Blackwater (Xe); Erik Prince Steps Down, No Contract Renewal

Erik Prince, the founder of the Blackwater security company, announced Monday he has stepped aside as the company's chief executive officer.  Good bye and good riddance! 

Since 2003, U.S. taxpayers have paid Blackwater (now known as Xe,) more than $1 billion dollars to guard diplomats, ambassadors, and dignitaries in Iraq.  Incidents in Iraq involving unprovoked shootings and tax evasion have however, tarnished the company’s image.  It is now trying to distance itself these controversies by changing its name from Blackwater to Xe, and replacing Erik Prince as the chief executive officer.  However, those incidents, in which innocent civilians were killed, should not be forgotten and mercenary armies such as Blackwater should be abolished all together.  At least, the State Department announced it would not rehire Blackwater after its current no-bid contract with the company expires in May 2009.

CONTROVERSIES

House Oversight Committee in October 2007, called Blackwater an out-of-control outfit indifferent to Iraqi civilian casualties. It said that Blackwater had been involved in nearly 200 shooting incidents in Iraq since 2005. 

In one incident an intoxicated 26-year-old Blackwater contractor shot and killed a 32-year-old security guard for Iraqi Vice President Adil Abdul-Madhi during a confrontation in the International Zone, the fortified compound in Baghdad, also known as the “Green Zone,” which houses the U.S. embassy and much of the Iraqi government.  Questioning was delayed due to the contractor’s intoxication level.

On September 16, 2007, Blackwater guards shot and killed 17 Iraqi civilians in Nisour Square, Baghdad.  Soon thereafter, Blackwater’a license to operate in Iraq was revoked by the Iraqi government.  The US State Department has said that "innocent life was lost" while U.S. military reports indicate that Blackwater guards opened fire without provocation and used excessive force

A single Blackwater security contractor costs the government $1,222 every day to guard U.S. civilian personnel, or $445,000 per year. That's six times the cost of getting a U.S. Army soldier to perform the same function.

Blackwater may have also engaged in significant tax evasion, failing to withhold and pay millions of dollars in Social Security, Medicare, unemployment, and related taxes, and sought to conceal its conduct from Congress and law enforcement officials.

In a letter to Erik Prince, Chairman Waxman of the Committee on Oversight and Government Reform writes;

“I have received documents which suggest that Blackwater may have engaged in significant tax evasion. According to an IRS ruling in March 2007, Blackwater violated federal tax laws by treating an armed guard as an “independent contractor.” The implication of this ruling is that Blackwater may have avoided paying millions of dollars in Social Security, Medicare, unemployment, and related taxes for which it is legally responsible…  Blackwater classifies its armed guards as independent contractors rather than as employees. Under federal tax laws, this classification has important ramifications. Businesses must pay Social Security, Medicare, and unemployment taxes for their employees. They must also withhold federal income taxes on their salaries. By classifying its armed guards and other personnel as independent contractors instead of employees, Blackwater has apparently evaded withholding and paying these taxes.”