Maersk Settles Alleged Contract Fraud for $8.7M

For the second time in less than three years, Danish shipping conglomerate Maersk paid dearly to resolve allegations of defrauding the U.S. government.

Last week, the United States Attorney’s Office for the Southern District of Illinois announced that Maersk Line Limited paid the government $8.7 million to settle claims that it submitted forged documents on a contract to ship cargo to military outposts in Afghanistan. The government allegedly found 277 instances in which claims verifying receipt of shipments in Afghanistan contained forged signatures. The settlement did not include an admission of wrongdoing.

When asked about the settlement, Maersk reminded the Project On Government Oversight that the U.S. Attorney praised the company’s cooperation in the investigation and its overall track record as a military supplier. “Maersk Line Limited is and has been a provider of transportation services to the United States Military for many years,” company general counsel Caroline Pontoppidan told POGO in an emailed statement. “As noted in the Department of Justice’s press release, [Maersk has] successfully delivered thousands of shipments in war-zone like conditions,” she wrote.

Lest we forget, this is not the first time Maersk has been accused of fraud on a federal contract. In January 2012, Maersk paid almost $32 million to settle allegations of overcharging the military. In that case, a whistleblower claimed the company fraudulently inflated invoices for the shipment of thousands of refrigerated containers to troops in Iraq and Afghanistan.

Maersk is one of the companies POGO tracks in our Federal Contractor Misconduct Database. The company is a big player in the federal marketplace, having received more than $3.7 billion in contracts over the last five years. Before last week, Maersk had five instances of misconduct and a total of $52.9 million in fines, settlements, and penalties. It has racked up multi-million dollar penalties for violating the U.S. embargo on Iran and Sudan, patent infringement, and workplace injuries. Maersk is currently embroiled in negligence lawsuits filed by crewmembers of the Maersk Alabama, whose ordeal aboard that ship in April 2009 at the hands of Somali pirates was depicted in the 2013 film Captain Phillips.

Last week’s Maersk settlement was the textbook definition of teamwork. Attorneys from the Justice Department were assisted by investigators from four different Pentagon offices and the Special Inspector General for Afghanistan Reconstruction. Working together, they were able to recover a sizable amount of taxpayer money.