in domestic surveillance by the National Security Agency.

At no point does Mr. Prince address the irony of making these arguments days after going into business with a state-owned firm founded as part of Communist China's Ministry of State Security.