Justice Dept.: Navy, Coast Guard bilked by ship services contractor

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The aircraft carrier USS Dwight D. Eisenhower transits the Atlantic Ocean last month. A Justice Department lawsuit against Inchcape Shipping Services claims the company inflated invoices for services to the carrier in 2009, resulting in a $222,788 profit during a four-day port visit. (Jameson E. Lynch/U.S. Navy)
From Stripes.com
The aircraft carrier USS Dwight D. Eisenhower transits the Atlantic Ocean last month. A Justice Department lawsuit against Inchcape Shipping Services claims the company inflated invoices for services to the carrier in 2009, resulting in a $222,788 profit during a four-day port visit. (Jameson E. Lynch/U.S. Navy)

Justice Dept.: Navy, Coast Guard bilked by ship services contractor

by: Erik Slavin | .
Stars and Stripes | .
published: November 21, 2015

YOKOSUKA NAVAL BASE, Japan — A defense contractor overcharged the Navy millions of dollars for sewage removal and other services at ports around the globe, according to a federal complaint filed Wednesday.

The complaint against Inchcape Shipping Services adds the Justice Department as a plaintiff to an existing case filed by whistleblowers, who brought allegations of inflated invoices, double-billing, kickbacks and fraudulent practices against the ship husbanding services contractor.

Inchcape, or ISS, also spent $234,000 on entertainment expenses that “could constitute improper monetary arrangements with Navy officials,” the complaint said.

Inchcape, which owned multimillion-dollar Navy contracts in Africa, the Middle East and the Americas, is one of two major ship contractors to come under federal scrutiny recently.

Earlier this year, the president of Glenn Defense Marine Asia, which provided services in the Asia-Pacific region for decades, pleaded guilty to bribing Navy officials in exchange for classified information that led to as much as $20 million in overbilling.

Inchcape denied the charges in a statement published Thursday in Heavy Lift and Project Forwarding International, a trade publication.

“ISS wholly refutes these historic allegations and disagrees that there has been wrong-doing,” the statement said. “The company sees no basis for the complaint and objects to the way the company has been characterized … ISS will cooperate fully with the U.S. authorities and looks forward to presenting the full case during trial, where it will vigorously defend its good name.”

In the Persian Gulf, the Navy paid Inchcape $280 million for services in 11 nations in 2005-14, according to a Justice Department statement. Inchcape “routinely inflated the prices on multiple vendor invoices by 15-20 percent or more and pocketed the difference as profit,” the statement said.

An audit found that Inchcape’s Dubai and Bahrain offices overbilled the Navy by more than $5 million during operations from 2005 to 2008. When confronted with the audit, the company returned only $362,000, according to the complaint.

“In billing the Navy for husbanding service provided in ports throughout the world … ISS has engaged and continues to engage in a scheme to overcharge the United States by submitting false and inflated claims for payment, and by failing to refund identified, significant overpayments,” the complaint said.

Akbar Khan, Inchcape’s former regional director in Southwest Asia and Africa, trained company employees to overcharge the Navy and Coast Guard, according to whistleblower testimony.

During a 2007 company workshop, Khan said “playing with the volumes [of sewage] is how you make your money,” according to accounts from two whistleblowers cited in the complaint.

The whistleblowers include three former company executives, one who is a former Naval Reserve intelligence officer, and another who is a former FBI agent.

In 2011, Khan left Inchcape and took a job with Multinational Logistic Services, the Navy’s largest ship supply company, according to a December 2013 New York Times report.

Khan denied doing anything improper, the report said. The Times reported that MLS placed Khan on leave in response to the story’s allegations.

Secretary of the Navy Ray Mabus ordered a review of ship husbanding services contracts and processes following the allegations against Inchcape and GDMA in 2013.

The case against GDMA remains open, according to federal prosecutors. GDMA president Leonard Glenn “Fat Leonard” Francis’ guilty plea earlier this year came after multiple ship commanders, an enlisted sailor and a Naval Criminal Investigative Service special agent pleaded guilty to providing GDMA with ship schedules and classified information in exchange for bribes.

Other officers, including two admirals, were found not to have engaged in criminal activity, but were censured and relieved from duty for “failure of leadership” related to dealings with GDMA.

slavin.erik@stripes.com

Twitter: @eslavin_stripes

Tags: Yokosuka Naval Base, News
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