A Kuwaiti company that refused to allow Mountain States dairy farmers to compete with Middle East milk suppliers for contracts to serve American troops in the Persian Gulf has been charged with bilking the U.S. military.
Public Warehousing Company, which collected more than $8.5 billion to feed U.S. military personnel in Iraq, Kuwait and Jordan, is charged with price gouging the United States in its food contract.
The Logan-based Gossner Foods will resubmit a bid for the milk contract next spring when the Defense Department names another firm to feed American troops in the Middle East, company officials said.
For more than 20 years, Gossner has supplied milk to U.S. troops worldwide. But the dairy firm lost the Persian Gulf contract in 2003 when Public Warehousing Company (PWC) became the prime Middle East food vendor.
PWC in turn awarded the contract to the Bahrain-based Awal Dairy to provide ultra-high-temperature milk, which requires no refrigeration. Awal uses reconstituted powered milk while Gossner uses fresh milk in the pasteurization process.
"Our milk has always gone with American troops all over the world," said Delores Gossner Wheeler, president of Gossner Foods, one of the nation's largest manufacturers of ultra-high-temperature milk. "Ever since the war in Iraq started, we've been trying to get that milk contract back."
Dairy farmers and distributors asked members of Congress to pressure the military to allow Gossner to bid on the milk contract for the Middle East. But the farmers' two staunchest supporters -- Republican Sen. Larry Craig, R-Idaho, and Sen. David Vitter, R-La. -- became embroiled in personal scandals: Craig did not run for re-election in 2008.
Sen. Orrin Hatch, R-Utah, wrote a letter on behalf of Gossner to PWC chairman Tarek Abdul Aziz Sultan-Al Essa. The chairman did not reply.
In early December, PWC is scheduled to appear in federal court for an initial appearance and arraignment before U.S. Magistrate Judge Janet King in Atlanta on fraud charges.
PWC was indicted Nov. 6 by a federal grand jury on six counts of conspiracy to defraud the United States, involving multibillion-dollar food contracts.
The company inflated bills and falsified statements to the U.S. military at a time "when these funds are in such demand for other support and equipping of our U.S. troops in various combat zones around the world," FBI Atlanta Special Agent in Charge Greg Jones said in a statement.
PWC said in a statement that company officials were surprised and disappointed at the U.S. government actions in what it calls a contract dispute. The company denied all wrongdoing and said PWC has "long cooperated with government reviews, inspections, audits and inquiries necessary to ensure taxpayer dollars are being spent appropriately."
PWC's prime food-vending contract, however, will not be renewed when it expires in December 2010, said Jack Hooper, director of the U.S. Defense Logistic Agency, which overseas food and other supplies for American troops.
Bids closed on Sept. 1 for a vending contractor, and an announcement on the new contract is expected by spring.
"Even though a firm is indicted, it still has an obligation to perform its work," said Mimi Schirmacher, spokeswoman for the Defense Logistic Agency, headquartered in Virginia. "There will be no interruption of food services to U.S. troops."
Meantime, farmers in Utah and Idaho have donated two truckloads of packages, each filled with seven cartons of Gossner milk and cookies, to soldiers from a Fort Douglas-based Army Reserve brigade that left in July for a one-year tour in Iraq.
The Kuwaiti firm is accused of massively overcharging the U.S. to feed American troops in the Middle East.
The firm allegedly altered packages in an ongoing scheme to charge twice as much as the food actually cost.
PWC submitted inflated invoices and false statements to the U.S. and committed wire fraud.
The firm collected rebates and discounts from vendors that were not passed along to the U.S.
