EGL pays $4 million to U.S. government to settle war risk surcharge case

EGL pays $4 million to U.S. government to settle war risk surcharge case    Eagle Global Logistics said it has received an offer from the U.S. Attorney General for the Eastern District of Texas to settle a war risk surcharge case against the Houston-based company for the sum of $4 million.
   EGL was served an administrative subpoena by the Defense Department in 2004 alleging the company had submitted unwarranted war risk surcharges to its customer and Defense contractor Kellogg, Brown & Root.
   EGL cooperated with the investigation by initiating an internal investigation and forensic analysis by accounting firm KPMG. The company said its analysis found that about $1.14 million in war risk surcharges charged by EGL to KBR were not actually imposed on EGL by transportation providers. EGL said it reported these results to the government and fired two employees for violating its code of conduct.
   “Our code of conduct could not be more clear on this subject, and every one of our more than 10,000 employees is required to sign a personal commitment to adhere to the code as a condition of employment,” said James R. Crane, chief executive officer of EGL, in a Dec. 14 statement.
   By cooperating with the federal government, EGL noted that the U.S. Attorney’s Office for the Eastern District of Texas and the Defense Criminal Investigative Service will agree to waive all investigatory expenses and will make no recommendation to the Defense Department for debarment of EGL from future Defense contracts. In addition, the U.S. Attorney’s Office for the Eastern District of Texas will not recommend any criminal charges against EGL, the company said.