Blackwater set up a shell company to "defraud the government" by leading it to believe it wasn't contracting with the notorious security contractor, investigative journalist Jeremy Scahill says.

"In Afghanistan, they set up this shell company, Paravant, in collaboration with mammoth war giant Raytheon, which held the prime contract" for training Afghan security forces, Scahill told MSNBC's Rachel Maddow.

"And they set up this contract to try to hide the fact that the Pentagon was once again hiring Blackwater, this firm that's been under investigation by practically every federal entity in the United States," Scahill continued. "It's a shell company that was used to essentially defraud the government by convincing the Army that Blackwater was not getting the contract, but this company Paravant."

Scahill was discussing revelations at a Senate Armed Services Committee hearing into Blackwater's work in Afghanistan. Numerous allegations of wrongdoing were presented at those hearings, including a claim that employees of Blackwater's Paravant subsidiary took more than 200 guns from a US military arsenal under a South Park character's name -- "Eric Cartman."

It also emerged that company guards still have in their possession 53 of those weapons, which they were never authorized to have. Perhaps most surprisingly, a US Army official told the committee the Army didn't know that Paravant was a Blackwater subsidiary when it was given the training sub-contract.

And Sen. Carl Levin (D-MI) caught Blackwater officials in a lie when he noticed that their application for the sub-contract stated that Paravant "has many years of experience identifying and selecting top candidates for training" -- even though the firm had been set up only months earlier.

This video is from MSNBC's The Rachel Maddow Show, broadcast Feb. 24, 2010.

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