November 19 - Inchcape Shipping Services (ISS) says it will 'vigorously defend its good name' following yesterday's announcement by the US Department of Justice that the US government has joined a lawsuit against the UK-headquartered company and a number
The whistleblower suit against ISS was brought under the US False Claims Act by three former senior employees of the company who are represented by the law firms of Vogel, Slade & Goldstein and Katz, Marshall & Banks of Washington DC.
The former employees are Larry Cosgriff, a retired Naval Reserve intelligence officer and senior vice president of ISS Government Services from 2007 to 2010; Noah Rudolph, a former special agent for the Federal Bureau of Investigation and cfo of ISS's government services division from 2008 to 2009; and Andrea Ford, an ISS government services manager from 2007 to 2010.
The whistleblower complaint alleges that all three resigned from the company after discovering a wide-ranging overbilling scheme and bringing it to the attention of the company's then ceo Claus Hyldager and other senior executives, only to be rebuffed in their effort to stop the fraud and prevent further illegal acts. In July 2009 the three contacted the government to provide evidence of the alleged worldwide fraud against the US Navy. Hyldager resigned from ISS three months ago.
Commenting on the justice department's decision to proceed with her clients' False Claims Act action against ISS, whistleblower lawyer Janet Goldstein stated: "This case should serve as a wake-up call to corporations not to ignore employees who step forward to report wrongdoing. The complaint alleges repeated efforts by our clients to persuade ISS executives to come clean with the US Navy and return the ill-gotten gains - efforts that were ignored by ISS. Our clients concluded they were left with no other choice but to contact the government."
ISS provides a wide range of husbandry services, such as arranging for pilots and tugs, hiring on-shore vehicles, procuring food and removing sewage for thousands of port calls by US Navy ships throughout the world.
"Under its husbandry contracts, ISS pledged to 'bring the highest level of commitment' to obtaining goods and services for Navy ships at fair prices," said co-counsel Alison Asarnow. "Our clients' complaint alleges that, instead, ISS conspired with its subsidiaries and vendors to gouge the US Navy wherever and whenever possible."
The whistleblower complaint describes a host of methods that ISS allegedly used to overcharge Navy ships. These methods included presenting false and marked-up invoices from vendors; maintaining a double set of invoices in its files to conceal the overbillings from auditors; concealing discounts, rebates and other credits from vendors that it should have passed on; failing to report its own financial interest in vendors it hired for services; and double-billing for fixed price items and again for goods and services that should have been included in the fixed-price charges.
The lawsuit seeks three times the amount of damages sustained by the USA as a result of ISS's alleged false billings. The complaint was filed under seal on June 30, 2010 in the US District Court for the District of Columbia and made public yesterday.
In an official statement ISS said: "ISS is fully committed to observing all laws and regulations, and to maintaining the highest standards when conducting business with customers, including the US Government.
"ISS wholly refutes these historic allegations and disagrees that there has been wrong-doing.
"The company sees no basis for the complaint and objects to the way the company has been characterised.
"As expected and valued by customers like the US Navy, the company operates with professionalism and has a clear commitment to ethics, compliance and fair charging.
"ISS will cooperate fully with the US authorities and looks forward to presenting the full case during trial, where it will vigorously defend its good name."