USDOJ: Maersk Line to Pay Us $31.9 Million to Resolve False Claims Allegations for Inflated Shipping Costs to Military in Afghanistan and Iraq
7th Space January 3, 2012
WASHINGTON – Maersk Line Limited has agreed to pay the government $31.9 million to resolve allegations that it submitted false claims to the United States in connection with contracts to transport cargo in shipping containers to support United States troops in Afghanistan and Iraq, the Justice Department announced today
The government alleges that Maersk, a wholly-owned American subsidiary of Denmark-based A.P. Moller Maersk, knowingly overcharged the Department of Defense to transport thousands of containers from ports to inland delivery destinations in Iraq and Afghanistan.
The government contends that Maersk inflated its invoices in various ways. For example, Maersk allegedly billed in excess of the contractual rate to maintain the operation of refrigerated containers holding perishable cargo at a port in Karachi, Pakistan, and at United States military bases in Afghanistan; allegedly billed excessive detention charges (or late fees) by failing to account for cargo transit times and a contractual grace period; allegedly billed for container delivery delays improperly attributed to the United States government; allegedly billed for container GPS-tracking and security services that were not provided or only partially provided; and allegedly failed to credit the government for rebates of container storage fees received by Maersk’s subcontractor at a Kuwaiti port.
“Our men and women in uniform overseas deserve the highest level of support provided by fair and honest contractors,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “As the Justice Department’s continuing efforts to fight procurement fraud demonstrate, those who put profits over the welfare of members of our military will pay a hefty price.”
The settlement resolves allegations against Maersk that were filed in San Francisco by Jerry H. Brown II, a former industry insider. The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals called “relators” to bring lawsuits on behalf of the United States and receive a portion of the proceeds of a settlement or judgment awarded against a defendant. The relator in this action will receive $3.6 million as his statutory share of the proceeds of this settlement. In 2009, the United States resolved the relator’s allegations against shipping company APL Limited and its parent company for $26.3 million.
“Contractors that submit false claims for monies they are not owed cost the government millions of dollars every year,” said Melinda Haag, United States Attorney for the Northern District of California. “This settlement should send a strong signal that the government is committed to safeguarding taxpayer funds by ensuring that contractors operate ethically and responsibly.”
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