Defense Contractor to|Pay $434M Settlement

     (CN) – A defense contractor has agreed to pay $434 million to settle criminal and civil charges that it overbilled the U.S. military for Afghanistan for providing food and water to the troops.
     Swiss-based logistics company Supreme Foodservice GmbH and Supreme Foodservice FZE of Dubai, pleaded guilty Monday to using a third company under their control — Jamal Ahli Foods Co. LLC — to overcharge the military by more than $48 million between 2005 and 2009.
     “This is about soldiers in the desert being charged outrageous amounts of money for something like water, all for money,” said U.S. District Judge Gene Pratter before accepting the plea.
     “That’s pretty low,” Pratter said.
     According to the U.S. Justice Department, the defendant companies made a concerted effort to conceal their true relationship with Jamal Ahli Foods, also known as Jafco, making it appear to be an independent company.
     “They also took steps to make Jafco’s markup on [local market-ready goods] look legitimate, and persisted in the fraudulent mark-ups even in the face of questions from the [Defense Supply Center of Philadelphia],” prosecutors said.
     Together the defendants agreed to pay $250 million in criminal penalties, $101 million to settle a whistle-blower lawsuit, a $38.3 million refund, and $45 million to address various other charges.
     The companies have also agreed to pay an additional $146 million to resolve a related civil lawsuit, as well as two separate civil matters, alleging false billings to the Department of Defense for fuel and transporting cargo to American soldiers in Afghanistan.
     The fraud came to light as the result of a 2010 whistleblower lawsuit filed by Michael Epp, a former Supreme employee in Dubai.
     In a written statement, Emma Sharma, a spokesperson for Supreme said, “We accept full responsibility for and deeply regret our past actions. We have implemented new compliance mechanisms and strengthened our internal processes.”

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