Inchcape To Pay $20 Million For Overbilling Navy

This article was updated with a statement from Inchcape.

Inchcape Shipping Services Holdings Limited and its subsidiaries agreed to pay $20 million to resolve allegations they knowingly overbilled the U.S. Navy in ship husbanding services from 2005 to 2014.

A Justice Department lawsuit alleged the marine services contractor knowingly overbilled the Navy for services including providing ships with food, subsistence items, waste removal, telephone services, ship-to-shore transportation, force protection services, and local transportation over nearly a decade.

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Inchcape provided these services to the Navy at ports in southwest Asia, Africa, Panama, North America, South America, and Mexico. The company is headquartered in the United Kingdom.

The lawsuit said Inchcape submitted invoices that overstated the quantity of goods and services provided, billing at rates in excess of applicable contract rates, even double-billing for some goods and services. This overbilling allegedly violated the False Claims Act.

The lawsuit was first brought under whistleblower provisions of the act by three former employees of Inchcape. The law allows private citizens to bring a suit on behalf of the U.S. for false claims and share in any recovery and the government may intervene, as it did here. The former employees will receive about $4.4 million.

The False Claims Act allows the government to recover damages and penalties three times higher than the damage done.

Because this case, U.S. ex rel Rudolph v. Inchcape Shipping Services Holdings Limited, et al, was settled, the claims stand as allegations and no liability was determined.

The case was handled by the Justice Department Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office of the District of Columbia. The department was assisted by the Department of the Navy and Naval Criminal Investigative Service (NCIS).

“This settlement demonstrates that the Department of the Navy will continue to hold contractors accountable for the agreements they make to supply our fleet. The Department expects strict adherence to higher standards within the Department and expects the same from its contractors,” Secretary of the Navy Richard Spencer said in a statement.

“We trust contractors supporting our warfighters to act with the utmost integrity and expect them to comply with their obligations to bill the government as called for by their contracts. This settlement reflects our office’s strong commitment to holding accountable those who violate these fundamental principles, no matter where they may be located,” U.S. Attorney for the District of Columbia Jessie K. Liu added.

On May 30 an Inchcape spokesperson said the company disputes the allegations and while confident in its legal opposition, the action was filed eight years ago and is still in the earlier stages.

“Absent this settlement, the litigation would likely continue to distract Inchcape personnel and drain resources for years to come.”

Therefore the company entered the settlement because “it must put this matter behind it, so that the company can focus on the future.”





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