"It was not hit even by a stone," government spokesman Ali al-Dabbagh said in a statement.
The shooting has outraged Iraqis and brought calls for the rules governing those protecting American diplomats to be overhauled.
The three-member Iraqi panel led by Defense Minister Abdul-Qader al-Obeidi put the casualty toll at 17 killed and 23 wounded, a higher number than other estimates. It determined that Blackwater guards sprayed western Baghdad's Nisoor Square with gunfire without provocation.
Dabbagh said the Cabinet would weigh the Iraqi findings with those of a joint US-Iraqi commission "and subsequently adopt the legal procedures to hold this company accountable."
The Iraqi panel is one of at least three investigations involving Americans. The joint US-Iraqi commission also met for the first time yesterday to review American security operations after the shooting.
The Federal Bureau of Investigation has dispatched a team to Baghdad, and retired veteran diplomat Stapleton Roy is leading a diplomatic review, along with a former State Department and intelligence official, Eric Boswell. The panel, led by Patrick Kennedy, one of the most senior management specialists in the US Foreign Service, was to present an interim report early this month.
The Sept. 16 episode was one of at least six involving deaths allegedly caused by Blackwater that authorities have brought to the attention of the Americans.
The joint commission exchanged opinions about the shootings and agreed on a need to establish a direct mechanism for sharing information and to review several issues related to US security operations, embassy spokeswoman Mirembe Nantongo said.
The joint commission is expected to issue recommendations to both Baghdad and Washington on improving Iraqi and US security procedures, with the "goal of ensuring that personal security detail operations do not endanger public safety" and prevent similar events in the future.
Across the Iraqi capital, bombings killed at least nine Iraqis in three attacks, including one near Iran's embassy, police said.
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