Linde GmbH and its US subsidiary Linde Engineering North America have agreed a $22.8m settlement of a whistleblower lawsuit which alleged the industrial gas giant evaded US customs duties on materials it bought and imported to build chemical and natural gas plants.
The settlement resolved allegations that Linde violated the False Claims Act by knowingly making false statements on customs declarations to avoid paying duties owed on the companies’ imports, according to the Department of Justice (DOJ), US Attorney’s Office.
The $22.28m settlement includes $15m that Linde paid previously in two separate payments after it self-disclosed that it had underpaid customs duties, according to a statement from law US-based firm Phillips & Cohen LLP, which filed the lawsuit.
Between 2011 and 2017, Linde imported more than $500m in goods into the US, according to a release on the settlement from the DOJ. The US alleged that between 2011 and 2017, Linde avoided duties owed to the US, including in some instances antidumping and countervailing duties, by misrepresenting the nature, classification, and valuation of imported merchandise, as well as the applicability of free trade agreements.
According to a statement released by Phillips & Cohen LL, “The whistleblower complaint says that Linde described stainless steel pipes from China as carbon steel pipes, which have a lower tariff and no AD/CVD duties. This saved the company millions of dollars.”
Acting Assistant Attorney General Jeffrey Bossert Clark for the Department of Justice’s Civil Division said, “This settlement reflects our commitment to hold accountable those who evade duties owed on imported goods, including antidumping and countervailing duties that level the playing field for US manufacturers.”
The whistleblower, Crystal Johnson, worked for Linde in Oklahoma for 10 years, most recently as a purchasing and logistics manager. Phillips & Cohen filed her “qui tam” (whistleblower) lawsuit under seal in federal district court in Philadelphia in 2017, and the settlement was announced 25th September, 2020.
“Companies that cheat on customs duties hurt sales for American manufacturers, which causes American workers to suffer,” Johnson said. “I could not keep quiet about what I saw.”
Johnson will receive a reward of $3.78m for her information, according to Phillips & Cohen.
“When companies don’t pay the duties that are owed on imported goods, they are breaking the law and also giving foreign manufacturers an unfair price advantage over American-made goods,” said Steve Hasegawa, a whistleblower attorney and partner at Phillips & Cohen. “Customs duties help level the playing field for US businesses.”
Before the US’s disclosure to Linde of its investigation, the industrial gas major initiated a voluntary disclosure to the US Customs and Border Protection regarding its importing practices.
First Assistant US Attorney Jennifer Arbittier Williams said, “We commend Linde for coming forward with these issues and working to ensure both that the government is made whole and that these issues will not recur. We hope this settlement will serve as a message to other importers to ensure that they have compliance processes in place that can detect problems before they grow. Importers have an obligation to scrutinise their practices and promptly report issues if they discover that they have not lived up to their obligations.”
Linde declined to comment when approached by gasworld for a comment on the settlement.