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World’s Largest Container Shipping Company Pays Federal Government $31.9 Million to Settle Lawsuit

Last week the U.S. Department of Justice (DOJ) announced that Virginia-based container shipper, Maersk Line Ltd., and its Denmark-based affiliate, Maersk Line, entered into a settlement agreement in which Maersk will pay the federal government nearly $32 million to resolve allegations that the companies submitted false claims involving cargo shipments to U.S. military personnel in Afghanistan and Iraq.

The DOJ brought the suit in the U.S. District Court for the Northern District of California under the whistleblower provisions of the False Claims Act (FCA). The suit was initially filed in 2004 against another shipping firm, American President Lines (APL), by its former employee, Jerry H. Brown. In 2007 the suit was amended to include Maersk as a defendant.

APL agreed to settle the suit with the government for $26.3 million in 2009 with the whistleblower, Mr. Brown, receiving $5.19 million. Mr. Brown is entitled to $3.6 million of the current settlement with Maersk.

According to the allegations, the companies “inaccurately billed the U.S. military for certain…services rendered during war-time conditions in Iraq, Pakistan, and Afghanistan.” Specifically, the DOJ alleged that Maersk “knowingly overcharged the Department of Defense to transport thousands of containers from ports to inland delivery” and that Maersk “inflated its invoices in various ways” including overcharging the government.

Maersk attorney, James Philbin, claims that “once Maersk became aware of the allegations [it] commenced an extensive internal review…and voluntarily disclosed these findings” to the government.

U.S. Attorney for the Northern District of California, Melinda Haag, noted that “contractors that submit false claims for monies they are not owed cost the government millions of dollars every year,”  and that this settlement “should send a strong signal that the government is committed to safeguarding taxpayer funds by ensuring that contractors operate ethically and responsibly.”

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