SBA Memo Does Not Accuse Blackwater

You wouldn't know it by Congressman Henry Waxman's spin when he released a memo to the press, but the Small Business Administration Inspector General did not accuse Blackwater of improper behavior.

A reporter for the Virginian-Pilot (a paper that has long been critical of the company) actually read the memorandum and reports, "The memo, written by Glenn Harris, counsel to SBA inspector general Eric Thorsen, refers to 'potential misrepresentations by Blackwater' but does not accuse the Moyock, N.C.-based firm of breaking federal laws or improperly obtaining contracts."

Waxman postured in a written statement that Blackwater “misled contracting officials who in turn ignored blatant warning signs. It is deplorable that no one ever looked out for the interests of the federal taxpayer.” He said it as fact, when that's not what the Inspector General said at all.

Inspector General Faults SBA in 4 of 5 Findings, But Waxman Spins It to Blame Blackwater

The Inspector General of the Small Business Administration (SBA) has faulted the SBA in four out of five findings concerning Blackwater Worldwide.

Congressman Henry Waxman (D-Cal.) is alleging "waste, fraud and abuse" on his committee website, which contains a headline today worded to imply that the SBA has a major problem with Blackwater.

Blackwater is certain to take the blame in the headlines soon to be generated from the Waxman statement. Waxman generated the complaint to the SBA in March.

However, a look at the SBA Inspector General memorandum shows that of the five "findings," the government agency itself appears to be at fault in four of them.

In Finding 1, Blackwater and an affiliated company "may have" won contracts that were set-asides for small businesses, even though the company no longer qualified as a small business. It's pretty subjective and inconclusive, because of Blackwater's use of contractors versus employees in key areas to support the troops.

In Findings 2-5, the Inspector General blames the SBA itself - not Blackwater. Take a look at the original document and see for yourself: http://oversight.house.gov/documents/20080728141224.pdf.

Waxman spins the issue in a memorandum dated today, July 28, and titled: "SBA IG Finds Blackwater May Have Misrepresented Small Business Status." That's the gist of his complaint - he doesn't make an issue of the IG's four allegations against the SBA itself.

At the core of this argument is whether Blackwater can call its contractors "contractors," or whether it must designate them as "employees." The SBA IG report is littered with weasel words like "could have" and "potential," not daring to issue any definitive finding at all.

Waxman, as part of his work helping trial lawyers who stand to make millions from suing Blackwater, complained to the SBA, saying that the company shouldn't be allowed to call its contractors "contractors," but instead should call them "employees" so they can be taxed. Big Labor doesn't like how the law allows contractors either, because they can't be unionized and forced to pay dues to the union political machine.

The trial lawyers and labor unions are among the biggest campaign contributors to the very partisan Waxman's political party.

(Follow-on added at 5:08 PM: This blog broke the story of the SBA IG report. The first news report appearing on Google News was a McClatchy story written by Joseph Neff of the Raleigh News & Observer - the folks who gave the world the phony "news" about the Duke lacrosse team - posted at 4:27 PM. Standish posted the story first at 3:36 PM eastern time.)

Enemies List: Waxman Steals Page from Tricky Dick

Congressman Henry Waxman has stolen a page from Richard Nixon's playbook and is trying to use the Internal Revenue Service to go after his political enemies.

Near the top of Waxman's enemies list, Blackwater is the subject of the California Democrat's call for an IRS probe. Waxman has complained loudly about Blackwater's alleged Republican connections, and the fact that the company and its owner have given money to Republicans but not Democrats.

According to Politico, Waxman is "reviving a long-dormant congressional inquiry of the North Carolina-based security firm that has protected US personnel in Iraq," pressuring the IRS to go after the company. Not convinced that the IRS will be enough, Waxman is also leaning on the Labor Department and the Small Business Administration, we learn. This coming from a man who has already been accused of destroying the independent oversight system.

Meanwhile, we already know that Waxman has already been abusing his chairmanship by doing the bidding of a California lawyer who stands to make millions by suing Blackwater.

Blackwater is dismissing Waxman's latest headline-generating stunt. "Blackwater’s classification of its personnel is accurate, and Blackwater has always been forthcoming about this aspect of its business with its customer, the US government," company spokeswoman Anne Tyrrell said. "The company regrets the Chairman’s decision to publicly air misleading information."

Next question: Will the IRS respond in a politicized way by answering Waxman's request? Or will it stay out of politics as it's supposed to?