US fines Maersk subsidiaries for container weight fraud

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The following is the text of a report from IHS Fairplay:

(WASHINGTON) — Maersk Group subsidiaries Damco and Farrell Lines have paid a $3.7 million fine for using false container weight invoices to bill U.S. military cargo.

U.S. investigators found that employees of Damco, a logistics and freight forwarding division of Maersk, falsified 563 container weight tickets submitted by Farrell Lines, which operates three U.S.-flagged ro-ro carriers through Maersk’s U.S. subsidiary Maersk Line Ltd. (MLL).

Damco and Farrell Lines were under contract with the U.S. Transportation Command, the logistics unit of the U.S. Department of Defense (DoD), to move DoD and other government cargo in and out of Afghanistan.

The price of the contract was based almost exclusively on the weight of the shipments. Container weights documented using weight tickets issued by a certified commercial scale for each container were required to be included with the billing invoices, according to prosecutors.

“Determined federal investigators and the attorneys in my office will continue to strive to ensure that dollars paid from the public fund are properly accounted for and that value is received,” said U.S. Attorney James Porter.

It was not the first time Maersk’s U.S. subsidiaries have been fined for bilking the U.S. military on transportation charges. In January 2012, MLL agreed to pay $31.9 million to resolve allegations that it overcharged the U.S. military for overseas shipments.

In that case, the U.S. Department of Justice (DoJ) contended that MLL inflated invoices by overbilling the rate to plug reefer boxes into an electricity source at a port in Karachi, Pakistan, and at U.S. military bases in Afghanistan.

MLL also allegedly billed for delivery delays improperly attributed to the government, and for container GPS-tracking services that were not provided or only partly provided, according to the DoJ.

By Professional Mariner Staff