The settlement highlights how the U.S. military effort in Afghanistan, which has stretched for nearly two decades and cost taxpayers at least $1 trillion, has consistently created opportunities for fraud.
Three executives associated with Anham, including longtime chief executive Abul Huda Farouki, were indicted by the Justice Department last year. They were accused of setting up a fake construction scene ― referred to by whistleblowers as a “Potemkin Village” ― to overstate progress on a warehouse, jacking up prices for basic items sold to deployed military units and illegally shipping products through Iran.
In January, Anham was suspended in relation to the fraud charges and barred from applying for any future opportunities with the U.S. government. However, the suspension was soon lifted because the Defense Logistics Agency entered into an “administrative agreement” that allowed the company to continue its work, providing food and water to 13,000 troops stationed in Afghanistan.
In a lengthy statement on its website, Anham said it has agreed to “review and continue to strengthen” its internal compliance programs and cooperate with future investigations.
“ANHAM has a long and successful history working with the U.S. government and military to provide high quality services reliably and cost-effectively in active war zones around the world,” the company wrote.
Anham sought to separate itself from the litigation, referring to “former employees” and “a former subcontractor” in its statement. However, the company’s administrative agreement, a public document reviewed by The Washington Post, points to the close involvement of the former executives.
Farouki, a Virginia-based business executive who was Anham’s CEO for years, independently or with his wife recently owned 25 percent of Anham and a third of its U.S.-based subsidiary, according to the company’s agreement with the Defense Logistics Agency. The two have since placed their ownership interests in a trust managed by Steven Shaw, a former Air Force official who is now a private attorney, the agreement states.
Farouki, his brother Mazen and another executive named Salah Maarouf were charged with counts including fraud and conspiracy. The charges were dismissed Dec. 3 after federal prosecutors entered into a non-prosecution agreement with the three, records show.
The Defense Logistics Agency has put the contract out for new bids, hoping to find a way forward. Anham, however, remains eligible and is one of the bidders on the new contract, according to court documents. An award date has not been determined.
The settlement is the latest example of a private company using the war in Afghanistan to earn excessive profits at taxpayers’ expense. The supplier before Anham, a Swiss company called Supreme Foodservice GmbH, pleaded guilty to similar charges and paid $288 million in criminal fines. The supplier before that, a Kuwaiti company called Agility Public Warehousing, spent $95 million to resolve civil fraud charges of its own.
The allegations against Anham originated from a qui tam lawsuit filed in 2016 by three whistleblowers. Under a qui tam suit, whistleblowers can bring cases on behalf of the government and be rewarded financially if it is successful. The whistleblowers included Rory Maxwell and John Bush, members of the British military who later went to work for Anham.
Gary Malone, an attorney with Constantine Cannon, represented them in the litigation. “This shows how important it is for whistleblowers to come forward when they discover any type of wrongdoing,” he said.