by Ben Vernia | August 1st, 2010
On July 30, 2010, the Department of Justice announced that Panalpina, a Swiss company with freight-forwarding subcontracts with Kellogg, Brown & Root, had agreed to pay $375,000 to settle claims that it paid kickbacks to KBR’s employees:
The kickbacks, which related to shipping orders issued in connection with KBR’s contract with the U.S. Army to provide logistical support to the U.S. military in Iraq and elsewhere, are alleged to violate the False Claims Act and the Anti-Kickback Act.
The settlement resolves allegations that Panalpina provided kickbacks in the form of meals, drinks, tickets to sports events and golf outings to employees in KBR’s transportation department in order to gain favorable treatment on subcontracts under the U.S. military’s Logistics Civil Augmentation Program (LOGCAP III). Under the LOGCAP III contract, KBR was to provide logistical support for U.S. military operations abroad.
Under the terms of the settlement agreement, Panalpina will pay the United States $375,000 to resolve its potential liability under the False Claims Act, the Anti-Kickback Act and common law theories. The United States previously settled claims with Eagle Global Logistics (EGL) (now CEVA) related to the same lawsuit for a total of $5,050,000. The government is continuing to pursue claims against KBR based on its employees taking kickbacks from Panalpina and EGL.
The case was brought by two qui tam whistleblowers with experience in the air cargo business. They will share a relators’ award of $78,750 (a 21% share).
