Two Maersk Group subsidiaries, Farrell Lines and Damco USA, have been forced to pay the US government a total of $3.66m in civil penalties (fines) for overcharging the Pentagon for shipments in and out of Afghanistan.
US investigators found that employees of Damco, a logistics and freight forwarding division of Maersk, falsified 563 container weight tickets submitted by Farrell Lines, which operates three US-flagged ro-ro carriers through Maersk’s American subsidiary Maersk Line Ltd. (MLL). They used false container weight invoices to bill US military cargo.
Damco and Farrell Lines were under contract with the US Transportation Command, the logistics unit of the US Department of Defence (DoD), to move DoD and other government cargo in and out of Afghanistan.
The price of the contract was based almost exclusively on the weight of the shipments. Container weights documented using weight tickets issued by a certified commercial scale for each container were required to be included with the billing invoices, according to prosecutors.
“Determined federal investigators and the attorneys in my office will continue to strive to ensure that dollars paid from the public fund are properly accounted for and that value is received,” commented US Attorney James Porter.
It’s not the first time Maersk’s US subsidiaries have been fined for bilking the US military on transportation charges. In January 2012, MLL agreed to pay USD31.9 million to resolve allegations that it overcharged the US military for overseas shipments.
In that case, the US Department of Justice (DoJ) contended that MLL inflated invoices by overbilling the rate to plug reefer boxes into an electricity source at a port in Karachi, Pakistan, and at US military bases in Afghanistan.
MLL also allegedly billed for delivery delays improperly attributed to the government, and for container GPS tracking services that were not provided or only partly provided, according to DoJ.