Maersk pays US government $32m

January 5, 2012 — 2 Comments

Logo of A.P. Moller – Maersk Group

Maersk Line has agreed to pay an out of court settlement of US$31.9 million to the US government to resolve allegations that it submitted false claims for inflated shipping costs incurred during the transport of containerised cargo to support US troops in Afghanistan and Iraq.

The government claimed Maersk was allegedly billing in excess of the contractual rate to maintain the operation of refrigerated containers holding perishable cargo at a terminal in Karachi, Pakistan, and at US military bases in Afghanistan; billing excessive detention charges (or late fees) by failing to account for cargo transit times and a contractual grace period; billing for container delivery delays improperly attributed to the US government; billing for container GPS tracking and security services that were not provided, or only partially provided; and failing to credit the US government for rebates of container storage fees received by Maersk’s subcontractor at a Kuwaiti port.

Tony West, Assistant Attorney General for the Civil Division of the US Department of Justice said: “Our men and women in uniform overseas deserve the highest level of support provided by fair and honest contractors. 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.”

In 2009, APL was fined $26.3 million by the US Department of Justice, and Agility is still fighting a claim for overcharging in 2010.

Makes you wonder – did they declare the correct cargo information on their manifest? I guess it really does not matter since the cargo was destined for Afghanistan and Pakistan in any event. Don’t believe these countries require advance manifest reporting just yet.

Source: ifw-net.com

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2 responses to Maersk pays US government $32m

  1. 

    Hi Mike, please also see below full text from the Department of Justice (Courtesy Peter Newton of Seaboard)..

    Quote

    Department of Justice
    Office of Public Affairs
    FOR IMMEDIATE RELEASE
    Tuesday, January 3, 2012
    Maersk Line to Pay Us $31.9 Million to Resolve False Claims Allegations for Inflated Shipping Costs to Military in Afghanistan and Iraq
    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 U.S. 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 U.S. 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 U.S. 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, U.S. 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.”

    The settlement with Maersk was the result of a coordinated effort among the Commercial Litigation Branch of the Justice Department’s Civil Division; the U.S. Attorney’s Office for the Northern District of California; the Defense Criminal Investigative Service of the Department of Defense; the Army’s Criminal Investigation Command; and the Defense Contract Audit Agency of the Department of Defense.

    “Aggressively investigating any allegation of fraudulent practices, such as those taken by Maersk Line Limited in order to profit at the expense of the safety and welfare of America’s Warfighters – especially those serving in dangerous locations such as Iraq and Afghanistan – as well as the security of the United States, is the Department of Defense Inspector General’s and the Defense Criminal Investigative Service’s highest priority,” said James Burch, Deputy Inspector General for Investigations, Department of Defense Office of Inspector General. “The settlement with Maersk was only made possible through our partnership with the Army Criminal Investigation Command and the hard work by attorneys from the Department of Justice and auditors from the Defense Contract Audit Agency.”

    “We are fully committed to tirelessly pursuing all those who knowingly submit false claims with respect to military contracts, particularly while our nation’s finest are at war,” said Major General David Quantock, the Provost Marshal General of the U.S. Army and Commanding General of the U.S. Army Criminal Investigation Command. “Our commitment is to ensure taxpayer dollars are not wasted or stolen. During the last 10 years alone, Army CID Special Agents have been instrumental in recovering and returning $2.1 billion dollars to the Treasury and the Army from fraudulent practices involving contractors.”

    12-002
    Civil Division
    Open Government at the Department of JusticeThe Criminal Justice System as a Counterterrorism Tool

    Unquote

    Hariesh Manaadiar
    http://shippinginsouthafrica.wordpress.com

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