Blackwater probe expansion sought

WASHINGTON – House Oversight Committee Chairman Henry Waxman expanded his effort Monday to investigate private security contractor Blackwater Worldwide, calling for a wide-ranging federal inquiry into the company’s employment practices.

In letters to the Internal Revenue Service, the Small Business Administration and the Labor Department, Waxman, D-Calif., questioned Blackwater’s classification of its workers as “independent contractors” rather than employees. That designation, which the government has questioned in the past, has allowed the company to obtain $144 million in contracts set aside for small businesses and to avoid paying as much as $50 million in withholding taxes under State Department contracts, he said.

A Blackwater spokeswoman called Waxman’s allegations “completely without merit” and said the company regrets his “decision to publicly air misleading information.” An IRS spokesman declined to comment.

The allegations came as a team of Justice Department and FBI investigators completed a two-week visit to Baghdad, where they interviewed additional witnesses in connection with a Sept. 16 incident in which Blackwater security personnel guarding U.S. diplomats killed 17 civilians at a Baghdad traffic circle. Although a grand jury was convened late last year in the case, federal prosecutors have not determined whether the contractors can be prosecuted under U.S. law. They are immune from Iraqi prosecution under a decree promulgated by the former U.S. occupation government in Iraq.

The incident prompted criticism of the use of private security contractors by both the State and Defense departments. As a result, State promised to increase supervision of their activities, and the two departments developed comprehensive guidelines for them.