Agility pleads not guilty, fraud case proceeds

Agility pleads not guilty, fraud case proceeds    Agility, the Kuwait-based global logistics provider, pled not guilty Tuesday to charges it ripped off the U.S. government on a huge contract to supply food to troops in Iraq and Kuwait.
   The Justice Department began investigating Agility in 2007 and subsequently indicted the company in 2009, but the case has been slowed by various filings and procedural issues. A U.S. appeals court recently rejected Agility's claim that the prosecution did not properly serve papers against parent company Public Warehousing Co., the official defendant, moving the case forward.
   Tuesday's hearing in Atlanta was a procedural step setting the stage for a trial sometime in the future.
   The government contends that Agility submitted inflated bills and false claims. Another practice it allegedly used was to pocket discounts from vendors, who were encouraged to inflate the price of supplies, rather than pass the savings onto the Defense Department. The indictment charges Agility with overcharging the government more than $68 million on two contracts worth $8.5 billion.
   In a statement, Agility reiterated it did not inflate the price of its services to the military and that the disagreement over billing should be handled as a contract dispute, not a criminal matter.
   'From 2003 to 2010, Agility operated under the most dangerous conditions to provide American troops with plentiful, high-quality food. No military has ever been as well fed in a time of conflict. Agility was open, transparent and accountable to the U.S. government, which approved its prices, suppliers and business practices for seven years — and continued to approve them even after the company was indicted. Agility received some of the highest U.S. government audit scores ever given to a contractor. By key industry benchmarks, Agility outperformed companies that work in the U.S. domestic food-service industry,' it said.
   The statement went on to say, 'Agility delivered unparalleled value for American taxpayers. It eliminated the need for an additional 3,000 to 5,000 uniformed troops in theater. It built a supply chain that extended 1,000 miles through a war zone, assuming all risk for inventory, infrastructure and equipment, and absorbing millions in losses for damaged vehicles and lost cargo. Thirty-three Agility employees were killed and 262 wounded in performance of their jobs.'
   The work was performed by Agility's Defense and Government Services subsidiary.
   Agility, which has been barred from bidding on any new government contracts until the case is resolved, has been unable to negotiate a settlement with the government. The lost business from the U.S. government has severely hurt the company, which two days ago reported second quarter net profit fell 57 percent versus a year ago. Agility has tried to adapt by focusing on its Commercial unit that provides logistics services to the private sector.