Maersk to Pay US $31.9 Million to Settle Suit

Maersk Line Ltd. will pay the U.S. government $31.9 million to settle allegations that the U.S.-flag subsidiary of the world’s largest ocean carrier overcharged the Department of Defense for the transport of thousands of containers to Iraq and Afghanistan.

The Justice Department said the carrier overcharged the military by billing above the contractual rate for the transport of refrigerated containers; added late fees by not accounting for cargo transit times and a contractual grace period; and improperly charged the government for container delivery delays. The A.P. Moller-Maersk subsidiary also was accused of billing the U.S. government for container GPS-tracking devices that were not or only partially provided, and for not crediting themilitary for storage fee rebates received by the carrier at a Kuwaiti port.

“Our men and women in uniform overseas deserve the highest level of support provided by fair and honest contractors,” said Tony West, assistant attorney for the Justice Department’s civil division. “As the Justice Department’s continuing efforts to fight procurement fraud demonstrate, those who put profits over the welfare of members of our military will pay a hefty price.”

The settlement, announced Tuesday, was the culmination of a 2004 whistleblower lawsuit filed against APL by an industry insider, who will receive $3.6 million from the settlement. Maersk was added to the lawsuit in 2007, according to the Virginian Pilot.

Maersk said war-time conditions caused the inaccuracies in documentation, according to a Reutersreport. "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," Reuters quoted the carrier as saying.

Singapore-based APL reached a $26.3 million settlement with the government in 2009.

-- Contact Mark Szakonyi at mszakonyi@joc.com. Follow him on Twitter @Szakonyi_JOC