Maersk to pay federal government $31.9 million

NORFOLK

The Norfolk-based Maersk Line Limited and its Danish affiliate, Maersk Line, the world's largest container shipping firm, have agreed to pay the federal government $31.9 million to resolve allegations that they submitted false claims related to shipments of cargo containers in support of U.S. troops in Afghanistan and Iraq.

The settlement was announced by the U.S. Justice Department on Tuesday, the culmination of a lawsuit filed under whistleblower provisions of the False Claims Act. The suit was filed in U.S. District Court for the Northern District of California.

The allegations and settlement involve activities by both Maersk Line and Maersk Line Limited, said James Philbin, a Maersk attorney, in an email.

Maersk agreed to a global settlement with the U.S. Department of Justice related to allegations that the companies "inaccurately billed the U.S. military for certain assessorial services rendered during war-time conditions in Iraq, Pakistan, and Afghanistan," according to Maersk's statement.

Philbin stated that the whistle-blower lawsuit was originally filed against shipping company APL by a former employee in 2004 and was later amended to include Maersk as a defendant in 2007.

"Once Maersk became aware of the allegations we commenced an extensive internal review of the U.S. Military contract and discovered additional billing discrepancies in the execution of the contract," according to Philbin's statement. "We voluntarily disclosed these findings to the U.S. Military and the Department of Justice in an effort to proactively resolve any issues and/or potential disagreements."

"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 government alleged that Maersk "knowingly overcharged the Department of Defense to transport thousands of containers from ports to inland delivery destinations in Iraq and Afghanistan," according to a Justice Department statement.

It alleged that Maersk "inflated its invoices in various ways," including overcharging to "maintain the operation of refrigerated containers holding perishable cargo at a port in Karachi, Pakistan, and at U.S. military bases in Afghanistan."

Other allegations included "excessive detention charges (or late fees) by failing to account for cargo transit times and a contractual grace period," according to the Justice Department statement.

Maersk Line Limited is one of the top recipients of late fees, according to a USA Today report in August.

Robert McCabe, (757) 446-2327, robert.mccabe@pilotonline.com