Kuwaiti firm unsure of settlement in U.S. fraud case

DUBAI, United Arab Emirates — A Kuwaiti logistics firm that is a major supplier of the U.S. military cast doubt Sunday on whether talks to reach a settlement with American prosecutors over fraud allegations will bear fruit.

Public Warehousing Co. said it is continuing negotiations with the U.S. government in an effort to resolve a dispute over multibillion-dollar contracts to feed American troops.

"However, there is no guarantee that the parties can reach a mutually agreeable settlement," it added in an update on the talks included in its annual financial report.

Federal prosecutors brought charges against the company, also known as Agility, in November. The firm — the military's main food supplier in Kuwait, Iraq and Jordan — is accused of making false statements, submitting false claims and committing wire fraud.

The indictment alleges the company manipulated a funding formula to defraud the U.S. of at least $68 million, though Assistant U.S. Attorney Barbara Nelan has said that figure could rise as the investigation continues.

Agility has received more than $8.5 billion in food supply contracts.

It has said the allegations are "without merit" and defended its "unparalleled service to U.S. troops and exceptional value for American taxpayers." It says more than 30 employees have been killed and 200 injured in the course of their work.

The firm last week delayed the release of its 2009 financial report for the second time pending a review of its ability to resolve the dispute.

Trading of the company's shares was halted on the Kuwait Stock Exchange in late March as the company tried to reach a deal with U.S. prosecutors.

Agility on Sunday posted a full-year profit of 156.4 million Kuwaiti dinars ($542.2 million), a 10.7 percent increase over the previous year.

Despite the gains, Chairman and Managing Director Tarek Sultan flagged a number of challenges still facing the company, "including the slower-than-expected recovery from the global economic recession, the troop drawdown in Iraq and the ongoing legal issues."