Canadian troops and police were trained for two years by the international security contractor formerly known as Blackwater without the permission of the U.S. State Department.
The revelation is contained in U.S. federal court records, unsealed in North Carolina as part of a $7.5-million settlement of criminal charges against the company now called Academi LLC.
It is the second time Canada's association with the notorious security company, often described as the world's largest mercenary army, has arisen in a complex legal case that has been churning its way through U.S. courts.
Blackwater, which changed its name to Xe Services before being sold and becoming Academi LLC, was cited in August, 2010, for the unauthorized export of technical data to the Canadian military.
The Harper government has had a standing contract with the company since 2008.
It's paid millions of dollars going back to 2006 for specialized training provided to special forces troops and some police officers.
U.S. prosecutors say Blackwater didn't seek the permission required under American arms control laws for the instruction, which took place between 2006 and 2008 and included training in marksmanship, defensive driving, bodyguard and close combat skills.
The company had a myriad of subsidiaries.
Some of what Blackwater companies taught the Canadian military involved the company's "Mirror Image" course, according to court documents filed in Raleigh, N.C. The program sees trainees living as a mock al-Qaeda cell to better understand the mindset and culture of insurgents.
It is a "classroom and field training program designed to simulate terrorist recruitment, training, techniques and operational tactics," said a Blackwater brochure.
The course was offered by the now-defunct Blackwater subsidiary Terrorism Research Centre, which in addition to the immersion-like training provided advice to governments and U.S. cities on intelligence-gathering. The centre was shut down by the new owners.
Much of the public attention on Blackwater has focused on the 2007 deaths of 17 Iraqis in Baghdad after an attack on a diplomatic convoy protected by Blackwater guards.
But the company's advice and potential involvement in the murky world of intelligence gathering for both government and corporations has been the subject of growing scrutiny over the past few years.
National Defence and the government have over the years defended their association with Blackwater, saying the courses and instruction were necessary and unavailable anywhere else.
A spokeswoman in Defence Minister Peter MacKay's office issued a one-line email statement, saying it was "appropriate training" to ensure that soldiers had "skills required to survive a very difficult military mission in Afghanistan."
Officials within the department declined further comment, but a defence expert who has written extensively on the shadowy ventures of private security companies called the revelations troubling.
Dave Perry of Carleton University's Centre for Security and Defence Studies said whenever it's gotten into trouble, Blackwater always insisted it was carrying out business in compliance with U.S. foreign policy.
"It potentially brings into question whether they were actually doing that, if they weren't going through the formal channels to get approval for something as relatively mundane as training," Mr. Perry said.
The NDP's Jack Harris said his party has long opposed the training.
"What else don't we know that's going on without the knowledge or consent of the Canadian people?" Mr. Harris asked.
The idea that technical data was transferred to Canada also grabbed Mr. Perry's attention. He wonders what it was the U.S. thought was so sensitive that it could be shared with a private contractor, but not with its closest neighbour and military ally.
Mr. Perry said the court case raises more questions about the government's association and believes the revelations may only be the tip of the iceberg, given that Blackwater had over 30 different subsidiaries.
"I don't think we have a full appreciation of the full range of services" offered to Canada by the company, he said.
Asked if the Canadian public has yet to learn the full story, Mr. Perry replied: "I think that's fair to say."