January 8, 2011 / 1:35 AM / 9 years ago

U.S. files fresh fraud suit against Kuwait's Agility

ATLANTA (Reuters) - Prosecutors have filed a civil suit against Kuwaiti logistics company Agility, accusing it of defrauding the government over food product contracts to the U.S. military in the Middle East worth $9.8 billion.

Agility was the largest supplier to the U.S. Army in the Middle East during the war in Iraq and a parallel criminal case is politically sensitive in both Washington and Kuwait.

The government aims to “recover all available damages for common law fraud, payment under mistake of fact, unjust enrichment and breach of contract,” said the suit filed on Wednesday.

The suit alleges that starting in 2003, Public Warehousing Company K.S.C. a.k.a. Agility engaged in two schemes to present false claims for payment. It also names The Sultan Center Food Products Company, K.S.C. as a defendant.

In the first scheme, the company falsely inflated prices for perishable items and local market ready items, the suit said, and in the second scheme, it overcharged the government by failing to disclose discounts it received.

Agility has long argued that it regards the entire case as a contract dispute that should be settled through negotiation.

Prosecutors first launched a criminal indictment against Agility in November 2009 for attempts to defraud the U.S. military over supply contracts in a case that is politically sensitive in both the United States and Kuwait.

This week’s civil suit appears to run in parallel with that indictment, which says the company overcharged the U.S. Army over 41 months on $8.5 billion in contracts first signed at the start of the Gulf War in 2003.

“The United States to date has paid in excess of $9.8 billion in claims for goods and services under the prime vendor contracts at issue in this complaint and the United States continues to pay PWC,” the civil suit said.

There was no immediate comment from the government or Agility and it was not clear how the civil suit fit into an overall government strategy on the case.

If convicted in the criminal indictment, the company would face a fine of twice the gains it realized, or twice the loss to the United States.

Negotiations in 2010 appeared to stall but the company says it has been hurt because of a decision by U.S. authorities to suspend it from bidding for new U.S. government contracts.

Agility has subsidiaries in both the United States and Kuwait and in 2010, pretrial motions in the criminal case focused in part on whether prosecutors originally served only the U.S. subsidiary, rather than its parent.

The civil case is the United States of America ex re. Kamal Al-Sultan versus The Public Warehousing Company, K.S.C., a/k/a Agility and The Sultan Center Food Products Company, K.S.C.

It is numbered 1:05-cv-02968-GET and was filed in the Northern District of Georgia, Atlanta division.

Editing by Gary Hill

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