Weeping mourners, meanwhile, demanded justice at a funeral for Marou Awanis and Geneva Jalal, the two Armenian Christian women who died Tuesday in the second shooting of civilians involving a security firm linked to U.S. government-financed work in Iraq in less than a month.
Unity, which provides protection for USAID contractor RTI International, said the security team was "approached at speed by a white car" and used "graduated and escalated" warnings, including signs, strobe lights, hand signals and a flare to try to get it to stop.
"The vehicle did not heed these warnings and failed to halt," the company's chief operating officer Michael Priddin said in a statement. "Fearing a suicide attack, only then did the team use their weapons in a final attempt to stop the vehicle."
Priddin said the area where the shootings occurred in the central Baghdad district of Karradah had been subjected to suicide car bombings in recent weeks and the guards were on alert.
It also confirmed that two people had been killed in the shootings. "We deeply regret the loss of these lives," the statement said, adding that the company was cooperating with Iraqi authorities in the investigation into the incident.
Relatives and friends of the victims as well as the Iraqi government claimed the use of force against the car was excessive and said those responsible should be held accountable.
"What is the use of the word 'sorry?"' Nora Jalal, Awanis' daughter and a student at Baghdad's Technology University, cried.
Government spokesman Ali al-Dabbagh said an initial site investigation showed the guards were wrong to use their weapons.
"The use of force in that incident was unjustifiable," he said. "We cannot say that the guards shot at random, but rather we would say that they used force in a situation that they should not have done this. The preliminary investigation has shown that there was no threat to the convoy."
Al-Dabbagh said the families would be invited to file a lawsuit against the company, but he did not elaborate.
The shootings occurred as outrage was still fresh over the killings of 17 Iraqi civilians allegedly at the hands of Blackwater USA as it was protecting American specialists working under USAID contracts on development projects in Iraq. The North Carolina-based company has said its guards were responding to an attack by armed insurgents.
An Iraqi investigation of the Blackwater shooting on Sept. 16 was ordered by Prime Minister Nouri al-Maliki and called for the company to pay $8 million in compensation to the families of each of the 17 victims. The commission also said Blackwater guards had killed 21 other Iraqis since it began protecting American diplomats.
The Rev. Kivork Arshlian urged the government to punish those responsible despite the immunity that has generally been enjoyed by foreign security contractors in Iraq.
"This is a crime against humanity in general and against Iraqis in particular. Many other people were killed in a similar way," he said. "We call upon the government to put an end to these killings."
"This security company should leave the country. Those who committed this crime should be punished because they claimed the lives of two people," he added. "We do not want a trial in Australia, which we would know nothing about."
Arshlian celebrated the funeral Mass, which was held at the Virgin Mary Church. Awanis' three daughters cried and other female relatives wailed over the caskets, adorned only with a golden cross.
In other developments:
Both Unity and RTI acknowledged a security contract between them but said RTI staffers were not present at the shooting in Baghdad's Karradah district.
A U.S. Embassy spokeswoman said RTI was under contract by USAID but was responsible for its own security. "USAID does not direct the security arrangements of contractors," Mirembe Nantongo said.
According to the USAID Web site, RTI has about $450 million in U.S. government contracts to work on governance projects in Iraq. USAID is a semiautonomous arm of the State Department that manages U.S. aid programs.
The deaths of the two women - including one who used the white car as a taxi to raise money for her family - came a day after the Iraqi government gave U.S. officials a report demanding hefty payments and Blackwater's ouster from Iraq for a shooting last month that left at least 17 civilians dead.
The Blackwater guards implicated in the Sept. 16 shooting also were protecting American specialists working under USAID contracts on development projects in Iraq, highlighting the difficult balance facing Western agencies trying to help rebuild Iraq while keeping their own staff safe.
Tuesday's killings were certain to sharpen government demands to curb the expanding array of security firms in Iraq watching over diplomats, aid groups and others - nearly all based in the United States, Britain and other Western countries - as they are increasingly seen as symbols of the lawlessness in Iraq since the U.S.-led ouster of Saddam Hussein in 2003.
Unity also has come under scrutiny before.
In March 2006, the company issued an statement of sympathy after one of its guards was blamed for shooting a 72-year-old Iraqi-born Australian, Kays Juma, at a Baghdad checkpoint.
Australian Foreign Minister Alexander Downer said Juma was killed because he was in a car that failed to stop. Unity said multinational forces and Iraqi police also were present at the checkpoint at the time.
Unity provides armed guards and security training throughout Iraq. Its heavily armed teams are Special Forces veterans from Australia, the United States, New Zealand and Britain - as well as former law enforcement officers from those countries.