The controversial American security company Blackwater is facing new allegations of gross misconduct after two former employees said that it had repeatedly defrauded the US Government, including charging it for the use of a Filipina prostitute in Afghanistan. In a federal lawsuit, Melan Davis, one of the former employees, accused the company of employing the prostitute in Kabul and charging the Government for her plane tickets and monthly salary under the morale welfare recreation expenses category. The lawsuit also accuses the company, which has since been renamed XE Services after years of bad publicity, of charging the Government for the use of strippers after Hurricane Katrina in Louisiana. The women were allegedly itemised under cleaning services. The company is also accused of deceiving the Government by double-billing for travel costs and creating false invoices. The lawsuit claims that the Government has been damaged in the amount of many millions of dollars in funds by Blackwaters fraudulent accounting. The most serious allegations against Blackwater, the biggest private security company used by the US Government in Iraq and Afghanistan, have centred on the use of excessive and lethal force against civilians. The most controversial incident involved the shooting and killing of 17 Iraqi civilians in Nisoor Square, Baghdad, in September 2007. Last year a US judge threw out charges against five Blackwater guards over the deaths. The Obama Administration has said that it is going to appeal against the ruling. A sixth guard pleaded guilty earlier. The company has also been accused of arms smuggling. An audit released last year found that the State Department could be owed as much as $55 million (35 million) by Blackwater because the company failed to provide the personnel necessary to fulfil its contract during the months examined between 2006 and 2007. Blackwater eventually lost its State Department contract in Iraq but continues to provide security services in Afghanistan. The lawsuit was filed by Mrs Davis and her husband, Brad, a former Marine and Blackwater employee. Mrs Davis was sacked by the company and is challenging her dismissal. She says that she first raised concerns about the book-keeping in March 2006 and was told to back off and that she would never win a medal for saving the Government money. Mr Davis, who served as a Blackwater team leader in Iraq, resigned. The lawsuit was filed in 2008 but has just been unsealed after the US Justice Department declined to become a party to the case. Mark Corallo, a spokesman for the company, said that the lawsuit was misguided and noted that the Justice Department had declined to join the lawsuit. The allegations are without merit and the company will vigorously defend against this lawsuit, he said. It is noteworthy that the Government has declined to intervene in this action. (The Times)