The House committee on Oversight and Government Reform raises the issue of how Blackwater pays its employees. Currently, Blackwater is the only contractor in Iraq that pays its armed guards as private contractors, not as employees (with income tax and social security withholding).
There’s nothing wrong with this arrangement by itself, but one of the guards working for Blackwater seemed to think it was unfair. He questioned his status as an independent contractor, and the IRS agreed with him. Now the speculation is whether the ruling applies to all of Blackwater’s contractors in Iraq and Afgahnistan as well:
Since the hearing, I have learned that the IRS determined in March — six months prior to your testimony — that your classification of a security guard working in Afghanistan as an independent contractor was “without merit.” The IRS advised that “[y]ou are responsible for satisfying the employment tax reporting, filing, and payment obligations that result from this determination.” By its terms, the IRS ruling applied only to the individual security guard who protested his classification, but the IRS warned that its ruling “may be applicable to any other individuals engaged by the firm.” The logic of the ruling would appear to apply to your entire workforce in Iraq and Afghanistan.
There is also evidence that Blackwater has tried to conceal the IRS ruling and the evasion of taxes from Congress and law enforcement officials. The IRS determination was issued in response to an inquiry by an individual security guard who questioned his classification as an independent contractor. In June, Blackwater required this employee to sign a nondisclosure agreement before it agreed to pay the back pay and other compensation that he was owed. The terms of this agreement explicitly prohibited the guard from disclosing any information about Blackwater to “any politician” or “public official.” The agreement further provided: “THE UTMOST PROTECTION AND NONDISCLOSURE OF CONFIDENTIAL INFORMATION IS OF CRITICAL IMPORTANCE AND IS THE ESSENCE OF THIS AGREEMENT.”
That last bit about nondisclosure is pretty scary, eh? Good thing that the Committee accepts anonymous whistleblower tips.
It’s a fact that our society’s workforce is moving to a more independent, less hierarchical form. Contractors and subcontractors are more and more common while pensioned, insured, “job-secure” employees are fewer and far between. The jury is still out on whether this will benefit society as a whole — I can see sound arguments on both sides of that issue. But again, the question of the day is: do we want our military to be contracted and subcontracted and sub-sub-contracted out? Where does the buck stop when, say, a bunch of subcontracted mercenaries open fire on a crowd of civilizans?
Truman had the correct answer to that question. Too bad our current President likes to be the decider and the buck-passer at the same time. Too bad everyone in his administration is part of the same culture of irresponsibility. Too bad that private military contractors can drop the buck anywhere they like… at least, until we get some laws passed that bring some legal accountability somewhere in this process.