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Kuwaiti firm is accused of defrauding U.S.

A major Kuwait-based military contractor was indicted Monday for allegedly defrauding the U.S. government under contracts through which it has supplied $8.5 billion in food and other products to the American military in Iraq, Kuwait and Jordan over the past six years.

The criminal indictment, against Public Warehousing Co. KSC, was brought in Atlanta and resulted from a multiyear investigation of inflated prices for billions of dollars in frozen and fresh food shipped each year under contracts to feed U.S. and coalition troops in Iraq and Kuwait, according to acting U.S. Attorney Gentry Shelnutt.

"This indictment is only the first step," Shelnutt said in a statement. "Our investigation of entities and persons who have defrauded the United States and our military is ongoing."

Public Warehousing denied the accusations in a statement, saying it "is confident that once these allegations are examined in court, they will be found to be without merit." The company, also known as Agility, has subsidiaries in countries around the world, some of which also hold U.S. government contracts.

Based on the indictment, the Defense Logistics Agency issued a suspension notice to the company, meaning it cannot bid on other contracts until the legal proceedings in Atlanta are concluded.

Public Warehousing's contract is set to expire in December 2010. If convicted, the company will face fines and possible prohibition from bidding on other government contracts.

In a related step, the Justice Department on Monday announced that it was joining in a lawsuit filed by a whistleblower in 2005 against Public Warehousing; its chief executive, Tarek Abbul Aziz Sultan Al-Essa; and a related company.

That case was filed under the False Claims Act by Kamal Mustafa Al-Sultan, owner of a Kuwaiti company that partnered with Public Warehousing in 2003 on the original bid for the food contract.

The whistleblower's allegations have been kept under seal to permit a federal investigation to determine whether the government would join the lawsuit.

Under the False Claims Act, the government may recover three times the amount of its losses plus civil penalties, according to the Justice Department announcement.

The publicly traded multinational company does business under the name Agility but was charged under its old name, Public Warehousing Co., or PWC. According to its Web site, it has 37,000 employees in 120 countries. The company's commercial division, Agility Global Integrated Logistics, has its American offices in Irvine, Calif. An initial appearance and arraignment for the company is set for Nov. 20 in front of U.S. Magistrate Judge Janet F. King in Atlanta. Prosecutors said they were unsure who would be representing the company in that proceeding.

Fast facts

Who is Public Warehousing?

The publicly traded multinational company does business under the name Agility but was charged under its old name, Public Warehousing Co., or PWC. According to its Web site, it has 37,000 employees in 120 countries. The company's commercial division, Agility Global Integrated Logistics, has its American offices in Irvine, Calif. An initial appearance and arraignment for the company is set for Nov. 20 in front of U.S. Magistrate Judge Janet F. King in Atlanta. Prosecutors said they were unsure who would be representing the company in the proceeding.

Kuwaiti firm is accused of defrauding U.S. 11/16/09 [Last modified: Monday, November 16, 2009 10:24pm]

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