Friday, February 12, 2010

Blow Those Whistles!

Blackwater/Xe is in the news again, and not in a nice way. Two former employees have filed a "whistle blower" suit against the company claiming the government contractor found all sorts of ways to screw the American taxpayers.

Two former employees of Blackwater Worldwide have accused the private security contractor of defrauding the government for years through phony billing, including charging taxpayers for alcohol-filled parties, spa trips and a prostitute.

In court records unsealed this week, a husband and wife who worked for Blackwater said they have firsthand knowledge of the company falsifying invoices, double-billing federal agencies and improperly charging the government for personal expenses. They said they witnessed "systematic" fraud in the company's security contracts with the State Department in Iraq and Afghanistan, and with the Department of Homeland Security and the Federal Emergency Management Agency in Louisiana after Hurricane Katrina. ...

Brad Davis, a former Marine, served as a Blackwater team leader and security guard, including in Iraq. His wife, Melan Davis, worked as a finance and payroll employee, starting in Louisiana. Their lawsuit was filed under the False Claims Act, which allows whistle-blowers to win a portion of any money the government recovers as a result of the information. However, the Justice Department has chosen not to join them in pursuing their lawsuit, a decision that led to the suit being unsealed this week.

The company changed its name to Xe Services LLC last year. Xe spokeswoman Stacy DeLuke said Thursday that the Davises' allegations are false. "The allegations are without merit and the company will vigorously defend against this lawsuit," she said. "It is noteworthy that the government has declined to intervene in this action."

The Washington Post article, written in collaboration with the Center For Public Integrity details some of the allegations made by the Brad and Melan Davis. It sounds like a typical laundry list for private contractors feeding at the government trough. If even a few of those allegations are borne out at trial, those who believe in shrinking government by outsourcing to those private contractors will be faced with the fact that their plans inevitably cost the taxpayers more than it would have cost to have the government perform those same services. Relying on the corporate mentality of doing it on the cheap almost inevitably does cost more because there is no incentive to keep costs down when Uncle Sugar is paying the bills.

Unfortunately, the federal government has declined to intervene in the lawsuit, depriving the Davis's law team of a well-funded discovery partner. There are all sorts of reasons for the DOJ's decision: the allegations didn't appear to be well-founded; the DOJ has its own investigation going on and didn't want to tip the defendant as to what they've found in a bigger case; or the Davis couple are just "disgruntled former employees." The article is silent on the reasons, probably because the Department of Justice was silent when asked by the Center for Public Integrity.

Maybe DOJ will be more forthcoming if asked by a congressional committee. That might prove interesting.

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