In 2009, Kuwait called on then Secretary of State Hillary Clinton to intervene with the Justice Department and help nix a criminal fraud case against a Kuwait defense contractor Agility Public Warehousing Company.
The case ended up settling just last week, with the company pleading guilty to theft of government property and paying $95 million for overcharging the Pentagon on food contracts.
In a letter to Clinton dated December 5, 2009, then Kuwaiti Foreign Minister Mohammed Al-Sabah writes that “in consideration of the special relations between our two friendly countries, we ask that this dispute be settled amicably without having to resort to criminal adjudication.”
Kuwait has donated between $5 million and $10 million to the Clinton Foundation.
Foreign donations to the Clinton Foundation became a major issue in the Presidential campaign last year.
Agility was the prime vendor to feed U.S. and coalition troops in Iraq, Iran and Jordan from between 2003 and 2010, securing $8.5 billion worth of prime-vendor food contracts.
As part of the global settlement, Agility will pay $95 million to resolve civil fraud claims, forgo administrative claims against the United States seeking $249 million in additional payments under its military food contracts, and plead guilty to a criminal misdemeanor offense for theft of government funds.
The Pentagon’s Defense Logistics Agency will also release a claim of $27.9 million against Agility and lift its suspension of Agility, as the company has been suspended from federal government contracting for the last seven years after being indicted.
An administrative agreement entered between the Defense Logistic Agency and Agility requires oversight of an Agility entity by an independent corporate monitor and the maintenance of an ethics and compliance program with a number of detailed requirements.
The civil claims and criminal charges arise out of allegations originally raised in a civil whistleblower lawsuit against Agility and another Kuwaiti company, The Sultan Center Food Products Company.
Kamal Mustafa Al Sultan, a former vendor of Agility, filed the lawsuit under the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.
Al Sultan will receive a $38.85 million for his work in bringing the case to justice.
The government alleged that Agility and TSC knowingly overcharged the Department of Defense for locally available fresh fruits and vegetables that Agility purchased through The Sultan Center and falsely charged the full amount of Center’s invoices despite agreeing that Agility would pay 10 percent less than the amount billed.
The United States also alleged that Agility failed to disclose and pass through rebates and discounts it obtained from U.S.-based suppliers, as required by its contracts.
“This is one of the largest military procurement fraud cases in the history of the False Claims Act, passed by Abraham Lincoln to combat war profiteers and one of the largest whistleblower awards ever in a military-procurement fraud case,” said Raymond Moss, Al Sultan’s lawyer. “Mr. Al Sultan’s unrelenting perseverance to see justice done for U.S. taxpayers and the troops who bravely fought in the two Iraq Wars to protect Kuwait, is awe inspiring and a classic David vs. Goliath story. This case proves the power and efficacy of the False Claims Act to right wrongs and expose and deter fraud anywhere in the world.”
The filing of Al Sultan’s lawsuit in 2005 — and its resulting Justice Department investigation — resulted in sweeping governmental changes in prime food vendor contracts to reflect greater pricing transparency, prohibitions on kickbacks and rebates and prompt payment discounts, saving the U.S. government and taxpayers billions of dollars, Moss said.
Moss said that Al Sultan’s whistleblower lawsuit also spawned the initiation of other Department of Justice investigations, whistleblower lawsuits, prosecutions settlements and convictions against other prime vendors and their suppliers for similar conduct.
“Raymond Moss and his team at Moss & Gilmore were highly effective, skilled and tenacious advocates over this entire 13 year battle,” Al Sultan said. “They never took their foot off the gas and, with Department of Justice, went toe to toe against six of the largest and most powerful law firms in the country.”
“As the great ancient Roman politician and lawyer Cicero once said, ‘Any man can make a mistake, only a fool keeps making the same one,’” Al Sultan said.
The company was represented in the criminal case by Richard Marmaro of Skadden Arps, Kristin Tahler of Quinn Emanuel and Richard Deane Jr. of Jones Day,