Former executives at US security contractor Blackwater Worldwide have admitted sending about one million dollars to Iraq to pay off officials angry about the fatal shootings of 17 civilians by its employees, according to a report.
Four former executives described the plan under the condition of anonymity, the New York Times said.
Iraqis had long complained about operations by North Carolina-based Blackwater, now known as Xe Corp.
The shooting by Blackwater guards in Baghdad in September 2007 left 17 civilians dead, further straining relations between Baghdad and Washington and leading US prosecutors to bring charges against the contractors involved.
The US State Department has since turned to DynCorp and another private security firm, Triple Canopy, to handle diplomatic protection services in Iraq.
But Xe continues to provide security for diplomats in other nations, including Afghanistan.
The former executives told the New York Times that the payments were approved by the company's then-president, Gary Jackson.
It was not clear whether the payments were actually delivered, or which Iraqi officials were intended to receive them.
Any payments would have been illegal under the US Foreign Corrupt Practices Act, which bans bribes to foreign officials.
The company has paid legitimate compensation to several victims of the shootings.
Two of the former executives said they were directly involved in discussions about paying Iraqi officials, and the other two said they were told about the discussions by others at Blackwater.
Jackson, who resigned as president of Blackwater early this year, criticised the newspaper when reached by phone and said: "I don't care what you write."
Xe spokesman Mark Corallo said the company disputes "these baseless allegations" and had no comment on former employees.
The plan to pay Iraqi officials caused a rift within the company, the former executives said.
Five Blackwater guards involved in the Baghdad shooting are scheduled to face trial on federal manslaughter charges in February in Washington.
A sixth guard pleaded guilty in December. Iraqi victims are also suing the company and its founder, Erik Prince.
The Iraqi government suspended the firm's licence after the shooting and demanded that Blackwater be expelled from the country within six months.