Bloomberg News

Agility Pleads Not Guilty to Government Contract Fraud

August 16, 2011

(Updates with Agility statement in third paragraph.)

Aug. 16 (Bloomberg) -- Agility, the Kuwaiti storage and logistics provider, pleaded not guilty to charges it defrauded the U.S. government on a multibillion-dollar contract to feed troops overseas.

Agility, also known as Public Warehousing Co., denied today in federal court in Atlanta accusations that it filed false invoices or conspired to pay premium prices to inflate its profit. Prosecutors said Agility encouraged companies it did business with to inflate costs through practices such as putting hamburgers in unnecessarily expensive packaging.

“Agility welcomes the opportunity to clear its name by having an impartial jury examine its work,” Agility said in a statement. “In bringing this case, the U.S. Department of Justice has criminalized what is, at most, a civil contract dispute.”

The estimated cost of the U.S. contract with Agility at the time it was signed was $4.66 billion, according to the November 2009 indictment. The final bill came to $8.6 billion, the government said. Agility bought food and transported it to U.S. soldiers in Kuwait and Iraq, prosecutors said.

The investigation into the company and its suppliers is continuing, federal prosecutors have said. Lawyers for both sides declined to comment after today’s hearing.

‘Dangerous Conditions’

The case against Agility had been slowed by the company’s claim that it wasn’t properly notified of the charges it faced in the U.S. Agility recently lost a federal appeals court decision on that issue.

Agility maintains that it was open and transparent with the government, which approved its prices, suppliers and business practices for seven years and continued to do so after the indictment, according to the statement.

“From 2003 to 2010, Agility operated under the most dangerous conditions to provide American troops with plentiful, high-quality food,” the company said in its statement. “No military has ever been as well fed in a time of conflict.”

The case is U.S. v. Public Warehousing Co., 09-cr-490, U.S. District Court, Northern District of Georgia (Atlanta).

--With assistance from Sophia Pearson in Philadelphia. Editors: Fred Strasser, Stephen Farr

To contact the reporters on this story: David Beasley at dbeasley3@bloomberg.net; Laurence Viele Davidson at lviele@bloomberg.net.

To contact the editor responsible for this story: Andrew Dunn at adunn8@bloomberg.net.


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