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. (Read the rest of the story here…)

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Indictments, convictions, rewards & let’s make a deal

Federal fraud case against Kuwaiti company (Agility/PWC) postponed
Atlanta Business Chronicle – by Dave Williams -  January 29, 2010
The challenges of serving a federal court summons on a foreign business have led to several delays in the arraignment of a Kuwait-based logistics company charged with defrauding the U.S. military.

U.S. Magistrate Judge Christopher Hagy of Atlanta agreed Friday to the latest request for a postponement by lawyers representing The Public Warehousing Co. K.S.C. (PWC) and rescheduled the arraignment for Feb. 8.

PWC is accused of submitting false information to win three contracts to supply food to American troops in Iraq, Kuwait and Jordan, and then overbilling the government for the items it delivered. (Read the rest of the story here…)

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DoJ finds bowling for contractors more lucrative than bowling for dollars



Looks like the long arm of the law is finally reaching out and bitch slapping some of the contracting cronies and culprits who believe the law does not apply to them.  All I have to say is, “IT’S ABOUT TIME!”

The Department of Justice (DoJ) seems to be getting serious about enforcing the Foreign Corrupt Practices Act (FCPA). Last year’s record breaking settlement with Halliburton and KBR to the tune of $579 million appears to have been only the beginning.  Last week the DoJ unsealed indictments against 22 high ranking individuals working for undisclosed (in the indictments) Defense contractors and then followed up with an indictment for one of their very own undercover operatives, Richard Bistrong, who helped them sting the first 22 alleged wrong doers. (Read the rest of the story here…)

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Defense contractors must now air dirty deeds in public

Defense contractors such as KBR can no longer hide behind the closed doors of secret binding arbitration for serious issues such as discrimination, harassment, rape and assault. No longer with KBR and others be able to violate Title VII Laws and then just sweep them under the rug behind closed doors. Those abusive criminal managers who have been in place for years are finally going to cost them some money and Heather Browne, KBR’s Communications Director is going to be working overtime. Well done, Jamie Leigh Jones and thank you Al Franken for taking these issue seriously. Hopefully this is just the first in a series of laws to protect defense contractor employees.

For those who respond to every dispute or disagreement here on MsSparky.com with “You signed a contract”. You can’t sign away law! (Read the rest of the story here…)

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Hypothetically speaking; Would KBR be liable if….

I’ll bet there is not one current or former KBR employee who does not know of at least one KBR LOGCAP manager who has committed some sort of crime or contract violation. Many have never been punished. Crimes can vary from basic General Order 1 (GO1) violations such as drinking alcohol on base, having sexual relationships with subordinates, subcontract workers or the client, or TIPs violations such as soliciting prostitution on base, in Dubai, Thailand or the Philippines etc. Then there are the crimes of fraud, theft, bribery, assault, sexual assault, harassment and discrimination. These managers were not charged or prosecuted for contract violations and crimes primarily because they were never reported to the client. I doubt seriously it was even reported to Houston. A few lower level managers and non managers have been convicted of crimes. That must have clearly been accidental on the part of the DoD.

Not only were these managers not prosecuted. They were not fired. They were either transferred around until they quit or were asked to resign. “What’s the problem with that?” you ask. Their resume is a lie. Their new hiring company has no idea what happened at KBR and now these managers take those undesirable behavior patterns and management styles to their new company. And then they surround themselves with their cohorts in crime. No charges were filed, so security clearances are granted without a problem. (Read the rest of the story here…)

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Will the Retired General’s Club help Agility buy it’s way out of trouble

I am going to have to reset my Google alerts to make sure I don’t miss all this Agility drama! Evidently Agility is in negotiations with the Feds to see if they can get themselves out of trouble. Evidently Agility has offered $600 million in fines/restitution as part the this deal. $600 Million isn’t squat in comparison to what they stole from the US Taxpayers. And does that include jail time. If so, who will be the sacrificial lamb for Agility….which I now call “The Jack Stanley”. For those who don’t recall Jack Stanley was KBR’s CEO who took the fall and was sentenced to prison for KBR’s part in the Nigerian bribery scandal.
Public Warehousing in talks with U.S. to settle fraud case

By Walter Pincus
Washington Post Staff Writer
Wednesday, December 30, 2009

The Kuwaiti firm indicted last month for allegedly overcharging the Army on a multibillion-dollar contract to supply food to U.S. troops in Iraq, Kuwait and Jordan has announced it is negotiating with the Justice Department to settle the case.

Public Warehousing Co. made the announcement in a statement posted Monday on the Kuwait Stock Exchange Web site and added: “No deal has been struck so far and there are no guarantees that the negotiations will result in a settlement.” (Read the rest of the story here…)

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U.S. food delivery contracts in Middle East worth billions

By Walter Pincus
Washington Post Staff Writer
Monday, January 11, 2010

Christmas lunch is served at Camp Phoenix near Kabul. Much of the food delivered to the region comes from the United States. (Musadeq Sadeq/associated Press)

One of the least publicized elements of the cost of the fighting in Afghanistan and Iraq is the need to truck into Iraq and landlocked Afghanistan almost all the perishable and non-perishable food items consumed by U.S. forces and civilian personnel.

The Defense Logistics Agency is preparing to contract out delivery of more than $10 billion worth of food to U.S. troops and other government personnel serving in Iraq, Afghanistan, Kuwait and Jordan. The solicitation is broken into two contracts — one for Afghanistan for five years and another for Iraq, Kuwait and Jordan for four years.

The list of items is extensive. The prime vendor, according to the bid solicitation, “must be capable of supplying all chilled products, semi-perishable food stuffs, frozen fish, meat and poultry, other frozen foods (fruits, vegetables, prepared foods, etc.), dairy and ice cream products, fresh and frozen bakery products, beverage base & juices (for dispensers), beverages & juices (nondispenser), fresh fruits and vegetables, non-food items.” (Read the rest of the story here…)

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Obama tightens reins on contractors

Obama By: Mike Allen
December 21, 2009 10:23 AM EST

Ahead of remarks Monday by President Barack Obama about making government more efficient and effective, the White House Office of Management and Budget released details of the administration’s drive to tighten the government’s contracting practices.

“This is a situation that would never exist in a business,” Jeff Zients, federal chief performance officer and OMB deputy director for management, told reporters on a conference call. “A business that had these kind of practices would have been out of business a long time ago. I believe we’re off to a really fast start here. There’s a lot of work to be done. And we’re going to clean up the situation and make sure there’s no waste, and we save as much money as possible.” (Read the rest of the story here…)

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Why isn’t the DoD removing Dyncorp from Afghanistan?

We all remember Kosovo. Why is the DoD allowing Dyncorp to bid at all?

We all remember Kosovo. Why is the DoD allowing Dyncorp to bid at all?

Where in the hell is the Defense Contract Management Agency (DCMA) in Kandahar? Why have they refused to do anything about this issue of Dyncorp not paying their employees as agreed to? American expats have not been paid at all or have not been paid as agreed to. Some who have complained are being told by Dyncorp in-theater management to keep their mouths shut about it.

Foreign Nationals have not been paid as agreed. Some have been paid cash in theater. This was not agreed to and puts them at great risk for theft and assault and does their families no good in Bangalore or where ever they’re from.

Why is this not being stopped immediately. Months have gone by and Dyncorp still can not get this pay issue right. As much as I despise KBR, at least they paid their people on time and were prompt in correcting errors.

Now is the time for the DoD to “man up”, admit you made a mistake and issue a Level IV Corrective Action Request (CAR) to Dyncorp, kick them to the curb and award Fluor or KBR the Logistics support for the Afghanistan-South Area of Responsibility. This is Dyncorp’s Task Order 4 – $643.5M for the one-year base plus four one year options with a total evaluated value of $5.874 billion. Dyncorp has already lost its partner support from Agility due to indictments. Dyncorp does not deserve one more penny of this contract. And it would appear at this point even KBR is superior to Dyncorp in Afghanistan. (Read the rest of the story here…)

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Selling their souls to sole sourcing sparks another KBR sub-contractor investigation

This article was first published in Germany on Dec 10, 2009 and has been translated from German to English for this article (this is my disclaimer):
SST Truck Iraq

SST Truck Iraq - Unknown operators dumping raw sewage

Services worth millions in Afghanistan

German armed forces awarded contracts without advertising

German armed forces must justify themselves for procurements worth millions for their mission in Afghanistan. For years according to the information of NDRInfo German Bundeswehr contracted the service provider Ecolog without tendering. The official’s association of the German armed forces VBB sees the ministry of defense in the duty.

By Christoph Heinzle and Benjamin Grosskopff, NDRInfo

For their ISAF camps in Afghanistan German armed forces have awarded for years orders worth millions to a private service provider without tendering, North German radio station NDRInfo reported. Besides, employees of the commissioned Dusseldorf company Ecolog AG are or were investigated by international authorities because of the suspicion of drug offence and money laundering. Germans never looked into the relations to Ecolog in detail according to an insider: “One can have an interest to get to know his business partner – but the armed forces never had this interest according to my observation.” (Read the rest of the story here…)

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It’s official…Agility is out of Afghanistan and Kuwait

Here is an email that was apparently just sent to Agility employees in Afghanistan.

As of December 16, 2009 2400hrs CST Agility DGS was notified of a decision from DynCorp International (DI) to remove Agility DGS from LOGCAP IV.

Agility DGS understands that these recent events have led to the development of tentative offers for employment being extended in mass from DI.  We recognize the necessity for continuity in support of the American war-fighter.  We also recognize our employees have personal obligations which are affected by their ability to continue gainful employment.  Agility DGS remains supportive of its employees, and encourages those employees currently on assignment with LOGCAP IV to make the best possible decision for their own personal sustainment. To include the acceptance of an employment offer extended from DI.

On December 17, 2009, there will be a hearing to challenge DI’s decision.  Should our court action be successful, resulting in the restoration of Agility to LOGCAP IV, we would welcome your application for available opportunities.

You will receive additional communications from HR Director Jim Wilkes regarding out-processing specifics.

Joseph M. Cosumano

President & CEO

Agility, DGS Inc (Read the rest of the story here…)

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Has Dyncorp cut Agility loose in Afghanistan and Kuwait? YES!

Dyncorp LogoAgility Logo

Rumors from Afghanistan are that Dyncorp has cut Agility (formally known as Public Warehousing Company-PWC) and one of their subsidiaries, Gulf Coast Catering-GCC loose. I have yet to confirmed this, but it wouldn’t surprise me.

Dyncorp teamed up with CH2M Hill and Agility and were approved by the DoD to bid on LOGCAP IV task orders. Now that Agility has been indicted by the Department of Justice they and all their subsidiary including Gulf Coast Catering are suspended from bidding on or being warded any future DoD contracts pending the outcome of the indictments. That could take YEARS!!! If they are found guilty, they will most likely be debarred from government contracting. (Read the rest of the story here…)

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Tax dollars for Terrorists – The DoD’s New Charity

Top Food Supplier to (US)Military Indicted

Convoy

By MIKE ESTERL
ATLANTA — The U.S. government filed a criminal indictment against a Kuwaiti company that is the leading food supplier to the American military in Iraq, in what prosecutors described as the first step in a broader investigation.

The Department of Justice on Monday declined to estimate the scope of the alleged fraud by Kuwait-based Public Warehousing Co. K.S.C., but it said in a statement that it believed the amount to be massive. PWC has received more than $8.5 billion in food-supply contracts for U.S. military personnel in Iraq, Kuwait and Jordan dating back to 2003, the DOJ said.

PWC, which rebranded itself as Agility in 2006 and continues to supply food to U.S. troops, said in a statement that it was confident the U.S. government allegations “will be found to be without merit.” PWC is “surprised and disappointed” by the indictment, it said.

Barbara Nelan, assistant U.S. attorney for the Northern District of Georgia, told reporters that the indictment against PWC was “the first step” in a broader investigation of individuals and other companies that may have participated in the alleged fraud.

The criminal indictment by a federal grand jury was filed under seal last week in the U.S. District Court for the Northern District of Georgia. Prosecutors on Monday said it was triggered in part by a whistle-blower civil suit filed with the same court by Kamal Mustafa Al-Sultan in November 2005.

Mr. Mustafa Al-Sultan, a former business partner of PWC, alleged in an amended civil suit against PWC in U.S. District Court in Atlanta last month that the Kuwaiti logistics company has defrauded the U.S. government of more than $1 billion by marking up prices by 30% or more.

The DOJ alleges that Sulaibiya, Kuwait-based PWC provided “false invoices and statements” to the Defense Supply Center Philadelphia, a branch of the Department of Defense that gives logistical support to U.S. troops. It says PWC used various tactics to artificially inflate bills and retain “product rebates, allowances and discounts” that should have gone to the U.S. government.

Among other allegations, prosecutors say PWC conspired with Kuwaiti subcontractor The Sultan Center Food Products Co. KSC — known as T.S.C. — to charge the U.S. above-retail prices for fresh fruit and vegetables. It alleges that T.S.C. then paid kickbacks to PWC in the form of a 10% rebate.

PWC received $62.3 million in such rebates from T.S.C. during the first 41 months of food-supply contracts with the U.S. military, the DOJ alleges. That figure doesn’t include an undisclosed amount of rebates spanning another 35 months of supply contracts between the parties, prosecutors said in the indictment, which was made public on Monday. T.S.C. didn’t return calls seeking comment.

In another case, prosecutors allege that PWC overcharged for food by persuading an unnamed Georgia-based supplier to reduce the pack sizes of products it sold by half so that PWC could bill the U.S. military twice as much.

The Department of Defense said that it has suspended PWC from bidding for contracts during the legal proceedings. The suspension doesn’t preclude PWC from completing its current contracts.

Prosecutors said they hoped to claim as much as two times the money that PWC gained from the food-supply contracts or two times the estimated loss to the U.S.

—Brent Kendall and Yochi Dreazen in Washington contributed to this article. (click HERE for original article)

According to yesterdays article (click HERE) it stated:

“The largest shareholder of its parent company – named Khalid Sultan – has been linked to the terrorist organization Revival of the Islamic Heritage Society known as RIHS; he also acts as the leader of the Islamic Salaf Alliance, the political arm of RIHS. RIHS has been designated by US Treasury as a terrorist organization,” CBS News’ Investigative Team reports.

PWC/Agility’s Response to the allegations

Gosh it sounds as though a certain “Spokeswoman” (Heather Browne) has been cloned, doesn’t it? Maybe she is moon lighting.

Statement by Public Warehousing Co. (PWC) Concerning Indictment Announcement

WASHINGTON, Nov. 16 /PRNewswire-USNewswire/ — PWC has for some time worked with the government to seek a mutually agreeable resolution to this contract dispute and is surprised and disappointed that the government has decided to take this action.

The company has been the principal food supplier for the U.S. military in Kuwait and Iraq since 2003. The prices it charges have been negotiated with, agreed to, and continually approved as by the U.S. government since then. The government has consistently found PWC’s prices to be fair and reasonable.

Since 2006, the company’s “fill rates” – the number of cases of food accepted compared with the number ordered – were consistently more than 99 percent, a number that exceeds the fill rates of U.S. domestic service providers. That means that PWC was more successful in delivering food and other items to the military in a hostile war zone than other vendors have been within the safe environs of the continental U.S.

The company has long cooperated with government reviews, inspections, audits and inquiries necessary to ensure taxpayer dollars are being spent appropriately.

More than 30 PWC employees have been killed and 200 injured carrying out the extremely dangerous work of providing food for U.S. troops in a war zone, primarily in attacks on convoys that have destroyed more than 300 trucks and damaged another 700.

An indictment is merely an allegation. PWC is confident that once these allegations are examined in court, they will be found to be without merit.

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Catering + Collusion = Indictment

Company Charged in $8B Troop Food Fraud

DFAC
(CBS/ AP)  A Kuwaiti company has been charged with conspiring to defraud the U.S. in connection with multibillion-dollar contracts to feed American troops in Iraq, Kuwait and Jordan.

Federal prosecutors said Monday that Public Warehousing Co. made false statements and submitted false claims to manipulate prices and overcharge for food for troops.

The company is registered in Kuwait and has received more than $8.5 billion in food supply contracts.

“The largest shareholder of its parent company – named Khalid Sultan – has been linked to the terrorist organization Revival of the Islamic Heritage Society known as RIHS; he also acts as the leader of the Islamic Salaf Alliance, the political arm of RIHS. RIHS has been designated by US Treasury as a terrorist organization,” CBS News’ Investigative Team reports.

Read CBS’ Investigative Team’s 2007 report on food fraud allegations (excerpt below)

  • Whether companies such as Perdue Farm, Sara Lee, and ConAgra set unusually high prices when they sold their goods to the Army’s prime food contractor for the war zone.
  • Whether or not that contractor, Public Warehousing Co., improperly pocketed so-called, “refunds” money it got back from its suppliers after these goods were sold.
  • And what role, if any, current and former Army officials played in a possible kickback scheme involving Public Warehousing, known as PWC, and some of its vendors.
  • Acting U.S. Attorney Gentry Shelnutt says the fraud investigation is ongoing.

    “This indictment is the result of a multi-year probe into abuses in vendor contracts in the Middle East involving the illegal inflation of prices in contracts to feed our troops,” said Criminal Chief F. Gentry Shelnutt, the current Acting U.S. Attorney for the case.

    The case was filed in federal court in Atlanta, and the company is scheduled for a first court appearance on Friday. A phone listing for the company could not immediately be found. (Link to original)

    ————————————————————————————-

    Affiliations & Connections:

    Public Warehousing Co. (PWC), is part of Agility Logistics and the following list of names may be familiar to some of you:

    U.S. Army Lieutenant General Paul Cerjan (Ret.)
    21 July 2008
    Paul Cerjan Joins Agility Defense & Government Services

    U.S. Army Lieutenant General Joseph Cosumano (Ret.)
    2 September 2008
    Agility DGS Names Cosumano To Head Taos Industries

    Subsidiaries include:

    Gulf Catering Company for General Trade and Contracting (GCC SERVICES)
    Taos Industries, Inc.
    Threat Management Group
    Impeva Labs

    According to Rory Mayberry’s testimony ”Then KBR switched to a new supplier, PWC.  PWC prices were almost triple from what Tamimi’s were. For example, tomatoes cost $5 a box locally, but PWC prices was $13 to $15 per box.” “When I had the military check some of the food shipments, they would turn the food items away. But there wasn’t any marking of the record, so KBR just sent the food to another base for use. The problem with expired food was actually worsened with the switch to PWC because it took longer for the food items to get to the base as they were shipped from the U.S. to a warehouse in Kuwait.”

    Taos Industries, Inc., a wholly owned subsidiary of Agility Defense & Government Services, is a partner in the DCP Team, a Joint Venture with DynCorp International and CH2M Hill.  DCP Team is a contract holder of this U.S. Army contract, which provides global, multi-functional contingency logistics support to the U.S. Army and other U.S. Government agencies as required.  As a strategic partner in the DynCorp International team, Agility DGS and Taos Industries will provide supply chain and logistics capabilities to rapidly support the logistical requirements of deployed forces.

    Do we have reason to hope there will be more indictments to follow?

    –Forseti

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