Whistleblower to get big payout in shipping company case
By ERIK SLAVIN | STARS AND STRIPES Published: January 6, 2012
YOKOSUKA NAVAL BASE, Japan – A whistleblower who alerted the U.S. government that shipping company Maersk knowingly overcharged the Defense Department for sending cargo to bases in Kuwait, Iraq and Afghanistan will receive a hefty payout, a percentage of the fines the Danish shipping conglomerate will have to pay under a settlement agreement.
The federal government’s long list of allegations against the Danish shipping conglomerate and its subsidiary included multiple examples of overbilling and faulty or unfulfilled services from 2006 to January 2011, according to the December settlement agreement, which was obtained by Stars and Stripes on Friday.
Jerry H. Brown II, referred to by federal prosecutors in a Tuesday statement as a “former industry insider,” will receive $3.6 million in compensation, in accordance with a provision of the False Claims Act.
Also known as the Lincoln Law, it was originally enacted in 1863 to encourage citizens to sue unscrupulous Civil War contractors on behalf of the government, and allows whistleblowers to claim a percentage of the settlement.
Maersk will pay $31.9 million in fines to settle the allegations.
The company made no admission of wrongdoing or liability, nor did the government concede “that its claims were not well-founded,” the settlement stated.
In 2009, prosecutors also settled Brown’s allegations against shipping company APL Limited and its parent company for $26.3 million. Brown is a former employee of APL, an American subsidiary of Singapore-based Neptune Orient Lines Limited.
The government alleged that Maersk billed the Defense Department from June 2006 to November 2008 for a contract in Kuwait for which Maersk’s subsidiary, A.P. Moller, had already received a partial rebate.
Maersk also incorrectly billed to maintain refrigerated containers at bases in Afghanistan and a port in Pakistan, where shore electric was readily available to keep the containers cool, according to the settlement agreement.
From August 2008 through January 2011, prosecutors alleged that Maersk billed for container GPS tracking and security services that were not provided or only partially provided.
“An automated monitoring unit was affixed to the container, but malfunctioned or failed to transmit during transit, and the service was billed for a pair of containers where the automated unit was affixed to only one pair,” according to the settlement agreement.
Maersk also billed the Defense Department for its own delivery delays, prosecutors alleged.
The final settlement was the result of a joint effort from the U.S. Attorney’s Office for the Northern District of California, the Justice Department and three Defense Department agencies.