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Samsung to pay U.S. $2.3 million to settle False Claims Act charges

Pedestrians pass an advertisment for Samsung Electronics Galaxy Tab S tablet devices in Istanbul, Turkey. Samsung settled charges that it misled resellers who sold federal agencies products manufactured in China. (Kerem Uzel/Bloomberg)

The American division of Korean electronics giant Samsung has agreed to pay the government $2.3 million to settle charges that it misled the United States about where some of its products were manufactured, violating trade agreements, the Justice Department announced Tuesday.

Under government contracting rules, federal agencies are required to purchase products made in the United States or in countries that America has a trade agreement with.

Federal agencies purchased products from Samsung resellers, believing they were manufactured in South Korea or Mexico, which are covered by the trade agreement. The products were actually manufactured in China, which is not part of the agreement.

Samsung provided the resellers “inaccurate information” about the country of origin of the goods, the Justice Department claimed.

The settlement is not an admission of liability by Samsung, the department’s statement said. Samsung said it would not comment on the settlement at this time.

“This settlement upholds important trade priorities by ensuring that the United States only uses its buying power to purchase from countries that trade fairly with us,” Stuart F. Delery, the Assistant Attorney General for the Justice Department’s Civil Division, said in a statement.

The matter was brought to light by a whistleblower, Robert Simmons, under the False Claims Act, a law designed to protect the government from receiving false goods and services from contractors. Simmons, a former Samsung employee, is entitled to receive a portion of the settlement, but the amount has not yet been decided, the Justice Department said.

The settlement was a joint effort by the U.S. Attorney’s Office for the District of Maryland, the commercial litigation branch of the Justice Department’s civil division and the General Service Administration inspector general.

Amrita Jayakumar covers national startups, small business issues and entrepreneurship.
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