US authorities slapped a new indictment on Monday on Kuwaiti logistics firm Agility in a case involving alleged overcharging of the US military in the Middle East on multibillion dollar contracts.
But the indictment remained under seal and it was unclear whether it would include fresh charges against Agility, the Gulf’s biggest logistics firm and the main food supplier to the US military in Iraq and Kuwait.
Agility is in talks with the US Department of Justice to resolve a November indictment accusing it of overcharging the US Army over 41 months on $8.5 billion in contracts to provide food to soldiers in Iraq, Kuwait and Jordan.
If convicted of those violations under the False Claims Act, prosecutors say the company faces probation and a fine of up to twice the gain it realized or twice the loss to the United States.
The company, formerly Public Warehousing Company Co(PWC), said in a statement on Monday the new indictment was “regrettable” and said the original indictment was not properly served on it by US authorities.
The fresh indictment could serve to weaken Agility as it seeks to negotiate a settlement, according to analyst Naser al Nafisi, general manager of Al Joman Center for Economic Consultancy in Kuwait.
Speaking to Reuters, al Nafisi said: “It will make it more difficult to reach a settlement because new charges are new problems.”
At present the company is suspended from bidding for fresh US contracts and if that ban is extended to existing contracts it would be damaging because US contracts account for at least 50 percent of Agility’s turnover, he said.
Agility is one of the most important companies on the Kuwaiti stock exchange.
It was first awarded a prime vendor contract by the U.S. Defense Logistics Agency to supply food for troops in May 2003, around the time of the US invasion of Iraq.
The company says the suit stemmed from a contract dispute it had been working with the government to resolve.
US Magistrate Judge Alan Baverman said he would rule later on Monday on whether the indictment could be unsealed.
Speaking at the hearding, Baverman said: “I will get an order out by the end of the day (Monday) either granting the government’s motion to unseal the superseding indictment or defending the defendant’s motion to keep it under seal for seven days.”
Lawyers for three distinct entities including parent company Agility attended the hearing in Atlanta.
Agility DGS Holdings Inc, which is Agility’s US subsidiary, pleaded not guilty to the sealed indictment.
Baverman entered a not guilty plea on behalf of the parent company. Agility and Kuwaiti subsidiary Agility DGS Logistics Services Company said they were not fully represented in court and declined to plead.
No plea was entered by or on behalf of DGS Logistics.
Agility says the original indictment was legally improper because it was served against the US subsidiary rather than against the parent company named in the indictment.
In a statement, the company said: “By extending the indictment (Monday) against PWC to its affiliates, the US Attorney’s office in Atlanta is acknowledging that it did not properly notify PWC of indictment in November.”
It said: “Today’s action by the US Attorney’s office is an attempt to ‘cure’ its invalid service of process.”
It was unclear whether the company hoped to get the entire case thrown out on this basis, or whether it hoped to use it to strengthen its negotiating position with the government.
Agility posted a 22 percent rise in fourth quarter net profit. The company said on Sunday it could not guarantee reaching a settlement with the US government on fraud charges. (Reuters)
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