By DANA LIEBELSON
Taxpayers were outraged in August upon news that the Pentagon was failing to return shipping containers used in Afghanistan and Iraq on time--racking up $720 million in late fees over the last decade. As it turns out, this may not have been merely an example of military negligence. Thanks to a whistleblower, the government will be paid $31.9 million by a contractor to resolve allegations of fraud.
Maersk Line Limited is a contractor that makes 20-foot containers used for storage, shelter, and building materials in Afghanistan and Iraq. A USA Today investigation found that when the military returned just one shipping container late, it could cost taxpayers more than $2,200. Of the shipping companies charging these kinds of late fees, Maersk Line was a top recipient.
But thanks to a former industry insider, taxpayers won’t be footing an astronomical bill. Whistleblower Jerry H. Brown II filed a qui tam lawsuit under the False Claims Act in 2007, alleging that Maersk Line inflated its invoices in various ways—one of which was billing excessive late fees by failing to account for cargo transit times and a contractual grace period.
Maersk Line has not acknowledged wrongdoing, but has settled the case, agreeing to pay the government $18.4 million in overcharges and interest, and $13.5 million in penalties, according to The San Francisco Chronicle. Brown is also entitled to $3.6 million under the False Claims Act.
Brown was fortunate enough to be covered by the False Claims Act—but many other contracted would-be whistleblowers are not so lucky. The act only covers fraud, and does not protect or incentivize those who witness waste, mismanagement, and other illegalities. That’s why POGO has thrown its support behind the Non-Federal Employee Whistleblower Protection Act of 2011 (S.241), which would fill these gaps.
“Our men and women in uniform overseas deserve the highest level of support provided by fair and honest contractors,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice, in the Justice Department press release.
Dana Liebelson is POGO's Beth Daley Impact Fellow.
Image via redyamflan.
Conventional wisdom states the government has very deep pockets and nobody will notice over charges.
Posted by: Dave Kisor | Jan 05, 2012 at 05:49 PM