New Fraud Suit Re Iraq Military Contracts

Prosecutors first launched a criminal indictment against Agility in Nov. 2009 for attempts to defraud the U.S. military over supply contracts in a case that is politically sensitive in both the United States and Kuwait.

This week’s civil suit appears to run in parallel with that indictment, which says the company overcharged the U.S. Army over 41 months on $8.5 billion in contracts first signed at the start of the Gulf War in 2003.

“The United States to date has paid in excess of $9.8 billion in claims for goods and services under the prime vendor contracts at issue in this complaint and the United States continues to pay PWC,” the civil suit said.

There was no immediate comment from the government or Agility and it was not clear how the civil suit fit into an overall government strategy on the case.

If convicted in the criminal indictment, the company would face a fine of twice the gains it realized, or twice the loss to the United States.

Negotiations in 2010 appeared to stall but the company says it has been hurt because of a decision by U.S. authorities to suspend it from bidding for new U.S. government contracts.

Agility has subsidiaries in both the United States and Kuwait and in 2010, pre-trial motions in the criminal case focused in part on whether prosecutors originally served only the U.S. subsidiary, rather than its parent.

The civil case is the United States of America ex re. Kamal Al-Sultan versus The Public Warehousing Company, K.S.C., a/k/a Agility and The Sultan Center Food Products Company, K.S.C.

It is numbered 1:05-cv-02968-GET and was filed in the Northern District of Georgia, Atlanta division.

(Source: Bloomberg)

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