Contractor Settles Criminal Charges on Overpriced Food for Troops in Iraq

Fourteen years after it was hired to supply fruits and vegetables to U.S. troops fighting in Iraq, the Kuwaiti-based Agility Public Warehousing Co. on Friday reached a settlement of all outstanding criminal, civil and administrative charges brought by the U.S. government.

The Justice Department announced that Agility had agreed to “globally resolve” the accusations and pay $95 million while foregoing its administrative claims against the United States totaling $240 million dating to 2006. It also pleaded guilty to one misdemeanor count of theft of government funds during its work for the Defense Logistics Agency.

The company had for years drawn scrutiny because of what was regarded as lax auditing. Under the settlement, the Pentagon’s logistics agency will also release a claim of $27.9 million against Agility and lift its seven-year-old suspension—a blacklisting that was later expanded to the company’s 300 affiliates.

“The Department of Justice will hold accountable contractors that seek to profit unfairly at the expense of U.S. troops and taxpayers,” said Deputy Assistant Attorney General Joyce Branda of the Civil Division. “Those who expect to do business with the government must do so fairly and honestly, abiding by the contract terms to which they agreed.”

The civil claims and criminal charges came out of allegations of illegal price markups and manipulation raised in a civil whistleblower suit against Agility and another Kuwaiti company, the Sultan Center Food Products Co., under the False Claims Act. That meant the whistleblower received $38.85 million as a result of the civil action he filed.

Under the settlement, Agility can apply for contracts but must use an independent monitor and maintain an ethics and compliance program.

The criminal and civil cases were investigated by the DCIS, the Army’s Criminal Investigative Command, the Defense Contract Audit Agency, and the FBI.