APL Pays for Alleged Defense Contract Violations

APL Limited has agreed to pay the U.S. government $9.8 million to resolve allegations that it violated the False Claims Act in connection with a contract to provide GPS tracking of shipping containers in Afghanistan.

APL is an ocean carrier based in Scottsdale, Arizona, and wholly-owned American subsidiary of Singapore-based Neptune Orient Lines Limited.  

The U.S. Department of Justice said that the Department of Defense contract required APL to affix a satellite tracking device to each shipping container transported from Karachi, Pakistan to U.S. military bases in Afghanistan. The United States alleges that APL billed the Department Of Defence for tracking services despite knowing that the tracking devices completely or partially failed to transmit data, or were not affixed to shipping containers. The government also claims that APL attached a single satellite tracking device to two shipping containers despite being required to affix one device to every container.

“Today’s settlement demonstrates our commitment to ensure that contractors doing business with the military perform their contracts honestly,” said Principal Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “We will continue to ensure that there are appropriate consequences for those who knowingly fail to live up to their bargain and misuse taxpayer funds.”

The Department of Justice notes that the claims resolved by the civil settlement are allegations only; there has been no determination of liability.

In 2009, APL Limited agreed to pay the government $26.3 million to resolve allegations that it submitted false claims to the United States in connection with contracts to transport cargo in shipping containers to support U.S. troops in Iraq and Afghanistan. The government alleges that APL knowingly overcharged and double-billed the Department of Defense to transport thousands of containers from ports to inland delivery destinations in Iraq and Afghanistan.

The government alleges that APL inflated its invoices in several ways. For example, APL allegedly billed in excess of the rate it paid to plug refrigerated containers holding perishable cargo into a source of electricity at a port in Karachi, Pakistan; billed in excess of the contractual rate to maintain the operation of refrigerated containers at a port in Karachi and at U.S. military bases in Afghanistan; and billed for various non-reimbursable services performed by APL’s subcontractor at a Kuwaiti port.

APL is not alone in facing such allegations. In 2012, Maersk Line Limited agreed to pay the U.S. government $31.9 million to resolve allegations that it submitted false claims to the United States in connection with contracts to transport cargo in shipping containers to support U.S. troops in Afghanistan and Iraq. The government alleged that Maersk, a wholly-owned American subsidiary of Denmark-based A.P. Moller Maersk, knowingly overcharged the Department of Defense to transport thousands of containers from ports to inland delivery destinations in Iraq and Afghanistan.

For example, Maersk allegedly billed in excess of the contractual rate to maintain the operation of refrigerated containers holding perishable cargo at a port in Karachi, Pakistan, and at U.S. military bases in Afghanistan; allegedly billed excessive detention charges (or late fees) by failing to account for cargo transit times and a contractual grace period; allegedly billed for container delivery delays improperly attributed to the U.S. government; allegedly billed for container GPS-tracking and security services that were not provided or only partially provided; and allegedly failed to credit the government for rebates of container storage fees received by Maersk’s subcontractor at a Kuwaiti port.