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Maersk to pay ${esc.dollar}32 million to settle overbilling suit

Source: Thomson Reuters Foundation - Tue, 3 Jan 2012 22:53 GMT
Author: Reuters
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(Adds company comment)

WASHINGTON, Jan 3 (Reuters) - A unit of Danish shipping and oil group A.P. Moller-Maersk has agreed to pay ${esc.dollar}31.9 million to settle claims it overcharged the U.S. military for transporting cargo to support American troops in Afghanistan and Iraq, the U.S. Justice Department said.

Maersk Line Limited was accused of overbilling for operating refrigerated containers in Karachi, Pakistan and American bases in Afghanistan, as well as charging for tracking and security services that were not provided, among other things.

The company was also accused of charging for delivery delays that were wrongly attributed to the U.S. government and for allegedly failing to pass on rebates for storage fees that a Maersk subcontractor in Kuwait received, the Justice Department said.

The settlement resolves a whistleblower lawsuit filed by a former industry insider. The individual, Jerry Brown, will receive ${esc.dollar}3.6 million as his share of the settlement, according to the Justice Department.

Maersk blamed the mistakes in part on operating in war-time conditions that led to inaccuracies in documentation such as invoices and also that sometimes information was only partially reported or delayed.

The company said that, once it learned of the allegations, an internal review was conducted and Maersk turned over the findings to the Pentagon and the Justice Department. Of the ${esc.dollar}31.9 million, almost ${esc.dollar}13.5 million was in penalties and the remaining amount was overcharges and interest, Maersk said.

"Maersk and U.S. military leaders have worked together over the past few years to improve their dialogue and communication so that any contractual disagreements are handled as early as possible in the contracting process," the company said.

Another shipping line, APL Ltd, a subsidiary of Singapore-based Neptune Orient Lines Ltd, agreed in 2009 to pay ${esc.dollar}26.3 million to settle similar allegations of overcharging the Pentagon for moving containers to Iraq and Afghanistan. (Reporting By Jeremy Pelofsky; editing by Andre Grenon)

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