01/25/2012 // San Francisco, CA, USA // Whistleblower Law Firm // Jeffrey Keller // (press release)
The U.S. subsidiary of Danish shipping giant Maersk Line will pay $31.9 million to settle claims that it charged excessive amounts — or charged for services not fully rendered — in the course of its work supporting American troops in Afghanistan and Iraq. The settlement, announced January 3, resolves a 2007 whistleblower lawsuit brought under the federal False Claims Act — a law that, ironically, had been enacted to stem fraud in another famous conflict: the American Civil War.
The whistleblower, Jerry H. Brown II, stands to collect $3.6 million of the settlement. Under the False Claims Act, private citizens with knowledge of unlawful activity can bring lawsuits on behalf of the United States and share in any recovery obtained by the government. Brown had previously been awarded $5.19 million of a $26.3 million settlement reached between the Department of Justice and his former employer, American President Lines. That case, addressed in the same 2007 whistleblower lawsuit and settled in 2009, also involved allegations of wartime overcharges. Brown had been a documentation controller for APL when, he says, he unearthed irregularities in the company’s billing.
The government, which joined Brown’s suit after investigating his claims, said Maersk charged excessive amounts for refrigerated containers holding perishable cargo at U.S. military bases in Afghanistan, billed for tracking and security services it failed to provide, or provided only in part, and charged excessive late fees at a port in Kuwait and other locations.
The combined recoveries, totaling more than $58 million, mark the largest civil fraud settlement with military contractors during the Iraq and Afghanistan wars, say whistleblower lawyers. They also highlight the power, and effectiveness, of the False Claims Act, which was enacted into law back in 1863 and created financial incentives for individuals to alert authorities to fraud and profiteering.
“The government’s settlements with Maersk and APL show that even in this modern day, False Claims Act lawsuits are still a necessary and valuable tool to protect against war profiteering,” says Jeffrey F. Keller, a founding partner at Keller Grover, a nationally recognized labor and employment law firm, and a veteran whistleblower lawyer. “They also show how vital a whistleblower is to stem these frauds. For his invaluable role in bringing wrongful conduct to the government’s attention, Mr. Brown will receive $8.79 million. Meanwhile the country, and all of its citizens, will recover much more. The False Claims Act truly gives the individual the power to right the biggest wrongs.”
In a statement, Maersk — which did not admit wrongdoing under the settlement — said the “complex and often uncertain nature” of wartime operations often leads to “poor data” that can cause the billing inaccuracies. It also notes that it has improved its procedures.
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