Agility Attempts to Vault Fraud Charges
Photo by Pratap Chatterjee
by Pratap Chatterjee, Special to CorpWatch
February 1st, 2010
Agility, a Kuwait-based multi-billion dollar logistics company spawned by the U.S. invasion of Iraq, is facing criminal charges for over-billing the U.S. taxpayer on more than $8.5 billion worth of food supply contracts in the Iraq war zone. If the lawsuit, scheduled for February 8, is successful, the company could owe the U.S. government as much as $1 billion.
Originally known as Public Warehousing Corporation (PWC), Agility boasts that it once supplied one million meals a day to U.S. soldiers and contractors in the Middle East. The company’s Mercedes trucks hauled delicacies from ice cream to lobster tails to feed soldiers living on military bases scattered throughout Iraq. Today it has new contracts to provide food to the U.S. Agency for International Development in Djibouti in the Horn of Africa and – until about a month ago – was supposed to ramp up food delivery to the troops newly posted in southern Afghanistan.
In a lawsuit filed on November 18, 2005, Kamal Mustafa Al-Sultan accuses Agility of cheating him of a share of profits from the lucrative contract because he refused to go along with alleged corruption. A former business partner of PWC/Agility, Sultan is a cousin of the company founder and CEO, Tarek Abdul Aziz Sultan Al-Essa.
After conducting a grand jury investigation, the U.S. Department of Justice (DoJ) joined Kamal Sultan and filed criminal charges against PWC/Agility on November 9, 2009, immediately boosting the original lawsuit’s chances of success.
“We will not tolerate fraudulent practices from those tasked with providing the highest quality support to the men and women who serve in our armed forces,” said Tony West, assistant attorney general for the District Court for the Northern District of Georgia, in a press release. “As this case illustrates, the Department of Justice will investigate and pursue allegations of fraud against contractors and subcontractors, whether they are foreign or domestic.”
Joint Venture Leads to Fall Out
PWC was part of the Sultan family’s business empire that is grounded in high-end supermarkets and mega-stores across the Middle East. (See Sidebar.) Starting in the late 1990s, Tarek Sultan teamed up with ex-U.S. soldiers to bid on lucrative U.S. government projects. PWC’s first major contract, initially advertised in May 2002, was for a U.S. Defense Supply Center called Prime Vendor Subsistence to supply food eaten on U.S. military bases in the Middle East in anticipation of the invasion of Iraq. (Halliburton/KBR cooks and serves the food, but it does not supply it.)
At the time, Tarek Sultan had no experience in food supply, nor did he have a personal track record with the U.S. military – a requirement for bidding on the contract. However, KMSCO – run by his cousin, Kamal Sultan – had multi-million dollar U.S. military contracts dating back to1996 for “life support, food supplements, and ice.” In a January 2007 interview with CorpWatch, Kamal Sultan says he agreed to create a joint venture with Tarek in June 2002 to provide PWC with the qualifications to bid.
The Sultan Family
In 1981 the family of Jamil Sultan al-Essa, a Kuwaiti family whose heritage has been alternately described as southern Iraqi and Saudi, opened Kuwait’s first self-service store near the Shuwaikh Port. It focused on hardware and do-it-yourself products. Almost three decades later, that store had evolved into a chain of 11 Sultan Centers scattered around Kuwait. In 1999 the Sultans expanded the retail chain to Oman, and in 2003 they acquired the Safeway chain in Jordan.
The Sultan Center supermarkets sit in or near some of Kuwait’s fanciest shopping malls, and sell a wide range of consumer goods including Horizon Organic milk flown in from the U.S. (at $22 a half gallon), mangosteens from Thailand, tents for desert camping, and shoes. The brightly lit, modern stores offer one-stop, 24-hour-a-day shopping to wealthy Kuwaitis and expatriates, often trailed by maids pushing over-laden shopping carts.
Like many wealthy Middle Eastern families, the Sultans have multiple businesses, each operated by a sibling or cousin with overlapping ownership and often senior government positions. One, Abdul Aziz Sultan al-Essa, was chairman of Kuwait’s Gulf Bank. Another, Kamal Sultan, ran the local franchise for Apple. Yet another Sultan venture, National Real Estate corporation, bought up 25 percent of the shares of a state-owned company, Public Warehousing Corporation (PWC), when it was privatized in 1997.
PWC was given to Abdul Aziz’s son, Tarek Sultan al-Essa, who is a dual Kuwaiti-U.S. citizen and a graduate of the University of Pennsylvania’s Wharton School of Business. When Tarek Sultan took over PWC, the company was already charging the U.S. military $60,000 a month to operate Camp Doha on a 1.6 million-square-meter property near Shuwaik port in Kuwait.
In the late 1990s Tarek Sultan hired Toby Switzer, a 20-year veteran of the U.S. Navy Supply Corps, who had extensive experience in U.S. military logistics. When the invasion of Iraq began, Switzer started to visit the U.S. military bases on a regular basis to offer services to the military. As a former soldier, Switzer was able to gain access easily. Indeed, he was invited to events such as the May 2003 Naval Supply Corps birthday party at Camp Patriot with his former comrades in the military supply business.
After the Iraq invasion, Tarek Sultan and Toby Switzer turned to Eric Stagliano of the Lucas Group in Atlanta, an executive search firm that specializes in helping ex-soldiers land jobs. With Stagliano’s help, PWC soon built up a team of former military officers to trawl for business and write up bids to send to the military contract managers in Kuwait and the States. A former PWC employee told CorpWatch: “It’s much easier for a former soldier with a crew cut and shiny shoes to get a contract than any foreigner, even a wealthy Arab.
A year later in May 2003, PWC won the initial Prime Vendor contract. Soon after that, Kamal Sultan alleges, PWC officials asked him to take part in a scheme to defraud the military. When Kamal refused, Tarek Sultan dropped KMSCO from the contract, thus depriving Kamal Sultan of his expected 30 percent profit share. Over the next four years the two men waged a series of legal battles in Kuwaiti courts, with each side alternately gaining the legal upper hand.
Overcharging Allegations
The court cases exposed a scheme of “prompt payment discounts.” It works like this: Company A (a shell company) buys a pound of chicken for $1 and gives it to Company B (e.g., PWC) along with a bill for $1.10. Then Company B sells it to the military for $1.10 plus the agreed-on overhead and profits. Next, Company B pays Company A $1.10 and pockets the ten cent mark-up from Company A as a prompt payment discount.
In this case, Company B has effectively earned the agreed-upon (and legal) profits from the military plus an extra ten cents that the military would never have paid if it bought it directly from company A. At the very least, this system is a waste of taxpayer money. And if Companies A and B are owned by the same people, it may constitute fraud.
Kamal Sultan says that in June 2003, PWC officials asked him to use KMSCO to buy local produce, and re-sell it to PWC at an inflated price invoiced to the U.S. military. In his lawsuit, Kamal Sultan alleges that when he “refused to participate in this announced scheme,” the Sultan Center supermarket chain agreed to take over responsibility to supply local produce.
PWC/Agility spokesperson Jim Cox told CorpWatch in September 2008 that “prompt payment discounts” were written into the contract and therefore not illegal. In any case, they far exceeded the more typical two percent military discounts.
Asked about the relationship between PWC and the Sultan Center, Cox said that the two companies are distinct businesses, listed separately on the Kuwait stock exchange.
In fact, Tarek Sultan and family head Jamil Sultan al-Essa serve on each other’s boards, while Jamil and four other Sultan family members are the largest stockholders the in Sultan Center, and also control a large stake in PWC. The DoJ criminal indictment states: “the two companies had interlocking directorates with at least three directors in common.” PWC/Agility’s Cox explains that this cross-ownership is common and legal in Kuwait.
In the grand jury documents submitted to the courts in November 2009, however, the investigators cite multiple examples of collusion. An October 15, 2004 email from PWC officials asked the Sultan Center to alter figures so that “the temporary price decline in the catalogue will not be obvious to the DSCP (Defence Supply Center, Philadelphia).” It also quotes emails from Albuquerque-based Professional Contract Administrators (a consulting firm working for PWC) to tell Toby Switzer, the CEO of PWC Global Logistics, to “fire somebody, blame it on them, and cover up” the revisions in the Sultan Center’s local market prices “ASAP–THIS IS VERY SERIOUS.”
PWC is also alleged to have profited from “prompt payment discounts” from companies in the U.S. In early 2007 the DoJ began a series of investigations into the company’s pricing practices, alleging that PWC had overcharged the Pentagon by as much as $374 million “by inserting a related company to inflate the amount billed.”
One PWC supplier that the DoJ investigated was American Grocers Inc., which provides foods such as Smucker’s peanut butter to the Sultan Center for resale to PWC in Iraq. In July 2009 American Grocers owner Samir Itani, a Houston-based Lebanese-American businessman, was convicted for tacking on “bogus trucking charges.”
Another company under DoJ scrutiny is Ocean Direct LLC, owned by Richmond Wholesale Meats Inc. of California. At one point, it was supplying $2.3 million a month worth of raw cold-water lobster tails to the military at $21 a pound while the average wholesale price at that time was between $17.60 and $18.75 a pound.
An October 2007 Wall Street Journal investigation revealed that PWC appeared to have also taken advantage of revolving doors between the military officials who hand out logistics contracts and the vendors that bid on them.
For example, when PWC bought poultry, ham, sausage and bakery products from Sara Lee, the Illinois-based company paid PWC five percent of the purchase price. The agreement, which began in 2003, was negotiated by a Sara Lee executive in charge of military sales, Paul Simmons, who was previously a chief warrant officer for the Army.
One of his counterparts on the military side is David Staples, a senior procurement official for the Army who formerly worked at Sara Lee’s Jimmy Dean Sausage unit. Staples went to work for the Army after his predecessor, Emily Prior, quit. Prior now works for Quantum Foods, in Illinois, which supplies beef to troops in Iraq. She also represents Perdue Chicken, another company that sells food to the military.
Agility Expands
As the Iraq war dragged on, PWC made billions from its contracts with the military. By late 2005, it had billed the U.S. $4.6 billion under the Prime Vendor contract, according to Kamal Sultan’s 2005 lawsuit. Four years later, according to the criminal charges brought by the DoJ, the amount billed had almost doubled to $8.5 billion.
Awash in cash, courtesy of U.S. taxpayers, Tarek Sultan embarked on a buying spree, snapping up companies around the world. In December 2006 PWC changed its name to Agility.
From managing a few warehouses in 2003, PWC/Agility was suddenly in the same league as global logistics giants FedEx and DHL. Like many multinational corporations, it signed on to the World Economic Forum’s “Partnering Against Corruption Initiative” where it has committed to zero-tolerance policies toward bribery and pledged to implement anti-corruption programs.
Today, Agility operates ports in Dubai, and runs shipping companies out of New Orleans. The company boasted to the Los Angeles Times that it was capable of “hauling giant mining equipment through the jungles of Papua New Guinea, or erecting stage sets in Asia for touring rock groups such as the Doobie Brothers.”
Wining and Dining the U.S. Military
Senior PWC staff regularly wined and dined army officials at five-star hotels including the Hilton Resort in Kuwait, as well as in the States to obtain military contracts, according to accounts provided by several former PWC officials to CorpWatch.
At least one such instance has been confirmed in a court hearing in Illinois in January 2008 when Peleti “Pete” Peleti, a former U.S. Army warrant officer at Camp Arifjan, Kuwait, pleaded guilty to accepting bribes from an unrelated company. At the hearing, government investigators confirmed that Peleti told them that Dan Crighton of PWC had taken him to the Super Bowl game in Detroit, Michigan, in January 2006.
In June 2005 PWC won part of the $1.5 billion Heavy Lift 6 contract to move all the military equipment from the Kuwait ports to Baghdad, sharing the award with IAP, a Florida-based contractor. PWC’s October 2006 purchase of an Alabama-based company, Taos, made it the main supplier of guns to the Iraqi army and police force. (see “One Million Weapons to Iraq; Many Go Missing.”)
The Heavy Lift contract is an example of how the company won bids despite its lack of qualifications. After wining and dining the military contracting officers at resorts in Kuwait, PWC executives obtained the Heavy Lift 6 draft bid documents four months before the published bid, multiple sources told CorpWatch,. The two men involved – Maj. Anthony Kramm who was in charge of the bidding and John Arnold of PWC – are both ex-101st Apache helicopter pilots from the same class at West Point.
Since it did not have the minimum number of trucks to qualify for the bid, the company would never have qualified for Heavy Lift in 2004 without advance knowledge. When the “request for proposals” was published, the company showed the military a fleet of borrowed “low-boy,” “reefer” and “flat-bed” trucks to prove that could fullfill the contract (reefers are refrigeration trucks and low-boys have low beds). As soon as it won the contract, PWC paid Mercedes to set aside an entire assembly line in Stuttgart for four months to build 1,800 trucks.
The U.S. “war on terror” continues to be a profitable source of business for the company. In 2008, Matrix, an Agility subsidiary in the United Arab Emirates, was contracted to fly turbines and transformers from Germany and Mexico to a power plant in Afghanistan. That contract is now the subject of a $20 million dispute with the company building the plant: Black & Veatch of Kansas. (For more on the power plant, (see “Black & Veatch’s Tarakhil Power Plant: White Elephant in Kabul.”)
In 2009, Agility announced revenues of $6.8 billion, a staff of 37,000 employees with 550 offices in 120 countries around the world, making it one of the world’s eight biggest logistics companies.
Supporters and Critics
The company has powerful supporters in the military. Its brochures quote Gen. David Petraeus, now the head of U.S. Central Command: “Agility has performed a miracle across Iraq.”
Some see less miracle and more profiteering. Rory Mayberry, a Halliburton/KBR food production manager for a dining facility at Camp Anaconda testified before Congress in June 2005: “For example, tomatoes cost about $5 a box locally, but the PWC price was $13 to $15 per box. The local price for a 15-pound box of bacon was $12, compared to PWC‘s price of $80 per box. PWC charged a lot for transportation because they brought the food from Philadelphia,” he said.
“They get options, privileges, that no one else can get, because they used to be part of the (Kuwaiti) government,” says Saad Salem Al-Qattan, a Kuwaiti business man who owns Al-Rakeb Company Petroleum Electricity & Construction Services (RAPICO) which is involved in a land dispute with PWC/Agility. Asked about the U.S. military contracts, he shrugs: “They (PWC/Agility) are greedy, and the (U.S.) military doesn’t know where to go.”
Several lawsuits have been filed against the company. Beth Hanken, an Iowa businesswoman, sued PWC/Agility when she lost contracts to supply pork to the military. The case was dismissed. The only lawsuit that has so far stuck is Kamal Sultan’s 2005 charge against PWC and its top officials – Tarek Sultan, Toby Switzer, and Emad Al-Saleh, PWC‘s deputy director (who now heads an investment management company called North Africa Holding).
After the court unsealed the records in November 2009 when the DoJ joined Kamal Sultan’s lawsuit, PWC/Agility posted a statement on its website: “Kamal Mustafa Sultan, owner of Kamal Mustafa Sultan Company … has a long history of strong animosity towards PWC, its officers and its employees.” PWC/Agility added that Kamal has filed more than 40 court actions against PWC, its executives and its employees in Kuwaiti courts, but that “all of the court actions have been unsuccessful.”
But whether or not Agility wins in court, it is already losing at the cash register. Immediately after the DoJ joined the case, the Pentagon barred PWC/Agility and its subsidiaries – including Taos of Alabama and Matrix from the UAE – from federal contracts by placing it on the “Excluded Parties List System.” DynCorp, a business partner, followed suit in late December by dropping PWC/Agility from a major U.S. military logistics contract in southern Afghanistan.
In November, PWC/Agility said it “is confident that once these allegations are examined in court, they will be found to be without merit.” Since then PWC/Agility has attempted to reach a settlement with the DoJ by offering to pay a $600 million fine, according to reports in the Kuwaiti press. “No agreement has been reached so far and there is no guarantee these negotiations will lead to a solution,” the company stated at the end of December.
A criminal arraignment of PWC/Agility scheduled for early January has been postponed five times so far, the latest delay coming at the eleventh hour on January 29. U.S. Magistrate Christopher Hagy agreed to a new date of February 8, although he expressed exasperation. “There’s a point at which this stops,” Hagy said.
Unless these settlement discussions bear fruit, the arraignment could lead to a trial in which spectators can expect a fascinating view into the extent of corruption engendered by the U.S. occupations of Afghanistan and Iraq. (Click HERE for original article)
Tuesday, February 2nd 2010 at 9:55 am |
Pratap Chatterjee ought to take a very good look at Bruce Comer/PCA.Besides being involved with this indictment PCA pulls the strings for corruption both domestically and overseas within military food supply contracts. Well intentioned government types are no match for his type of manipulation. PCA’s motto should be “We will get you the business by unfair means. We will all make tons of money and the government will never figure out what went on.” That is how he gets the clients and keeps the business. Pratap Chatterjee, outstanding research and analysis.
Tuesday, February 2nd 2010 at 11:48 am |
This came out today:
Kuwait’s index ended slightly higher, snapping a two-day fall as late gains in Zain and two major banks outweighed further declines in Agility, which slumped to a four-week low.
Agility fell 1.8 percent to its lowest close since January 4. It is down 49 percent since a US court indicted the logistics provider on fraud charges in November, with the next hearing slated for February 8.
Tuesday, February 2nd 2010 at 2:44 pm |
Yes, Sysco, US Foodservice and other distributors pull the same wool over the eyes of the government as Agility. They dont have the challenges that Agility has logistically which are some ( small ) element of defense. PCA gets contracts for them by virtue of same underhanded low bidding and incentives which increase pricing charged to Uncle Sam. Contracting needs to open their eyes or their eyes need to be opened by the Justice Department or journalists. While PCA’s role and the incentives which increase pricing are a well known and understood secret, formal whistle blowers are afraid to lose their business.
Wednesday, February 10th 2010 at 11:20 am |
Just learned Agility’s top dog in Afghanistan is taking an indefinite leave of absence after only a short time in country. Second, one of their top Afghanistan Project Managers just resigned too. On Sunday a DGS BDM/proposal manager in Kuwait called it quits as well. They just can’t leave fast enough can they? Stay far, far away from this company. Don’t you love when time proves us right?
Saturday, February 13th 2010 at 1:23 am |
Rumor within Agility is that Tarek Sultan has no intention to settle with the USG and will continue to stonewall until he sells off DGS. Several potential buyers are conducting discussions with DGS, but it’s clear that the vast majority of expats are not staying around for the outcome.
Saturday, February 13th 2010 at 9:02 am |
http://www.zawya.com/story.cfm/sidZW20090714000008/Kuwait%20Agility,%20DynCorp,CH2M%20Hill%20Win%20$6.5B%20US%20Army%20Deal
DynCorp was the main contractor on this mess. Somehow Dyncorp seems to get their hand in the cookie jar whenever possible and it is bound to catch up with them.
Saturday, February 13th 2010 at 9:05 am |
Zawya won’t let you read the whole article unless you are a subscriber. Is is published anywhere else?
Saturday, February 13th 2010 at 2:04 pm |
Here is another site that shows DynCorp as the main contractor and Agility and CM2Hill as sub-contractors.
http://www.ameinfo.com/203591.html
Monday, February 15th 2010 at 11:07 pm |
In regards to LOGCAP, yes, DynCorp is the prime with Taos (Agility) and CH2MHill the subs. For Prime Vendor, it’s all PWC (Agility) as the one and only prime……not for long. Tarek Sultan is attempting to sell DGS, but the lease Agility has with the Kuwait government for all it’s warehouses will prevent the new owner from owning the warehouses. A subcontract and/or lease from Agility won’t work either. The USG won’t allow the Agility entitiy to have any influence in the matter. Agility is screwed!
They better start bolstering their commercial businesses and keep raising prices in the Sultan Center stores. Have you noticed how virtually all of their prices have increased 20-40% in the last year alone? This was already on top of the inflated expat/Kuwaiti prices and with the inflated oil prices of last year. Well, oil prices have been cut in half, but the prices keep rising. What gives Mr. Sultan?
Wednesday, February 17th 2010 at 4:27 am |
Just confirmed Agility DGS handed out 113 pink slips this week. Laborers to Managers to Vice Presidents……all looking for new jobs. Appears Tarek Sultan is keeping even his own senior leadership in the dark as the same VPs that say that all of their legal issues will be resolved quickly are the same people sending out their CVs in bulk looking for new employment. Little brothers Taos and GCC are in the same boat.
Who else has the lowdown on Agility/Taos/GCC?
Friday, February 19th 2010 at 2:39 am |
Good job Pratap Chatterjee………….
Tuesday, February 23rd 2010 at 4:30 am |
Confirmed today that Agility DGS just laid off scores of employees including VPs, Directors, etc., during their third wave of firings in just the last week.
Tarek Sultan, it’s clear you had no intention of taking care of your employees as you lied to them for 3-4 months that this “contract dispute” was simply a hiccup. May your fraudulent practices and lack of integrity ruin your reputation indelibly and Agility be the butt of jokes for decades.
I wonder if United Airlines has sufficient seats to accommodate all of the US expats’ return.
Monday, March 8th 2010 at 4:01 am |
Intel reveals Paul Cerjan is departing Agility at the end of the month. And what did he contribute to Agility during his 20-month tenure? What occured during his watch? I’m scratching my head too. Let’s see, 6 criminal indictments, inclusion of 100+ Agility-affiliated companies on the Excluded Parties List, loss/non-renewal of several USG worth billions of dollars. I know, I know, the PV issues existed long before his arrival, but where there’s smoke……… This guy’s like the character Pigpen from the Peanuts cartoon, always a trail of dirt and filth following him. I guess he fit in well with Tarek Sultan, Toby Switzer, Steve Lubrano, and the rest of the Agility miscreants. I assume he can still return to the US without being arrested though, unlike the aforementioned Three Musketeers.
Additional Agility personnel from their Proposal Center (TPC) in sunny Orlando, FL have resigned or been fired too. Ah, feels like Christmas doesn’t it?
Saturday, March 13th 2010 at 5:58 pm |
TPC never got on the suspended list. Now a high school graduate is running their proposal center.
Saturday, March 13th 2010 at 7:57 pm |
If I recall correctly, the TPC relationship was/is one of an exclusive consultant, allowing them to avoid the EPLS. A high school graduate? Seriously?
Sunday, March 14th 2010 at 8:04 am |
TPC is was purchased by Agility a few years ago
Sunday, March 14th 2010 at 8:14 am |
Wasn’t sure if Agility bought it or had an exclusive contract with TPC. Since TPC doesn’t provide goods or services directly to the USG (via contract), I guess it serves no point adding them to the EPLS.
Sunday, March 14th 2010 at 9:09 am |
Actually, the TPC is no longer a separate operating unit – it is a division of Agility DGS and therefore would be included in the exclusion as Agility DGS is listed in EPLS
Wednesday, March 17th 2010 at 11:46 am |
Just confirmed ANOTHER wave of lay offs / firings this week at Agility. That makes six or seven. I’ve lost count.
Additional details of the DGS sale include selling all contracts except PV and DDKS to the new “owner”. Hmmm, does Agility honestly believe they’ll have either contract after 2010? PV is in the final evaluation stage with award imminent. The DDKS RFP is about to be released and awarded by this summer. Agility can’t bid on, nor be awarded either one. Why wouldn’t Agility go ahead and throw these current contracts into the offer? Tarek Sultan, what game are you playing? My guess, he’s trying to use his Royal ties to influence the Kuwait Gov’t to convince the USG to somehow overlook and/or settle the 6 indictments.
If anyone has been paying attention to the local and US media it’s clear Agility is also heading a smear campaign against its 2-3 top competitors. Articles that have no legitmate story, nor facts, are front page news in Kuwait. Old non-stories rehashed. Random emails badmouthing other defense contractors being distributed, most without authors identified. My CEO received an email three days ago attempting to influence us from doing business with any other Kuwaiti logistics provider.
Tarek Sultan. Have you realized that the end of Agility is near and all you have left to do is attempt to disparage your competiors? A man lacking integrity is willing to perform egregious and wanton acts towards others. Shame on you.
Sunday, March 21st 2010 at 9:25 am |
Looks like Agility is having some real problems:
“Agility shares dropped more than 5 per cent yesterday, falling to a six-week low. There were unconfirmed reports that the total number of layoffs could reach the thousands.”
http://www.thenational.ae/apps/pbcs.dll/article?AID=/20100321/BUSINESS/703219944/1005
Sunday, March 21st 2010 at 4:42 pm |
May you vault over the camel dung you created, only to land in pigs blood that awaits.
Sunday, March 21st 2010 at 8:29 pm |
Love the comment Baboo!
Undoubtedly, hundreds if not thousands of additional layoffs are ahead for Agility. The DOJ has set their sights on these criminals and the past four months of Agility dragging their feet and stalling hasn’t produced a buyer for the DGS. They haven’t been able to find buyers for each individual operating unit either. I hear TMG is continuing to be awarded new subcontracts via a loophole of “commercial bills of lading”. Why the USG is allowing this is beyond me. There are multiple security companies that can perform in this region, so TMG should be blacklisted.
Expect Agility stock to continue to fall slowly over the next 2-3 years as the court battle drags on.
Sunday, March 21st 2010 at 11:58 pm |
Just heard that Paul Cerjan is conducting an “all hands” meeting at Agility on March 23. Considering how investors are consistently selling their stock at a loss over the past few weeks, I assume the news doesn’t bode well for their DGS business future. I also heard that Cerjan announced his own departure date. Anyone have the date he’ll depart Kuwait?
Tuesday, March 23rd 2010 at 5:53 am |
USfoodservice and Sysco do the same type of price fixing rip off to the government within their food supply contracts. Agility could be one scapegoat. It could be the beginning of a bigger look. The reach would be easier when investigating those contracts.
Friday, March 26th 2010 at 9:50 am |
I’ve heard all types of rumors about the imminent Subsistence Prime Vendor award for weeks. Last week it was KGL had won it, their shares skyrocketed for a few days, then no news of an award. I haven’t heard a word about Anham or any other bidder since day one of the solicitation. Does anyone out there have a clue about the potential bidders, who may have a leg up, and/or an idea when this billion-dollar contract will be awarded? My curiousity stems from reveling in the demise of Agility.
Saturday, March 27th 2010 at 4:38 pm |
Don’t know about SPV, but I do know they are planning on bidding DDKS. They are “confident” they will be off the suspended list by time the proposal is due. The new director of the proposal center is not letting anyone print the RFP or have a “proposal wall”. He sees the paper savings as a major cost cutting initiative. (Don’t ask about the high priced full-time IT consultant he’s keeping on the payroll)
Tuesday, March 30th 2010 at 4:20 am |
So who’s the high-priced full time IT consultant at TPC? Would it be the daughter of the former Managing Director? Do tell.
I’ve seen the products from TPC and I would never pay full price. Give me a 50% discount and I might consider. TPC has pretty colors, photos, and graphics, but the proposal text is adequate. My BD Department produces superior proposals at 20% the cost of Agility’s. Take my word for it, I’ve checked several times. Read through the TPC invoices and nearly 50% of their costs are assigned to G&A from their Washington, DC office which has absolutely nothing to do with the document composition. TPC is in Florida. Support from DC? Are you kidding me? All that tells me is that I am paying for the high-end offices of Dan Mongeon, George Allen, and Rich Brooks in Washington.
Friday, March 26th 2010 at 1:07 pm |
I only hope the government continues to investigate and prosecute and demand repayment as the troop numbers continue to decline. There are lot of other projects we could be spending taxpayer money on besides lining the pockets of these companies.
Sunday, March 28th 2010 at 10:07 pm |
What do investors in the Kuwait Stock Exchange know that the rest of us don’t? I presume that everyone’s expecting KGL to nab the DDKS, Subsistence Prime Vendor, and Heavy Lift awards in 2010. Speculation is a wonderful thing…..if you’re an investor in these stocks at the right time. I’d be very careful, the USG has an uncanny way of selecting contract awardees. As long as Agility loses all three contracts, I’ll be satisfied!
Monday, March 29th 2010 at 6:25 pm |
It could almost be sad to see this company implode. I said almost because the men in charge have brought this on themselves
Tuesday, March 30th 2010 at 7:04 am |
Agility brought it on themeselves, but the government has also allowed for a situation where they award contracts with underbidded distribution and operating fees, knowing well that contractors run freely about grabbing what they can in other much larger amounts, right under their nose. Contracts must stand the test of making sense for both sides and USG should not tolerate what they know are underhanded elements of operation. You cannot have relationships of epidemic dishonesty. The government had to know the extra markups existed. They now should understand that other Prime Vendor contracts operate in similar ways. What are they going to do about it?
Wednesday, March 31st 2010 at 1:29 am |
Any updates on the case in court guys? Trading on the stock will halt for an unknown period of time, due to Agility’s announcement that it will postpone the disclosure of their earnings until a clearer conclusion of the “alleged” settlement with the USG is reached.
Wednesday, March 31st 2010 at 3:01 am |
I think it’s highly unlikely Agility has any intention of settling. Agility has fired/let go about 80% of their DGS employees. If Agility envisioned a settlement in the near future they wouldn’t fire hundreds/thousands of people that are required to run their operations.
What we do know: the Subsistence Prime Vendor award is imminent and Agility is ineligible. The DDKS RFP is out with a due date of 10MAY and Agility is ineligble. Come 31AUG both SPV and DDKS will have new awardees and neither of their names will be Agility. Agility has no future in USG contracting for the foreseeable future. Now that their stock is frozen, most investors will lose faith just as their former hardworking employees did over the past 18 months. Stick a fork in Agility…….they’re done!
Wednesday, March 31st 2010 at 5:09 am |
I have been listening to this chat intently.
RE Serious PV Contenders -
My ears were telling me Anham was trolling thru Kuwait looking for partners and was at on time in advance teaming discussions with KGL….The problem with trying to gauge who will win requires understanding the background manuevering that was done early on. Agility colluted with RISCO (the only cold store of any dimension when the solicitation was floated) to give letters of agreement (required for big outsiders [Anham, Ebrex, Seven Seas, the other PV heavy weight in Europe I can't remember their name - Swiss based] to include with their prosposal) ONLY AFTER GIVING RISCO 100,000KD. That’s a 1/4millionUSD expense added to the proposal writing cost and God knows what rates Risco was really giving in any letter of agreement….This collusion sufficiently lined Risco’s (Agility’s) pockets and assured all competitors would be overpriced.
This Agility plan didn’t include Agility’s implosion, so who holds the edge?
KGL will be rated neutral, poor or none as far as prior PV experience – this could neutralize them even if their costs were to be lowest.
My guess on PV is
1) an outside white knight with PV experience above KGL’s cost – the USG wants a fresh, clean face
2)Anham or an Anham/KGL (bound for divorce courts) team
3) KGL
My take on KGL is that their pricing will be greedy and management heavy handed -
Thursday, April 1st 2010 at 2:07 am |
RISCO? Is that Rastelli’s in the US? Since Agility imploded, I think the new PV award will most likely be awarded to KGL. Unfortunately due to the extremely limited frozen warehousing in Kuwait, I think KGL has a huge leg up on all the competition. Where is Anham going to find frozen warehousing in Kuwait? The only providers of frozen storage are the very small ice companies and the supermarket chains. I’d put my money on KGL.
Wednesday, March 31st 2010 at 8:47 pm |
Thanks for the insight Spooky. White Knight from Europe or the US? Hmm…interesting. Don’t they have to have massive frozen and chilled storage in Kuwait? I assume subcontracted works, but increases price. Besides Agility and KGL, who has frozen storage? Kuwait is extremely limited in that respect. My intel suggests KGL and Anham submitted separate bids. Have you worked with KGL before? My organization has and their pricing has always been fair and their performance competent. The new PV contract will be a BEAST for any new awardee though. Major growing pains for both the USG and awardee. Heavy handed management from KGL? Do tell.
Thursday, April 1st 2010 at 3:18 am |
RISCO is a big cold store convienently located at Shuwaikh port – but proposal also needs a cold store called LOGISTICA. LOGISTICA is next to the Avenues retail mall which is expanding (hellava headache for big reefer traffic competing with the mall crowd…) Rumor was big wigs (Agility/Risco) had pushed for the mall expansion and the closing of LOGISTICA.
All white knights are below (all attended the PV Conferences)
TWI
Supreme
Ebrex
Seven Seas
IAPWS attended conferences but saw little return for up front proposal cost close to 7 figures (wise move but they’re still in the KBOSSS game)
All the white knights have current PV contracts around the world – something that gives them advantages over KGL even if KGL is cheaper.
ANHAM has a history of tight margins but they REALLY planned this out – maybe learning from past mistakes
KGL in 2003/2004 had truck drivers sleeping in garbage bins and got really bad press. My insider said they started to recruit Nigerian truck drivers and were surprised when none of them could really drive. DUH!
And with other intel, I just don’t get the warm and fuzzy feeling with KGL. They’re not a well liked company in Kuwait.
Thursday, April 1st 2010 at 3:47 am |
i think you may have to start a new thread
titled “PV’s acoming, please your bids….”
r u in Kuwait?
Thursday, April 1st 2010 at 4:55 am |
“Place your bids”. Unfortunately I am in Kuwait. It’s been almost 6 years now.
I’ve confirmed that Seven Seas, TWI, BMMI and Supreme didn’t submit bids. Not sure if Ebrex is priming or partnering with another company. With Agility excluded, I guess that leaves only Anham and KGL. Could such a high-dollar contract come down to a two-pony race?
Thursday, April 1st 2010 at 4:59 am |
BTW. Anham and RISCO have an exclsuive PV relationship.
Thursday, April 1st 2010 at 7:03 am |
Errr, ‘exclusive’? I know another company was approaching RISCO then backed out – so I doubt ‘exclusivity’.
And the FFandV (Fresh Fruits and Vegetable) companies were giving out price lists and letters of agreement to ‘several’ if not ‘many’ bidders.
I had left out BMMI who I knew where in town – can’t imagine them backing out as they’re in Bahrain and could have sweetened a deal by merging the 2 zones if we ever put boots in Iran….
OH – I forgot ‘the wild card’ who else secretly attended the PV conferences? None other than…………
Khalid Sultan and his company!
It was real rsecret but they were CC’d on all registered vendor correspondence!
Thursday, April 1st 2010 at 7:10 am |
another legal nightmare scenerio is a newly formed ‘son of Agility’ company which contracts Agility’s cold stores
now can those 1,500usd a hour corporate lawyers craft corporation papers that significantly distances the new comapny from the old, bad Agility….the pen is mightier than the sword!
Thursday, April 1st 2010 at 7:38 am |
Yes, a ‘son of Agility’ could arguably bid, but they won’t be able to use the Agility warehouses. Agility can’t prime, subcontractor, or sell the warehouses as long as they remain on the EPLS. No doubt about it. I wouldn’t rule out Agility lawyers attempting to find/create a loophole though. I’d bet the USG will award SPV in the next 60 days.
Thursday, April 1st 2010 at 7:12 am |
and is your company hiring? ;P!
Thursday, April 1st 2010 at 7:42 am |
Your specialty? Our hiring depends solely upon contracts pending award.
Thursday, April 1st 2010 at 7:52 am |
how do i start to talk jobs off ms sparky’s site?
does she allow private messeges or can she give you my private email? or do you have an email i can have?
Thursday, April 1st 2010 at 7:57 am |
Spooky ..
Khalid Sultan .. the Kuwaiti MP ? or you were trying to say “Kamal Sultan” .. the whistle blower ?
Thursday, April 1st 2010 at 7:58 am |
Whoops. Kamel and his company not Khalid.
Thursday, April 1st 2010 at 8:24 am |
Thats what I thought
.. now get this .. Newspapers today mentioned that Agility made the request to freeze their stock’s trading in Kuwait stock exchange (KSE). The request was basically for it to be halted until this coming Tuesday, where they are expecting some feedback pertaining the “alleged” settlement with the DOJ. Now thats a big lie, because the real reason behind the freeze is the fact that Agility isn’t complying with KSE’s regulations which is to disclose the Year End’s earnings before March 31st, something that Agility failed to do. Nonetheless, the announcement by KSE didn’t mention the date by which the trading on the stock will resume, and that the word “Tuesday” wasn’t even mentioned anywhere in the announcement. This is misleading the stock holders! As far as “official announcements” are concerned, and not pieces of unofficial news thrown to reporters in local newspapers, no predetermined date has been announced for the stock to start trading again, and all what we know is that it is linked entirely to the date when Agility actually discloses its complete financials to KSE. Go figure !
Question: You guys mentioned that about 80% of Agility’s employees were fired/let go .. those employees are the ones working for DGS subs in the US ?
Thursday, April 1st 2010 at 8:36 am |
If you take into consideration Agility DGS’ BD, Ops, Procurement, and Estimating/Pricing departments, yes, the employee ranks have been decimated. They are still employing sufficient laborers to fulfill their remaining contract operations, but once Agility loses DDKS (NLT 28FEB11), Heavy Lift 6 (2010) and SPV (2010), the flood gates will no longer exist.
Then Tarek Sultan will focus on severely overcharging expats at The Sultan Center to make his next million.
Thursday, April 1st 2010 at 8:49 am |
Basically Wafra investment Company, owned entirely by Kuwaiti government through the Public Institution for Social Security (Pifss), was the main stock buyer during the last period, and thus acting like a stock market maker. The problem is that Piffs is the government institution handling every single citizen’s “pension” money and funds. The more they loose, the more the Kuwaiti people loose..
Damn you Tareq Sultan for being such a crook!! For once we were very proud of your company’s achievements, but you had to prove us wrong .. didn’t you ?
Thursday, April 1st 2010 at 2:53 pm |
Kuwait Govt through KIA and KIFSS is taking the long view – with Gulf Bank, Global Investment, the telecoms and the new BOT joint venture projects planned – DEEP POCKETS, LONG VIEW, they’ll acept a crash and recovery in Agility stock as they’ve well positioned for internal and international recvovery – same as Global and Gulf Bank
BUT like the govt’s dealing with GLOBAL, companies have to behave and obey Kuwait Stock Exchange or they drag the whole index down
Tarek Sultan does NOT run the SUltan Center (TSC) and only stores their goods. With Carrefour and Gegant (sic) competing for business, there is actiually more competition and more downward pressure on high end retail food stuffs
price hikes at TSC are just testing the upward limit on market goods
expats are oblivious on their increasing choices and with few westerners knowing about CityCenter and Lulu Hypermarket, they’d blissfully and ignorantly still get their 2kd package of Calfornia baby carrots from TSC
The tipping point moment will be when the Khorafi shareholding block of the TSC throws Tarek under the bus
Thursday, April 1st 2010 at 3:02 pm |
Sorry, meant to write the Khorafi shareholding block of Agility – as far as shareholders, tarek only listens to them
Saturday, April 3rd 2010 at 10:24 am |
Just had three people call/email me about the Subsistence Prime Vendor contract for Kuwait and Iraq. All three “heard” that KGL has been selected and an official press release will be published this week.
Anyone with solid KGL contacts that can confirm this news? I know a few employees at KGL, but doubt they’ll be “in the know”. Awfully close to April Fool’s Day though. Hmmm, maybe it’s time to buy some stock.
Saturday, April 3rd 2010 at 10:34 am |
Not true. KGL just made an announcement that they and another “Jordanian” based company are competing after the $4 bil SPV contract, and that the award will be announced begining of May.
Saturday, April 3rd 2010 at 10:40 am |
Interesting Simzer. Who and when did KGL announce that? I assume KGL is referring to Anham, a firm constructed with Jordanian, Saudi, and US parts. Did the USG release an expected award date?
Saturday, April 3rd 2010 at 10:54 am |
Well, just few minutes ago, I received an sms from a semi-official news serv here in Kuwait called ” Kuwait News” quoting KGL in that announcement. Too bad, because KGL isn’t even in the same league as companies with true capacity to exercise such huge contracts!
Saturday, April 10th 2010 at 4:33 pm |
Hello Guys. Agility has just announced (not fully official yet) their dividends. They are handing out %40 cash bonus per share.
which means the total amount they are paying out to shareholders will be, approximately %40 of KD 104 mil (their current capital) = KD 41.5 mil = $ 144 mil.
In addition to the dividends announcement, they passed a note that the “legal deadline for reaching a settlement with the USG has passed without any agreements”
How do you translate these new happenings?
Sunday, April 11th 2010 at 2:01 am |
I translate it that Agility is attempting to wrangle the settlement figure downward. From the USG’s perspective, they intend to go to trial and hold the imminent PV award over Agility. In the next few weeks will see how badly Agility wants to keep the contract. I believe Agility is/was bluffing and now that the deadline (April
has passed, Agility’s bluff was called.
Stick a fork in Tarek Sultan…he’s done!
Sunday, April 11th 2010 at 2:01 am |
April 8 deadline
Sunday, April 11th 2010 at 2:32 am |
what board of directors will hire tarek sultan for his next job?
oh, yes, I have a Wharton MBA and I oversaw the meteoric rise in market cap, market share and worldwide peneteration during my last job, but some accounting mistakes occured and I didn’t know anything about them…..
Sounds like what the Enron boys told the judge.
Maybe Citi or Countrywide will hire him to bring subprime mortgages back……
The press leaks/propaganda from Agility is to slow the share dumping that is about to occur.
Sunday, April 11th 2010 at 3:38 am |
I agree Spooky. Although Agility has cut costs by firing vast numbers of DGS staff, the loss of PV, DDKS, DRMS, and HL7 will be monumental comparatively. I’m sure Tarek Sultan sold his stock ages ago as he was well aware of these issues since their inception. I love your dig on his MBA and his ‘lack of knowledge’. LOL. Um, Mr. Sultan, as Chairman and Managing Director it’s your job to know. Dumbass! Like Ms. Sparky, I would love to see this guy in an orange jumpsuit doing 5-15 years in the US, but that will NEVER happen. Tarek won’t return until all of this has passed.
Sunday, April 11th 2010 at 2:49 pm |
Well, Tareq Sultan is more of an owner than an employee. The Sultan family is amongst the richest here in Kuwait. Agility has officially announced that no agreement with regards to the “alleged” settlement has been reached. Talks about announcing losses instead of profits are surfacing today (due to the need of allocating provisions of course). National Real estate Co. (major shareholder of Agility) announced 38% EPS today (around $100 mil of net profit), yet they decided not to give out any dividends (I wonder why?)
I wonder how many forks we’re sticking in this turkey?
Wednesday, April 14th 2010 at 10:27 pm |
News Update ….
KGL just announced that the SPV contract has been awarded ………….
to another company ….
poor traders … how they got caught badly .. the stock is bleeding badly as i write this message ..
The funny thing though ..is that Agility’s stock has been halted temporarily ..due to an “announcement” … and traders are buying heavily into affiliate companies like the Sultan Center, National Real estate, and Bayan Investment !!!
and just this second Agility announced that although the DOD has awarded a different company the PV contract yet they’s extended Agility’s contractual responsibilities for an extra 6 months.
and yet .. traders are still buying … welcome to the “3rd world stock markets”
Thursday, April 15th 2010 at 6:22 am |
Check this post for the name of the new Prime Vendor http://mssparky.com/2010/04/virginia-based-versar-inc-to-replace-agility/
Thursday, April 15th 2010 at 12:43 am |
re PV
this could be a kgl ploy to manipulate their stock lower for a spike $$$
nothing’s official until fbo.gov announces it, what is your source – gimme a link
BUT I STILL THINK kgl will lose
re Agility
WHAT contracts extended? mostly likely DDKS, not PV or HL
Thursday, April 15th 2010 at 7:43 am |
It’s official, Anham has been awarded the new Subsistence Prime vendor contract. So sorry Agility….:) DGS is doomed for sure now!
In reference to the DDKS contract only, yes, the new RFP timeline reflects that Agility may be extended for another 6 months (thru Feb’11). If the new awardee is prepared before then the USG could T4C.