Inchcape Shipping Services Holdings Limited, one of the world’s largest providers of marine support services, will pay $20 Million to resolve allegations that they violated the False Claims Act by knowingly overbilling the U.S. Navy under contracts for ship husbanding services, the Department of Justice announced today. The company provided goods and services to Navy ships at ports in several regions throughout the world, including Southwest Asia, Africa, Panama, North America, South America and Mexico. Inchcape provided ships with food and other subsistence items, waste removal, telephone services, ship-to-shore transportation, force protection services and local transportation. The lawsuit asserted that from 2005 to 2014, Inchcape knowingly overbilled the Navy for these services by submitting invoices that overstated the number of goods and services provided, billing at rates in excess of applicable contract rates, and double-billing for some goods and services.
The lawsuit was brought under the qui tam, or whistleblower, provisions of the False Claims Act by three former employees of Inchcape. Under the act, a private citizen may bring suit on behalf of the United States for false claims and share in any recovery. The government may intervene in the case, as it did here. The False Claims Act allows the government to recover treble damages and penalties from those who violate it. As part of today’s resolution, the whistleblowers will receive approximately $4.4 million, 22% of the settlement proceeds.
Among other things, the lawsuit alleged:
In the Persian Gulf, during the contract period of 2005 to 2014, Inchcape routinely inflated the prices on multiple vendor invoices by 15-20% or more and pocketed the difference as profit. In one example, the complaint cites a four-day call by the USS Eisenhower in Jebel Ali in 2009 in which Inchcape’s Dubai office booked a gross profit margin of $222,788.
In Panama, Inchcape submitted false claims for Panama Canal tolls; in one example charging over $14,000 for two Navy ships when the actual bill had been less than $7,000.
In South Africa, Inchcape marked up vendor invoices for barges, cranes, forklifts, portable toilets, South African tours, hotel bookings and a host of other goods and services.
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.