Blackwater's SOS

Primary sources exposed and explained.
Oct. 26 2007 5:38 PM

Blackwater's SOS

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Blackwater Worldwide has snagged lucrative State Department contracts to guard diplomats in Iraq. Its chairman, Erik Prince, enjoys stellar political connections. Its high-priced attorneys can whisk wrongful death claims from open court into arbitration behind closed doors. Even so, the private security firm has lately been experiencing a few difficulties.

In the past month, the company endured scrutiny from the FBI over a bloody confrontation in Baghdad's Nisour Square and from a House oversight committee over other seemingly unrestrained shootings. The Iraqi government wants $136 million to compensate for 17 civilian deaths in the Nisour matter, and Blackwater is the primary target of House legislation to put contractors in war zones under the jurisdiction of U.S. courts. The Internal Revenue Service recently issued this potentially costly opinion faulting Blackwater's practice of treating its thousands of workers as "independent contractors" instead of "employees," thereby allowing Blackwater to avoid payroll taxes and income-tax withholding. Blackwater claims it relied on an opinion from the Small Business Administration, but the SBA told a Senate committee that eligibility for small business programs has "no applicability to tax liability matters."

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In response to this sudden surge of ill fortune, Blackwater sent an e-mail (below) to employees, alumni, suppliers, political allies, and fellow security contractors soliciting supportive "letters, e-mails and calls to your elected Congressional representatives." The direct-mail plea helpfully offers  talking points for recipients who (understandably) can't imagine what to say in Blackwater's defense.

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