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The global supply chain management company argued the U.S. government should have delivered papers to its parent company, Public Warehousing Co., in Kuwait rather than a U.S. office of its Agility Defense & Government Services unit.
U.S. Magistrate Judge Alan Baverman recommended to the U.S. District Court in Atlanta that the case not proceed, saying the government violated the company's due process rights. He also rejected the Justice Department's claim that Agility is a 'fugitive.'
Prosecutors responded by asking that the remaining charges against Agility DGS Holdings be dropped so that the subsidiary isn't punished for the parent company's wrongdoing, the Associated Press reported.
In July the U.S. Attorney for the Northern District of Georgia filed a motion to dismiss the case against Agility DGS Holdings, foreshadowing some of Friday's events.
Prosecutor Barbara Nelan said that investigators are still gathering details on the company's contracts and did not rule out a new indictment for Agility.
The Justice Department began investigating Agility in 2007 for not passing on supplier rebates to reduce food costs and indicted the company last November. It also charged the company with inflating fees by asking vendors to manipulate the way the products were packed, enabling it to bill the government twice as much as it should have.
Agility has tried to settle the case out of court while trying to stop it moving forward on technical grounds. It claims the dispute is a civil matter related to interpretation of a contract and should not be criminalized.
'Agility's prices, suppliers and business practices were disclosed to, approved and routinely reviewed by its U.S. government customer,' Agility said in a statement.
The case has hurt Agility, which is suspended from bidding on U.S. government contracts until the case is resolved. The U.S. Defense Logistics Agency extended Agility's work on the food contract until Dec. 4 because of delays in the transition to Anham, a Dubai-based conglomerate, that will take over the job of supplying troops. ' Eric Kulisch
