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Thu 8 Dec 2011 10:34 AM

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Agility unit sues US to lift military freeze

Kuwait firm says business has ‘collapsed’ since defrauding charge from US military

Agility unit sues US to lift military freeze
Agilitys DLA said business had collapsed since the freeze

A unit of Agility, the Kuwaiti storage and logistics provider, sued to lift a freeze on government contracts imposed after the company was accused of defrauding the US.

Agility Defense & Government Logistics Services called the freeze “capricious” in a filing in federal court in Alabama. The Defense Logistics Agency, or DLA, an arm of the US Department of Defense, suspended the unit from new contracts 10 days after Agility was indicted in November 2009.

Agility, which supplied food to US forces in Iraq, paid premium prices for goods to inflate its profits, according to the indictment. Agility, formerly known in Kuwait as Public Warehousing Co, pleaded not guilty in August to the allegations in federal court in Atlanta.

DLA acknowledged that Alabama-based Agility Defense & Government, or DGS, faced “no allegations” of wrongdoing, the company said in the complaint.

DGS’s business “has collapsed” since the indictment and its workforce has shrunk to fewer than 50 employees from about 1,200, according to the complaint.

DLA’s “shifting, inconsistent and unsubstantiated rationales for suspension render its continued suspension of DGS and Agility International arbitrary and capricious,” the company said. The claims of unfairness were brought under the Administrative Procedures Act.

To satisfy the defense agency, DGS offered to restructure and end its affiliation with Agility, according to the complaint.

Mimi Schirmacher, a spokeswoman for the DLA, said the agency doesn’t comment on pending litigation.

The criminal case in Atlanta continues. During Agility’s arraignment in July, US District Judge Thomas Thrash said new witnesses could be subpoenaed to “investigate new potential charges.”

Richard Deane Jr., a Jones Day partner and former US attorney in Atlanta who represents Agility, declined to comment on the criminal case. Jim Cox, a DGS spokesman, didn’t immediately return a call for comment.

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