Back in 1986 when Congress was debating whether it should breathe life into the False Claims Act, Americans were treated to many tales of government contractors run amuck. The Los Angeles Times told of ordinary claw hammers sold to the navy for a “mere” $435 a piece. Or plastic toilet seats that were sold to the air force for $640. The best story involved an ordinary looking piece of hardware, a nut, that McDonnell Douglas sold to the U.S. Navy for $2043 each.
Senator Grassley and Congress brought back the False Claims Act and suddenly defense contractors started behaving better. Fraud is still with us, however, and as long as some folks are motivated by greed, fraud will always be a fact of life.
Thankfully, the United States is unique in that we have a law – the False Claims Act – that pays awards to whistleblowers who step forward to report corporate fraud and wrongdoing.
This week Senator Grassley announced that the Special Inspector General for Afghanistan Reconstruction (SIGAR) is investigating why taxpayers paid $43 million to build a gas station in Afghanistan. (The government has built several similar stations in Pakistan for an average price of $500,000.)
Is there some fraud going on? Probably! Vendors and contractors who bid on U.S. AID contracts are held to high standards. Price gouging and billing for things services not provided is illegal.
The story doesn’t end with the contractors and SIGAR’s investigation, however. Apparently folks in the Pentagon thought it would be helpful to the Afghani people if we built a station that supplies CNG instead of gasoline. One problem. There is neither a ready supply of CNG in Afghanistan nor vehicles that can run on such fuel!
Leaving aside the silliness of the entire CNG concept, contracts in Afghanistan have been rife with fraud. We spoke off the record with one embassy official that says they simply don’t have the staff to monitor every contractor’s behavior. Already one contractor, Supreme Foodservice, was fined millions of dollars for marking up the price of water and beverages supplied to our combat forces in Afghanistan. (Because that case was brought under the False Claims Act, the whistleblower received an award of $16 million.)
Government Aid Fraud and the False Claims Act
Providing a tip to the Special Investigator General for Afghanistan Reconstruction won’t get you a cash award. The False Claims Act, a Civil War era law, can lead to awards of up to 30% of whatever the government recovers from wrongdoers, however. The Act can also protect you from retaliation and provide double damages and legal fees if you do suffer from retaliation such as termination or demotion.
To earn an award under the False Claims Act, one must have inside information about fraud involving government funds or programs. Any reconstruction projects in Afghanistan qualify. Defense contracts and embassy security spending also are subject to the Act.
To be eligible for an award, one must have a lawyer and file a sealed lawsuit in federal court. Generally only the first person to file receives an award so time is often the essence.
Once filed, the government is given a minimum of two months to investigate and must ultimately takeover the case or allow the whistleblower to proceed without government support. The amount of government support impacts on the size of the whistleblower’s award.
Fraud in Pakistan, Iraq and Afghanistan is rampant. If you have first hand knowledge, give us a call. You need not be a U.S. citizen to collect an award. To date, our clients have recovered over $100 million in award monies.
For more information, contact attorney Brian Mahany at or by telephone at +01 202 800 9791 or directly at 414 704 6731. Please feel free to visit our Government Contract Fraud page too.
MahanyLaw – America’s Whistleblower Lawyers