It was a pretty neat trick. Because Blackwater classified its guards in Iraq as independent contractors, the company saved possibly "tens of millions" of dollars in taxes.
A number of senators called
for investigations last October. But House oversight committee Chairman Henry Waxman (D-CA) says
that his staff have been digging and now it's clear: Blackwater is wrong when it says that its guards fit the description of contractors and not employees, and that dodge had much bigger benefits than a simple tax dodge.
Because Blackwater had many fewer "employees," for example, it made out with a number of contracts reserved for so-called small businesses: "at least 100 small business set-aside contracts. worth over $144 million, that have been awarded to Blackwater since 2000."
Waxman wants the IRS, the Small Business Administration, and the Department of Labor to investigate. Blackwater is already the focus of its share of criminal investigations
, but it may be that these, if they were to get off the ground, would do the most damage to the company's bottom line.