An American company known as Chemonics International Incorporated has agreed to pay a $3.1 million fine to the government of the United St
This was revealed on after a court ruling by Deputy Assistant Attorney General Brian M. Boynton in Washington District of Columbia (DC), on Tuesday, February 4.
USAID had awarded the contract for delivering certain healthcare products to Chemonics, which then subcontracted Zenith Carex to handle last-mile delivery (LMD) and long-haul delivery (LHD) services for the project.
However, Zenith Carex, a logistics and freight forwarding company located in Abuja, Nigeria, inflated its invoices for delivering products, including HIV test reagents, in a financial crime that spanned several years, specifically from May 2017 to March 2020.
Investigations revealed that the Nigerian company overcharged Chemonics by basing the charges on truck tonnage instead of the actual weight of the goods being transported.
Chemonics, initially unaware of any wrongdoing, submitted all the fraudulent invoices to USAID for payment.
The US government criticized Chemonics, especially for acting recklessly in failing to identify fraudulent charges by Zenith Carex, which likely had insider assistance in carrying out the fraud.
Assistant Attorney General Brian M. Boynton urged contractors to be accountable for the actions of their subcontractors.
He said, “Government contractors must exercise responsible oversight and management of their subcontractors to ensure contract compliance and appropriate billing.”
Chemonics identified an employee who was suspected of collaborating with Zenith Carex to inflate invoices.
The company dismissed the individual, which led prosecutors to believe that the Washington-based contractor was not involved in the fraud.
However, USAID required Chemonics to pay $3.1 million as part of a settlement, holding the company accountable for its failure to implement proper checks and balances.
Adding that, “Today’s settlement demonstrates the department’s commitment to hold accountable those who knowingly or recklessly submit false claims for payment to the United States no matter where in the world the underlying conduct occurs.”
Sean Bottary, a US Special Agent, who oversaw the case, stated that the settlement demonstrated justice would always prevail and is not constrained by borders.
He said, “This settlement underscores that justice has no borders, and that USAID’s contractors and grantees must have systems in place to detect and prevent false invoices submitted by sub awardees.”
