Blackwater deal worth £146m for military work in Afghanistan comes despite accusations over murder and indiscriminate killings in Iraq

Contractors from Blackwater near the Iranian embassy in central Baghdad Blackwater contractors in central Baghdad, July 2005: The company was recently given a week to leave Iraq after murder accusations. Photograph: Ahmad Al-rubaye/AFP/Getty Images

The Obama administration has awarded $220m (£146m) in new contracts to the military contractor formerly known as Blackwater to provide security in Afghanistan. This is despite accusations against the company of murder and indiscriminate killings of civilians in Iraq and investigations into alleged corruption and sanctions busting.

The contracts have drawn stinging criticism in Congress and assertions that because of Blackwater's reputation for indifference to innocent lives it will jeopardise the mission in Afghanistan.

But Leon Panetta, the head of the CIA, has defended the new contracts by saying the company, which changed its name to Xe Services as part of an image makeover, has "shaped up their act".

The state department has agreed to pay Xe Services $120m to provide security to new diplomatic premises being built in Afghanistan, including consulates outside Kabul. The CIA has awarded a separate contract worth $100m to "secure its bases" in Afghanistan.