The FBI has reportedly concluded that private security guards working for Blackwater were unjustified in killing at least 14 of the 17 Iraqis they shot dead in Baghdad on September 16th.
The shootings have caused major outrage in Iraq, where the Government had initially threatened to expel all Blackwater employees from the country.
Witnesses say the 17 victims were killed when employees of the US company opened fire indiscriminately and without provocation.
Blackwater claims its staff responded after coming under attack, but reports in the US today say the FBI has found no evidence to back up this claim.
An Iraqi investigation has also come to the same conclusion.
The FBI has reportedly concluded, however, that three of the deaths may have been justified under rules that allow the use of lethal force in response to an imminent threat.