Agility slumped yesterday after a US court ruled against the Kuwaiti logistics company on a motion relating to charges that it defrauded the US army in multibillion-dollar contracts in Iraq.
The court said prosecutors correctly served Agility with an indictment in 2009 when they accused the company of overcharging the US over 41 months on US$8.5 billion in supply contracts signed at the start of the Gulf War in 2003.
Agility argued the action was invalid because prosecutors served the indictment only on the company's US subsidiary and not the Kuwaiti parent, Public Warehousing Company. Agility said it was "disappointed" with yesterday's decision and was reviewing its legal options. The company's shares, listed on the Kuwait Stock Exchange, declined 5 per cent to 380 fils.
"The company continues to believe this case involves a civil contract dispute and should not be a criminal matter. Agility's prices, suppliers and business practices were disclosed to, approved and routinely reviewed by its US government customer," it said in a statement. "Agility remains committed to trying to resolve the dispute through dialogue with the justice department but is prepared to defend itself vigorously if that dialogue is not fruitful."
The US government filed a lawsuit last January in addition to the criminal indictment. The cost of defending the actions and the possibility of having to pay a penalty are weighing on Agility's finances. According to a report published by Al Mal Capital this month, Agility has debt repayments of up to 75 million dinars due through the end of next year. The company has projected operating cash flow of 91m dinars this year and 106m dinars next year.
Agility provides integrated supply chain and logistics services in the GCC region.
It is the largest warehousing and logistics operator in the GCC by market capitalisation. It comprises three main business groups: global integrated logistics; defence and government services; and infrastructure.