Forwarders respond to Justice announcement
Freight forwarders Panalpina and CEVA Logistics responded to last week’s U.S. Justice Department statement that it has intervened in a whistleblower lawsuit against Kellogg Brown & Root (KBR).
The suit alleges employees of the two freight forwarders doing business with the companies provided unlawful kickbacks to KBR transportation department employees.
KBR is the prime contractor under the Logistics Civil Augmentation Program (LOGCAP III) contract for logistical support of U.S. military operations in Iraq.
The government said it is pursuing allegations that Eagle Global Logistics and Panalpina provided unlawful kickbacks in the form of meals, drinks, tickets to sports events and golf outings to KBR employees. The government said it would seek damages and penalties under the False Claims Act and common law, as well as penalties under the Anti-Kickback Act. Eagle Global Logistics has since merged with TNT Logistics and become CEVA.
“CEVA Logistics is aware of the recent press reports in relation to allegations made under the False Claims Act in a whistleblower lawsuit originally filed under seal in 2004. All of the claims and allegations against EGL entities in that lawsuit were previously settled and no EGL or CEVA company is a party to the ongoing lawsuit,” said a CEVA spokesman.
Panalpina said its Houston office along with other parties “has been named as a defendant in a civil complaint filed years ago but only served in April 2010. In the complaint it is alleged that Panalpina and one of its main competitors have provided unlawful entertainment to employees of Kellogg, Brown and Root under Logistics Civil Augmentation Programs.”
Panalpina said “the alleged entertainment expenses — which are still under review — are comparably small. Allegations stem from activities of a former employee who left Panalpina in 2007.”
Panalpina said that since then it has implemented a compliance program and that it is “confident that today’s program and advanced employee training would have avoided incidents such as these as small in monetary amounts as they are.”
Panalpina said it was confident it would reach a settlement with the U.S. authorities soon. Respective negotiations are at an advanced stage and Panalpina expects its financial exposure to be limited. Further Panalpina said it has been informed that it is not the subject or the target of a criminal investigation into LOGCAP related activities.