UPDATE 3-Kuwaiti firm denies overcharging U.S. army

* New contracts barred as U.S. charges pend

* Agility says charges "without merit"

* Stock down over 8 pct

(Adds analyst quote)

By Eman Goma

KUWAIT, Nov 17 (Reuters) - A Kuwaiti firm supplying food to U.S. soldiers in Iraq and Kuwait, denied allegations of fraud on Tuesday after a U.S. grand jury accused it of overcharging.

Agility Agility (AGLT.KW) was indicted on Monday, under its previous name, Public Warehousing Company, K.S.C. (PWC). The firm is accused of overcharging the U.S. Army to the tune of $60 million over a 41- month period, on $8.5 billion worth of food supply contracts. [ID:nN16518906]

Agility, the principle food supplier to the U.S. military in Kuwait and Iraq, said in a statement that the indictment and complaint were without merit and would not impact current contracts with the U.S. government.

"PWC has been debarred from future contract awards until such time as a determination has been made about the company's current responsibility as a contractor," Agility said. "PWC is confident that once these allegations are examined in court, they will be found to be without merit".

Trade in the stock was suspended pending clarification from the firm over the indictment and once dealing resumed the stock sunk more than 8 percent on the Kuwaiti bourse.

"There's no accountability on the Kuwait stock exchange," said Talal al-Loghani, vice-president for Gulf equity markets at Kuwait Finance and Investment Co. "The company didn't give an indication."

Agility receives 37 percent of its revenue through logistics support to the U.S. government and other agencies, according to a recent Goldman Sachs report.

It competes with regional firm Aramex ARMX.DU and global players such as DHL (DPWGn.DE), UPS (UPS.N), FedEx (FDX.N) and TNT TNT.AS.

The Middle East is a large market for freight and logistics due to its strategic location, quickly growing economies and massive shipping infrastructure. The grand jury in Atlanta indicted the firm on multiple charges in connection with contracts issued by the U.S. Department of Defense between 2003 and 2005.

If convicted of violations of the False Claims Act, PWC faces probation and a fine of up to twice the gain it realized or twice the loss to the United States.

Agility, which operates in 120 countries, has been trying to reduce its dependence on U.S. government deals by moving to new markets and making a string of acquisitions.

It now also makes money from real estate and, in July, signed a deal to provide freight services for a gold mine in Papua New Guinea.

The lawsuit followed an initial whistle-blower suit filed by Kamal Mustafa Al-Sultan, the owner of a company that partnered with PWC to submit a proposal for the contracts, according to a Justice Department spokesman. (Additional reporting by Thomas Atkins, Nicolas Parasie, and Amran Abocar; editing by Simon Jessop and Elaine Hardcastle)