A Kuwaiti firm with US$8.5 billion in contracts to supply food to US troops in the Middle East has been indicted for fraud, accused of taking elaborate measures to overbill the Pentagon.
Public Warehousing Co (PWC) is accused of multiple charges of conspiracy to defraud the US in connection with its contracts to supply food to US troops stationed in the Middle East.
The case is just one of a series of multi-million dollar fraud accusations leveled at US government contractors in Iraq, including allegations that Halliburton subsidiary KBR overcharged for oil and other supplies.
A grand jury indicted PWC on multiple counts related to contracts for food supplies in Iraq, Kuwait and Jordan, the FBI 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,” said Gentry Shelnutt, the acting US Attorney working on the case.
The company won three major contracts to supply food for US troops between May 2003 and July 2005, worth a total of US$8.5 billion, but now faces six counts including fraud, making false statements, making false claims and wire fraud.
PWC is accused of taking elaborate measures to overcharge the US Defense Department, including submitting false pricing information and statements and claiming expenses without taking into account rebates and discounts the firm had received.
It is also accused of ordering suppliers to shrink parcel sizes in order to double the number of packages delivered under Pentagon contracts.
US officials warned that actions against PWC were “only the first step” in tackling dishonest government contractors.
“Others who have engaged in similar conduct should beware,” Shelnutt said.
In a statement posted on the Web site of Agility — PWC’s current trading name — the firm said it was “confident that once these allegations are examined in court, they will be found to be without merit.”
More than six years after the US-led invasion of Iraq, the US government is still tackling allegations of fraud and overbilling related to contracts it approved in the wake of the war.
Last month, a State Department audit suggested the US government should seek to recover up to US$132 million from First Kuwaiti, the company that constructed the US embassy in Baghdad, because the building has “multiple significant” flaws.
PWC said in a statement that it was “surprised and disappointed” by the charges in what it described as “a contract dispute.”
The company added that the “prices it charges have been negotiated with, agreed to, and continually approved by the US government.”
“The company has long cooperated with government reviews, inspections, audits and inquiries necessary to ensure taxpayer dollars are being spent appropriately,” it said.
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