There was no shortage of controversies surrounding the disastrous war in Iraq, but among the most serious was the reliance on private security through a controversial company called Blackwater. These well-armed private forces operated outside the chain of command and often seemed to be accountable to no one.

But a striking new report from the New York Times this morning presents these concerns in a new, more alarming light.

Just weeks before Blackwater guards fatally shot 17 civilians at Baghdad’s Nisour Square in 2007, the State Department began investigating the security contractor’s operations in Iraq. But the inquiry was abandoned after Blackwater’s top manager there issued a threat: “that he could kill” the government’s chief investigator and “no one could or would do anything about it as we were in Iraq,” according to department reports. American Embassy officials in Baghdad sided with Blackwater rather than the State Department investigators as a dispute over the probe escalated in August 2007, the previously undisclosed documents show.

It’s hard to know which of these sentences is the most outrageous. The State Department wanted to get a better sense of Blackwater’s operations in Iraq, which led a Blackwater manager to not only resist but to actually threaten the life of a State Department investigator – and the U.S. Embassy sided with Blackwater?

As msnbc’s Benjy Sarlin added this morning, “The cartoon version of Blackwater spread by antiwar protestors sounds like it may have been too kind in retrospect.”

Remember, Blackwater may have provided private security, but we’re not talking about bodyguards for private citizens concerned about potential threats. In Iraq, Blackwater received a $1 billion government contract – financed by U.S. taxpayers – that tasked the company with protecting diplomats and other American officials on the ground.

That wouldn’t necessarily be scandalous, were it not for the fact that Blackwater’s mission included military operations with little oversight. Indeed, we now know that when the State Department considered additional oversight, a Blackwater official threatened to kill the American investigator.

Jean Richter, the threatened investigator, wrote in an August 2007 report, “The management structures in place to manage and monitor our contracts in Iraq have become subservient to the contractors themselves. Blackwater contractors saw themselves as above the law.” He added that the “hands off” management resulted in a situation in which “the contractors, instead of Department officials, are in command and in control.”

This is of particular interest now because the Blackwater guards accused of murdering 17 civilians in Nisour Square will go on trial in D.C. today. It will be the second attempted prosecution.

The whole Times report is well worth your time.

Experts who were previously unaware of this episode said it fit into a larger pattern of behavior. “The Blackwater-State Department relationship gave new meaning to the word ‘dysfunctional,’ ” said Peter Singer, a strategist at the New America Foundation, a public policy institute, who has written extensively on private security contractors. “It involved everything from catastrophic failures of supervision to shortchanging broader national security goals at the expense of short-term desires.” Even before Nisour Square, Blackwater’s security guards had acquired a reputation among Iraqis and American military personnel for swagger and recklessness, but their complaints about practices ranging from running cars off the road to shooting wildly in the streets and even killing civilians typically did not result in serious action by the United States or the Iraqi government. […] Blackwater’s rapid growth and the State Department’s growing dependence on the contractor led to unbridled hubris, according to several former company officials.