Agility Logistics exclusive: MoD hires company blacklisted in US to sell off Army gear
Monday 10 March 2014
A Kuwaiti firm blacklisted by the US military on major fraud charges has been hired by the British Army to sell its left-over kit in Afghanistan, The Independent has learnt.
Agility Logistics has secured the Military of Defence (MoD) contract to organise the “car boot sales” of equipment that is deemed not valuable enough to ship back to the UK as British forces leave the country.
The desert auctions, held at Camp Bastion in Helmand Province, include everything from Land Rovers and dumper trucks to stranger items including a portable laundry.
The MoD handed the contract for the auctions to Agility even though its parent company was indicted by a US grand jury in 2009 on suspicion of defrauding the US military on contracts worth $6bn to supply US bases in Iraq and Kuwait with food.
Agility, which shipped everything from ice cream to fruit to US soldiers from 2003, was accused of inflating and manipulating prices, defrauding the US military to the tune of $60m. An abortive attempt to settle the claim in 2010 involved a reported $600m proposed payment from Agility to the US government.
US authorities are still pursuing Agility in the courts, and has put the firm on their “Excluded Party List System”, a blacklist of firms excluded from government contracts. Agility deny any wrongdoing.
Commenting on the case in 2009, the US Department of Justice said: “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.” Despite the ongoing action, the MoD in 2012 awarded Agility the contract to sell off British equipment ahead of the withdrawal of its remaining troops in Afghanistan. The PM has promised no British troops will remain in the country in a combat role after the end of 2014.
As well as the desert auctions, which began this month, the British Army’s used kit is also displayed, eBay-style, on an Agility website. When the firm won the contract, called “Bastion Drawdown Project”, Dan Mongeon, chief executive of the firm’s defence business, said the deal “broadens and builds on” Agility’s “relationship with the MoD”. The value of the contract has not been made public. Mr Mongeon is one of a number of retired US soldiers Agility hired when they began expanding into military contracts, which have helped the company grow into the Middle East’s biggest logistics firm, with a turnover of £3bn and 22,000 employees in more than 100 countries.
Questioned about Agility’s contract, An MoD spokesman said: “We adhere to strict procurement regulations and all our potential contractors are thoroughly scrutinised. Agility were awarded the contract following an open competition because they scored highest and offered the best value for money. We are aware of the US indictment against their parent company but they have not been convicted and excluding Agility from the tender process would have breached EU procurement regulations.”
Government sources indicated that treating Agility differently from other companies bidding for the contract, or excluding them from the work, could have resulted in the company taking legal action. Agility vice president Jim Cox told The Independent it was picked for the Afghan contract because it could do “difficult jobs in war zones”. He added: “UK troops and taxpayers have been extremely well served. We’ve saved the MoD millions of pounds in transportation costs and generated millions more in sales from unwanted equipment and material. Our performance has brought accolades from the MoD.”
He added the criminal fraud charges related to the firm’s “prices”, not their “performance”. Agility said the case should be a “civil contract dispute not a criminal matter”.
What is Agility Logistics?
Agility Logistics is one of Kuwait’s largest non-oil companies. The company was set up as the government-owned Public Warehousing Company (PWC) in 1979.
Oil-rich Kuwait relies heavily on imports for all consumer goods, so warehousing is big business. The company was privatised in 1997 and expanded to become the biggest logistics – transport and warehousing – group in the Middle East, with a £3bn turnover.
Contracts to supply US military bases in Kuwait and Iraq were an important part of that expansion. Agility – PWC was renamed in 2004 – hired retired US military personnel to help win these contracts. The contracts later gave rise to US criminal fraud charges.
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