Military food supplier accused of defrauding US

17 November 2009

17 November 2009 | Jake Kanter

A Kuwaiti company that provides food and other items to troops has been charged with conspiracy to defraud the US government.

The Public Warehousing Company (PWC) was yesterday indicted by the Department of Justice for six counts of major fraud, making false statements and submitting false claims on $8.5 billion (£5 billion) worth of contracts to feed US troops in Iraq, Kuwait and Jordan.

The company is accused of taking elaborate action to overcharge the Department of Defence (DoD) by submitting inflated distribution and food price information and failing to pass on supplier cost reductions on three contracts between May 2003 and July 2005.

It is also accused of ordering its supplier to reduce package sizes, enabling it to bill the DoD for twice as many packs of products.

Gentry Shelnutt, who is currently serving as the acting US attorney on the case, said: "This indictment is the result of a multi-year probe into abuses in vendor contracts in the Middle East involving the illegal inflation of prices in contracts to feed our troops."

He added that the charges were only the "first step".

In a statement Agility - PWC's current trading name - said it was "surprised and disappointed" by the action. "PWC's service has been timely, reliable and cost-effective throughout its work on these competitively awarded contracts, and its performance has been unparalleled."

Agility added that the prices it charges have been negotiated with, agreed to, and continually approved by the US government.

The company faces a possible fine of twice the profit it made from the deals, or twice the losses incurred by the government.

 

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