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Wed 10 Dec 2014 01:25 PM

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$389m fine for Dubai-based defence group

Contractor admits overcharging for food and water for US military in Afghanistan

$389m fine for Dubai-based defence group
(AFP/Getty Images)

A company operating from Dubai and its Swiss-based partner pleaded guilty before a US court and agreed to pay $389 million for overcharging for food and water for the US military in Afghanistan.

Pleading guilty on Monday in a court in Pennsylvania, Supreme Foodservice, a Swiss-based logistics company, and Supreme Foodservice from Dubai, admitted to using Sharjah-based Jamal Ahli Foods Co (Jafco), which was under Supreme’s control, to overcharge for food and bottled water.

The court documents state that the companies marked up the price of non-alcoholic beer by 125 percent and milk and juice products by 55 percent from 2005 to 2009.

The supply of these products to the US troops serving in Afghanistan was based on an $8.8 billion worth contract Foodservice GmbH signed with the US Defence Logistics Agency – Troop Support (then known as Defense Supply Centre of Philadelphia) in June 2005.

The fraud came to light after a separate 2010 law suit filed by whistle-blower Michael Epp, a former Supreme employee in Dubai.

Having pleaded guilty to major fraud against the United States, each of the companies agreed to pay $96m in fines, as well as joint payments of $48m in restitution and $10m in criminal forfeiture.

Supreme group also agreed on Monday to pay $101m to settle the civil law suit with Epp.

It also accepted full responsibility in a statement while expressing deep regret for past actions.

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