A major defense contractor agreed to pay $20 million to settle U.S. charges that it bilked the Navy in a ship-supply contracting scandal at ports around the world, the Justice Department announced.
The Navy in 2013 suspended business with Inchcape Shipping Services, and the U.S. government joined a whistleblower fraud suit in November 2015 after settlement talks broke down with the maritime trading firm that delivers port services in 66 countries.
The lawsuit in D.C. federal court alleged that Inchcape knowingly overbilled the Navy from 2005 to 2014 at ports in the Middle East, Africa, and North and South America when it was providing services for food, telephone services, force protection and local transportation. The settlement included no acknowledgment of wrongdoing by the maritime trading firm, based in Britain and owned by a state-run Dubai investment firm.
Inchcape at the time of suspension held Navy contracts valued at more than $240 million, mostly for supplying ships in the Middle East.
In a statement, a company spokesman said it entered the settlement because absent it, “the litigation would likely continue to distract Inchcape personnel and drain resources for years to come. Inchcape, accordingly, has determined that it must put this matter behind it, so that the company can focus on the future.”
The Inchcape settlement followed the high-profile termination of Navy business with one of its chief competitors in the Pacific, Glenn Defense Marine Asia. That company held similar contracts valued at more than $200 million, and its chief executive, Leonard Glenn Francis, known as “Fat Leonard,” and several current and former naval officers have since pleaded guilty in a conspiracy to bribe officials with cash, trips and prostitutes.Francis agreed to forfeit at least $35 million.
The bribery scandals reached high into the officer corps and rocked the U.S. Navy, ensnaring naval captains and commanders, contracting personnel and Naval Criminal Investigative Service agents, and exposing fraud by contractors that had served the Navy for decades.
Navy officials said that the two cases are unrelated and that the problems surfaced separately.
“This settlement demonstrates that the Department of the Navy will continue to hold contractors accountable for the agreements they make to supply our fleet,” Navy Secretary Richard V. Spencer said in a statement Tuesday with U.S. Attorney for the District of Columbia Jessie K. Liu, Naval Criminal Investigative Service Washington Field Office chief Jeremy Gauthier and Chad A. Readler, acting head of the Justice Department’s civil division.
“Fraud is an abuse of the system that siphons resources away from the American warfighter,” Gauthier said. “NCIS will continue to work with our law enforcement partners to hold responsible those who would put personal gain above corporate integrity.”
The whistleblower lawsuit was brought in 2010 under the False Claims Act by three former high-ranking employees of Inchcape — Noah Rudolph, Andrea Ford and Lawrence Cosgriff — who alleged Inchcape conspired with subsidiaries and vendors to gouge the Navy whenever and wherever possible, triggering a management overhaul in 2015.
Under the law, whistleblowers may be joined by the U.S. government and earn a share of any recovery, in this case $4.4 million, plus $1.25 million in attorney fees.
Janet L. Goldstein, the attorney for the whistleblowers, credited her clients, federal prosecutors and the law for enabling the accusations to go public.
“It is an unfortunate reality that sometimes government entities are reluctant to acknowledge that they have been defrauded,” she said. The False Claim Act empowers whistleblowers to file lawsuits “that, by law, must be investigated and, upon unsealing cannot go away . . . becoming part of the public record.”