Over $1 billion of U.S. taxpayer money was defrauded by Public Warehousing Co. (PWC) according to recent whistleblower lawsuits now being pursued by the Department of Justice. According to one lawsuit filed under U.S. qui tam provisions, the Kuwait-based company, which has been doing business as Agility since 2006, knowingly through a series of schemes overcharged the U.S. government.
As the principal food supplier to the U.S. military in Iraq, PWC filed false invoices and failed to pass discounts along to the federal government. Monday, the Department of Defense suspended PWC’s ability to receive new government contracts, although the company’s present multibillion food contracts will continue to be honored.
The source of the alleged fraud was an illegal inflation of prices charged for supplying foodstuffs to the troops. This was done, according to the indictment, by submitting outright false prices for foods and collusion with food vendors so that PWC could increase profits by overcharging the government for food.
In one instance of recurring fraudulent billing alleged by a whistleblower lawsuit, PWC worked with vendors to manipulate the packaging of materials to increase distribution charges paid by the Armed Services–sometimes costing the government up to twice what it should have been charged. PWC is also alleged to have shown preferential treatment to contractors who would mark-up prices in return for a rebate that PWC would pocket courtesy of U.S. taxpayers.
PWC is a multinational, publicly traded company with a number of other government contracts with the Defense Department, including agreements to operate distribution depots in Kuwait and Guam.
PWC believes the indictment unfounded.
Potential purposeful government misbillings came to light in 2005 thanks to a qui tam relator, one Kamal Mustafa Al-Sultan whose company partnered with the company that would become Agility. Justice Department officials have decided to join the civil whistleblower action, providing credence to Al-Sultan’s claims. Al-Sultan stands to share in 15% and 25% of the government’s recovery if it is decided that misbilling fraud has occurred against the military. PWC also faces criminal complaints for these actions of which it is accused.