Water prices for U.S. troops in Afghanistan were grossly inflated — sometimes almost fourfold — from 2005 to 2009 in a scheme by two foreign companies.
Supreme Foodservice GmbH and Supreme Foodservice FZE, private companies from Switzerland and the United Arab Emirates, respectively, fraudulently inflated the prices of food and water sold to the Department of Defense, according to the Department of Justice.
Ultimately, the fraud cost the U.S. government $48 million. The Supreme companies pleaded guilty and were fined almost $300 million Dec. 8, 2014.
“The civil resolutions and agreements reflect the Justice Department’s continuing efforts to hold accountable contractors that have engaged in war profiteering,” Acting Assistant Attorney General Joyce R. Branda said in a statement.
The conspirators sold half-liter 24-packs of drinking water at a flat rate of $6.45. However, according to court documents, the sales should have ranged from between $1.64 to $5.03. The actual mark-ups ranged from 28 to 300 percent.
Jamal Ahli Foods Co. LLC, a middleman controlled by the Supreme companies, would inflate food and water sales to its operators. This made the conspirators’ additional mark-ups to the U.S. appear legitimate, according to DOJ.
“Emails between executives at the companies reveal [their] deliberate decision to inflate the prices,” DOJ said.
Water was not the only product on which the companies manipulated the federal government. In one example, one of the companies ordered Jamal Ahli to increased their mark-up on non-alcoholic beer from 25 percent to 125 percent.
Also, the companies misled the U.S. by altering invoices to reflect cheaper prices or by claiming that the products were of high quality.
In 2007, the two companies bribed a fired executive with $476,740 to withhold information about the fraud, according to the government.
Ultimately, both companies were caught and jointly paid $48 million in restitution, $10 million in criminal forfeiture and $38.3 million to the Department of Defense as a refund for overpayments, as well as $96 million each in criminal fines.
Additionally, Supreme Group B.V. and several subsidiaries agreed to pay $146 million from related civil suits connected with over-billed fuel and falsely billed shipping.
The lawsuit was filed by a former Supreme GmbH director, Michael Epp, under the whistleblower provision of the False Claims Act. He will receive $16.6 million.
