- The Washington Times - Thursday, May 14, 2009

EXCLUSIVE:

The Department of Homeland Security says it is reviewing a last-minute Bush administration appointment of a shipping industry executive and registered lobbyist to serve on a government maritime security board, even as his company faced serious allegations of defrauding the U.S. military in war zones.

The appointment of Earl Agron, vice president of security for American President Lines Ltd. (APL), has raised questions in part because he continues to lobby on issues under the jurisdiction of the Coast Guard’s Maritime Security Advisory Committee - the same committee on which he now serves, according to the company’s April 17 filing with the secretary of the Senate.

His company is a subsidiary of the Singapore government’s Neptune Orient Lines Ltd., which is a large ocean carrier with vessels calling on key ports in the United States.

Mr. Agron was appointed Jan. 8, just one month before APL agreed to pay a record $26 million-plus fine to settle federal lawsuit allegations that it had defrauded the Pentagon over many years.

Mr. Agron was not involved in the court case. His company admitted no fault, and it says the settlement was a result of a contract dispute with the Defense Department.

Obama administration officials said they were unaware of Mr. Agron’s lobbying role until contacted by The Washington Times, and they are now reviewing the appointment made by Homeland Security Secretary Michael Chertoff just 12 days before President George W. Bush left office.

“We take this seriously and are reviewing the situation,” said Sean Smith, a spokesman for Obama administration Homeland Security Secretary Janet Napolitano.

“Mr. Agron is not a political appointee of this administration. He was appointed to this part-time position by the previous secretary,” Mr. Smith said.

In March, the Obama administration ordered an overhaul of how U.S. agencies award contracts to the private sector and promised to crack down on fraud regarding Defense Department contracts. The administration also has imposed strict rules that require appointees to recuse themselves from issues on which they have lobbied.

Mr. Agron advises Homeland Security and the Coast Guard about policies on which he lobbies, specifically national maritime security strategy.

According to the April 17 report filed by his company, Mr. Agron also lobbies members of Congress, U.S. Customs and Border Protection, the Food and Drug Administration, the Department of Agriculture and the Commerce Department.

Mr. Chertoff, who is now with the law firm Covington & Burling in Washington, responded by e-mail through company spokeswoman Kathryn King to questions posed by The Times.

“The secretary relies on the nominating agency to vet the candidates recommended to the various advisory committees,” Ms. King said.

She added that Mr. Chertoff “was not aware” that Mr. Agron was a lobbyist for APL or that the Justice Department was investigating the company on suspicion of fraud when he nominated Mr. Agron.

APL spokesman Mike Zampa said Mr. Agron’s role as a lobbyist should not affect his work with the government on the advisory committee. Mr. Zampa said Mr. Agron could not speak with The Times because he was “out of the country and had limited access to his cellular.”

“His job is maritime security. His role on the committee is advising the government,” Mr. Zampa said. “I see nothing wrong with his role on the committee. He’s considered an expert.”

Mr. Agron has “dedicated a lot of his time and energy to helping our government and the maritime industry to secure global trade. I think he’s to be commended and the company to be commended for allowing one of its executives to spend so much time in support of the goals of the government and the maritime industry,” Mr. Zampa said.

APL continues to contract with the Defense Department despite the lawsuit settlement.

“It was the settlement of a contract dispute,” Mr. Zampa said. “It was not a declaration of wrongdoing by anyone. We settled to put the issue behind us and keep our energy focused on the strong and long-standing relationship we’ve had with the military.”

Sharon Woods, director of the Pentagon’s Defense Criminal Investigative Services, who aided prosecutors with the case against APL, said in February when the case was settled: “This particular fraud was directly related to the supply lines supporting our brave soldiers, sailors, airmen, Marines and U.S. civilians in Iraq and Afghanistan.”

Ms. Woods said the settlement with APL was made possible by intense investigations that uncovered the fraud.

The committee on which Mr. Agron serves advises the government on maritime security issues. Such issues, for example, could include policies on how to best inspect cargo for terrorist weapons or how to protect ships from Somali pirates.

Mr. Agron is a part-time appointee. His is not a paid position, although travel and other expenses are reimbursed by the government.

Coast Guard spokeswoman Lisa Novak said Mr. Agron was appointed because of his experience and expertise in the shipping industry.

“Mr. Agron’s service on the committee is as an individual and in this role he does not represent his company,” Ms. Novak said. “We are working to ensure his role as a security official at APL does not disqualify him from continued service on the panel as it relates to this case.”

In February, APL agreed to pay more than $26 million to the U.S. government to settle allegations that the company had inflated prices on shipping invoices for cargo headed to military bases in Afghanistan and other countries.

The settlement against APL was considered an early victory for Justice Department prosecutors under the new administration and for the Defense Department’s Criminal Investigative Service, which aided in the investigation.

Justice Department spokesman Charles Miller said the APL settlement was the largest the U.S. has exacted from a shipping company for fraud.

The government claimed Oakland, Calif.-based APL inflated its invoices by billing in excess of the rate it paid to plug refrigerated containers holding perishable cargo into a source of electricity at a port in Karachi, Pakistan.

APL’s parent, Neptune Orient Lines, is the largest shipping and logistics company listed on the Singapore Stock Exchange. Its majority shareholder is the Singapore government.

APL also was accused of billing in excess of the contractual rate to maintain the operation of refrigerated containers in Karachi and at U.S. military bases in Afghanistan. In addition, it billed for various non-reimbursable services performed by an APL subcontractor at a Kuwaiti port, according to the Justice Department.

“In achieving a settlement in any case where a company or an agency has defrauded the U.S. government we can only hope it serves as a deterrent for any other companies in the future,” Mr. Miller said.

Mr. Miller said he could not comment on Homeland Security’s decision to appoint Mr. Agron to the maritime committee.

The maritime committee has 21 positions “filled by people drawn from a broad range of maritime interests, including container ship operators, passenger ship operators, port facility reps, ferry reps” and others to ensure interests are balanced, Ms. Novak said.