U.S. Joins False Claims Act Lawsuit Against Kuwait-Based Companies That Supplied Food to U.S. Troops in Middle East

The United States has joined a whistleblower suit against Public Warehousing Company (PWC), The Sultan Center Food Products Company (TSC), and PWC’s chief executive officer, Tarek Abbul Aziz Sultan Al-Essa, the Justice Department announced today.

The lawsuit, which was filed in the U.S. District Court for the Northern District of Georgia, alleges that since 2003, defendants have violated the False Claims Act by presenting or causing others to present false claims for payment under PWC’s multi-billion contracts with the Defense Logistics Agency to supply food for U.S. service members serving in Kuwait, Iraq and Jordan. The complaint alleges that defendants knowingly overcharged the United States for locally available fresh fruits and vegetables that PWC purchased through TSC. The complaint also alleges that PWC failed to disclose and pass through rebates and discounts it obtained from its U.S.-based suppliers, as required by its contracts.

The case was initially filed under seal by Kamal Mustafa Al-Sultan, the owner of a Kuwaiti company that originally partnered with PWC to submit a proposal on the food supply contracts. The case remained under seal to permit the United States to investigate the allegations and determine whether it would join the lawsuit. Under the False Claims Act, the United States may recover three times the amount of its losses, plus civil penalties.

"We will not tolerate fraudulent practices from those tasked with providing the highest quality support to the men and women who serve in our armed forces," said Tony West, Assistant Attorney General for the Civil Division. "Those who do business with the government must act fairly and in accordance with the law. As this case illustrates, the Department of Justice will investigate and pursue allegations of fraud against contractors and subcontractors, whether they are foreign or domestic."

"The decision to join in this civil lawsuit follows a multi-year probe into abuses in Middle East subsistence prime vendor contracts," said Acting U.S. Attorney F. Gentry Shelnutt. "This Office and the Department of Justice will spare no effort in investigating those persons and companies, regardless of location, who seek to defraud the United States."

The U.S. Attorney’s Office for the Northern District of Georgia also announced today that a grand jury returned a six-count indictment against Public Warehousing Company, also known as Agility, in connection with its prime vendor contracts.

Assistant Attorney General West and Acting U.S. Attorney Shelnutt thanked the joint investigation team, which includes Special Agents with Defense Criminal Investigative Service; the Federal Bureau of Investigation; and U.S. Army Criminal Investigation Command (Army CID), auditors from the Defense Contract Audit Agency, and the Department of Defense, Office of the Inspector General, for the investigation of this defense procurement fraud matter.