Tuesday, October 23, 2007

Blackwater: The Waxman Cometh (So Might the Taxman)

House Oversight and Government Reform Chair Henry Waxman (D-CA) has sent two letters to Erik Prince, chair of the business which owns Blackwater USA, a firm which supplies security personnel in Iraq. Waxman asked for financial management and annual profit information and implied that Blackwater was assigned two security contracts without proper bidding occurring. Among other allegations made by Waxman: misidentification of employees as contract labor (to avoid/evade social security and unemployment taxes) and the use of an "abhorrent" confidentiality clause before back pay was paid in a dispute with a former employee. For its part, Blackwater cites an SBA determination letter agreeing with its determination that security personnel hired by Blackwater are independent contractors and accuses Waxman of making a one-sided presentation to the public before all facts have been known.

Witch-hunt, Blackwater malfeasance or some of both? Time will tell. The "independent contractor" tax issue will be particularly interesting with the SBA letter apparently favoring Blackwater while two other private security contractors (DynCorp and Triple Canopy) treating their Iraq security staff as employees might favor Waxman.


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