Waxman's staff also released a memorandum (.pdf), outlining the Committees' concerns. An excerpt:

The evidence received by the Committee shows that Blackwater has taken inconsistent positions regarding whether its guards are employees or independent contractors. When the issue is whether Blackwater can be held liable for wrongful death of Blackwater guards, Blackwater argues that the guards are "employees" and can recover only through the workers' compensation system. But when the issue is whether Blackwater must pay or withhold Social Security, Medicaid, and other taxes for the guards, whether Blackwater is eligible for small business preferences in contracting, or whether Blackwater must comply with anti-discrimination rules, Blackwater calls these same guards "independent contractors."

The implications of Blackwater's actions are significant. Committee staff have estimated that Blackwater has avoided paying or withholding up to $50 million in federal taxes by treating its guards as independent contractors rather than employees. It also appears that Blackwater has received more than $144 million in small business contracts that may not be justified and has evaded oversight by the Department of Labor.

For these reasons, I am sending letters today to the Internal Revenue Service, the Small Business Administration, and the Department of Labor. These letters ask the agencies to investigate whether Blackwater has complied with federal tax and other laws and to initiate enforcement action where appropriate.

Photo used under a Creative Commons license from James Gordon.