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Former Employees Say Blackwater Defrauded Government

Two former employees of Blackwater Worldwide have accused the private security contractor of defrauding the US government. The false billing allegedly includes charging taxpayers for alcohol, parties, spa trips and a prostitute.

In court records unsealed this week, a husband and wife who worked for Blackwater said they witnessed the company fabricating invoices, double-billing federal agencies and charging the government for personal expenses. They allege that they observed “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. Blackwater is the State Department’s largest security contractor.

The couple filed the lawsuit 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 decided not to join them in their lawsuit.

Blackwater changed its name to Xe Services LLC last year. The company became a major source of anti-American sentiment in Iraq because of repeated deadly shootings involving its guards. Xe spokeswoman Stacy DeLuke said Thursday that the couple’s allegations are false.

In their suit, the couple asserts that Blackwater officials kept a Filipino prostitute on the company payroll for a State Department contract in Afghanistan, and billed the government for her time working for male Blackwater employees in Kabul. They alleged the prostitute’s salary was labeled as part of the company’s “Morale Welfare Recreation” expenses.

The wife, Melan Davis, worked in Blackwater’s finance department. She questioned how the company could bill the government for its employees’ travel expenses to and from Iraq when it lacked the documentation for those trips. She said corporate officers instructed her and co-workers to create many false invoices for travel, so her bosses could overcharge the government.

Melan Davis argues that Blackwater fired her in February 2008 because she questioned fraudulent billing. Her husband, Brad Davis resigned.

See NYTimes for more.


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