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 earlier this week. 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.
"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."