The IRS ruling concerned one particular case. But Waxman said its logic "would appear to apply to your entire workforce in Iraq and Afghanistan." Extrapolating from the one case, the Democratic committee staff calculated that Blackwater avoided paying $15.5 million in Social Security and Medicare taxes, $15.8 million in federal income tax withholding, and $500,000 in unemployment taxes from the start of its last contract, in May 2006, through the receipt of the IRS ruling in March. It's an "unanswered question," Waxman wrote, whether Blackwater has continued to avoid paying these taxes after the IRS ruling. If so, then Blackwater would have evaded an additional $18 million through September.
That's not all. Waxman took special note of a non-disclosure clause in the settlement Blackwater ultimately reached with the ex-guard on June 6. It prevented the ex-guard from discussing the case with any "politician" or "public official." The chairman sees it as evidence of a cover-up, and called it "abhorrent on its face."
Nondisclosure agreements that prohibit individuals from reporting illegal conduct to public officials have been widely held to be unenforceable as against public policy. It is deplorable that a company that depends on federal tax dollars for 90 percent of its business would even contemplate forbidding an employee to report corporate wrongdoing to Congress and federal law enforcement officials.
Waxman found the "timing" of the non-disclosure agreement "particularly suspect." It was signed by Blackwater's general counsel, Andrew Howell, who the previous month had received requests for information on the company from the committee as part of its initial investigation into security contracting in Iraq. Howell's non-cooperation led to the committee issuing subpoenas for the relevant documents in August. It was during this period, Waxman noted, that the company reached the non-disclosure agreement with the ex-guard.
An e-mail request for comment from Blackwater spokeswoman Anne Tyrrell was not immediately returned.
Update: Here's Tyrrell's reply.