Jeremy Scahill is an independent journalist who reports frequently for the Nation magazine and the Pacifica radio program Democracy Now! His investigations have exposed the role of the Blackwater USA security firm in the aftermath of the Hurricane Katrina disaster.

MAASS: WHAT IS Blackwater USA?

Scahill: BLACKWATER USA is the most rapidly growing and, arguably, the most successful mercenary firm in the world today.

A few years ago, no one had ever heard of it. The company was founded by a very right-wing fundamentalist Christian and former Navy SEAL by the name of Erik Prince. Prince comes from a family that was a major bankroller of far-right-wing causes. His father was a close friend of Gary Bauer and helped him to found the Family Research Council.

Blackwater started in the late 1990s as a firm that was going to train law enforcement, and supplement the work of the U.S. military. When the Bush administration took power and then September 11 happened, the company absolutely exploded--and turned into an all-out mercenary firm.

Blackwater was awarded the prize contract in Iraq to provide security for the original head of the U.S. occupation, Paul Bremer. At the time, it was a $21 million contract, but more important than the money was the prestige that came with being the guys who were guarding the head of the U.S. occupation.

Then in March 2004, four Blackwater contractors were ambushed and killed in the Iraqi city of Falluja, with two of their bodies hung from a bridge. That really put Blackwater on the map.

The company viewed this as a great moment to profit. The day after those guys were killed, Erik Prince hired the Alexander Strategy Group, a very powerful lobbying and p.r. firm. Now, it's a disgraced firm, but at the time, it was very powerful--it had been set up and staffed by former senior aides to former House Majority Leader Tom DeLay.

And that really began a massive war profiteering and disaster profiteering boom for Blackwater--not just in Iraq and Afghanistan, but here at home as well.

Maass: YOU WERE probably the first journalist to discover that Blackwater was on the scene in New Orleans, in the days right after Hurricane Katrina struck. How did you come across them?

Scahill: BLACKWATER'S MEN actually beat the federal government, FEMA, the Red Cross and all these organizations to the hurricane zone.

In fact, I interviewed Cofer Black--the former head of counterterrorism at the CIA, and now one of the top people at Blackwater--at a mercenary conference, and he told me that they sent a helicopter and a bunch of their guys down there without any contracts at first. Clearly, they saw this as an opportunity to really cash in on the disaster of Katrina.

Within days of their guys deploying down there, Blackwater was handed a very lucrative $409,000 contract--literally to guard a morgue in Baton Rouge, Louisiana. Fourteen guys, four vehicles, for 22 days--and they were paid $409,000.

That contract, which was not open to public bids, was awarded to Blackwater, and it would kick off a contract spree that in just four months would amount to over $30 million for Blackwater.

They were billing the federal government some $950 per day per man in the hurricane zone. I had Blackwater men who told me that they were getting paid $350 a day, plus a modest per diem. So that's $600 that Blackwater had to play with, above what they were paying their guys.

I came across Blackwater quite by accident. I was in the French Quarter talking to two New York police officers, when this car with no license plates sped up, and these huge mercenary types--wearing all khaki, carrying M4 machine guns, with ammo strapped to every part of their body, wearing sunglasses with the foam strap around the back--got out. And they asked the officers, "Do you know where the rest of the Blackwater guys are?" The police officers said, "Yeah, they're all over the place," and one sort of pointed them in the direction down the street where they needed to go.

Then, an hour later, we saw those guys again, and went up and started talking to them. I don't know for what reason, but they ended up talking to me for an an hour and a half. We had a wide-ranging discussion.

Some of them had been on Paul Bremer's security detail. One guy had gotten back from Iraq two weeks before being deployed in New Orleans. He said, "When they told me I was going to New Orleans, I asked what country that was in."

So these guys who literally had just been in the thick of things in Iraq were now marching around the streets of New Orleans, with automatic weapons. They told me that one of their roles was to stop looters and confront criminals. One of the guys showed me a Louisiana state law enforcement badge and said they'd been deputized.

The reporting that I did down there ended up sparking a congressional demand for an investigation. So the Department of Homeland Security did, in fact, investigate Blackwater, but what came out of that internal investigation was a whitewashing of the situation. Ultimately, the Department of Homeland Security's inspectors general's office defended Blackwater's contract.

MAASS: YOU'VE WRITTEN that the Department of Homeland Security plans to keep its contract with Blackwater for two to five years. What are they supposed to be doing?

Scahill: THAT'S A very good question. We don't know at this point, and one of the reasons that we don't know is that not even members of Congress can see these contracts. We were able to get about four months of Blackwater's contracts, but that's only because of the uproar that was created by the presence of mercenaries on the streets of a U.S. city.

I was just in Washington, meeting with some congresspeople, and one member of Congress told me that she's not even allowed to see any of the contracts in general, but when she is, she has to go into a padded room. She's not allowed to bring in any kind of writing equipment or paper, and she's not allowed to say what she saw in that room after she's viewed the contracts.

That should be a cause of great concern among people, because what little oversight actually did exist in the federal government in this country has really been thrown out the window by this administration.

So the answer to your question is that we don't know what Blackwater is tasked with doing at this very moment. I did have Cofer Black confirm to me that Blackwater's men are still deployed in New Orleans and in the hurricane zone, but he wouldn't say what they were doing.

MAASS: HOW DOES the tens of millions that Blackwater is making compare to what is being spent in New Orleans on school reconstruction or affordable housing?

Scahill: WE REALLY don't know how much Blackwater has been paid. We know that they were paid $30 million for the first four months. Well, now we're nearing the first year anniversary of the hurricane, and we don't have the updated amount of money that they've been paid.

But this is just is just one company. There are scores of private security companies on contract with the federal government. This other company, DynCorp, is itching to get more of the action, offering their guards at $700 per day.

There's very little irony in all that, given that we're talking about a place that has been utterly devastated, and people are being told that we don't have the resources to rebuild their homes, and they're going to have to live somewhere else in the country. Yet they have all the money in the world to pour into guns and mercenaries.

Chris Kromm, who is one of the editors of the really great Gulf Coast Reconstruction Watch, points out that there are tons of projects that have received basically no money. Among those are education programs, repatriation programs to bring people back into the city, health care, food distribution.

And perhaps most importantly, they still haven't reconstructed the levees to withstand anything more than a Category 2 hurricane, and hurricane season is here.

MAASS: CAN YOU talk how contracts like these are part of the drive toward privatization and the neoliberal agenda?

Scahill: THIS BECOMES very frightening on a number of levels.

On the one hand, you have this happening across the board. For example, this administration is attacking the public school system--de-funding it, and putting resources in the hands of fundamentalist Christian schools instead of bolstering the public school system. You see the Wal-Martization of U.S. society.

And now you have contractors being used all over Iraq and Afghanistan. They are alleged to have been involved in the torture at Abu Ghraib. They have acted with impunity. Not a single contractor has been prosecuted for any crimes committed in Iraq.

So you're left with one of two conclusions. Either they haven't committed any crimes, which I think we have the evidence to show isn't the case. Or no one's paying attention to accountability issues right now.

But it's not just about accountability. What we see happening is the federal budget being pilfered by friends of the administration, and that's what we see in the case of Blackwater, where they're billing $950 a day.

This is a very, very frightening prospect that we face in this country. Bush is talking about sending 6,000 National Guard troops down to the border, and Blackwater is itching to get involved in those operations. They're itching to get involved in Darfur right now.

We have to step back from this and say: Do we want to live in a country that runs a mercenary army. I think that most people, if they were asked if they wanted these kinds of trained killers patrolling their streets and interacting with ordinary folks, would say no. We've seen the consequences of their impunity in Iraq and Afghanistan.