Three whistle-blowers will receive about $4.4 million as part of the False Claims Act.
Inchcape Shipping Services Holdings Ltd. has agreed to pay the U.S. government $20 million to resolve allegations that it overbilled the Navy for ship husbanding services overseas.
The Justice Department said the action taken against the U.K.-based subsidiary of the Istithmar World investment firm and United Arab Emirates government-owned Dubai World violated the False Claims Act.
Inchcape provided goods and services to Navy ships at ports in several regions around the world, including Southwest Asia, Africa, Panama, North America, South America and Mexico. Inchcape provided these ships with food, waste removal, telephone services, ship-to-shore transportation, force protection services and local transportation.
The lawsuit, which was filed in 2010, alleged that between 2005 and 2014 Inchcape knowingly overbilled the Navy for these services by submitting invoices that overstated the quantity of goods and services provided, billing at rates in excess of applicable contract rates — by 15 percent to 20 percent — and double-billing for some goods and services.
For example, in Mexico, during port calls to Cozumel, Mazatlán and Acapulco, Navy ships were routinely charged up to 10 times the true cost of services ranging from ship pilots to long-distance telephone airtime, according to court records.
Three former Inchcape employees, Noah Rudolph, Andrea Ford and Lawrence Cosgriff, brought the illicit overbilling activity to the attention of U.S. authorities.
Cosgriff, a retired Naval Reserve intelligence officer, was senior vice president of Inchcape’s Government Services Division from 2007 to 2010. Rudolph, a former FBI special agent, was the chief financial officer of the Government Services Division from 2008 to 2009. Andrea Ford was an Inchcape government services manager from 2007 to 2010. The three were represented by the law firms Vogel, Slade & Goldstein and Katz, Marshall & Banks.
The lawsuit alleged that Cosgriff, Rudolph and Ford resigned from the company after discovering the alleged multimillion dollar overbilling scheme and bringing it to the attention of Inchcape CEO Claus Hyldager and other senior executives, who allegedly rebuffed their efforts to stop the fraud and prevent further illegal acts.
In July 2009, the three contacted the FBI and provided evidence of the alleged fraud against the Navy. Hyldager resigned from Inchcape in 2015, and the company subsequently hired new senior management not implicated in the fraud.
The False Claims Act allows the U.S. government to recover damages and penalties from those who violate it. As part of the resolution, the whistle-blowers will receive about $4.4 million.
“Under its husbanding contracts, Inchcape pledged to ‘bring the highest level of commitment’ to obtaining goods and services for Navy ships at fair prices,” said whistle-blower legal counsel Alexis Ronickher in a statement. “The lawsuit alleges that, instead, Inchcape conspired with its subsidiaries and vendors to gouge the Navy wherever and whenever possible.”
“Inchcape, accordingly, has determined that it must put this matter behind it, so that the company can focus on the future,” a company spokesperson said in a statement, adding that Inchcape “cooperated fully” with the investigation. “The United States, the individual plaintiffs, and the Inchcape entities that are involved have entered the settlement agreement ending this matter without any finding of fault related to the disagreements that underlie the litigation.”
Inchcape will pay $20 million for overbilling Navy
