United Airlines (NYSE: UAL) has agreed to pay more than $49 million to resolve criminal charges and civil claims alleging it defrauded the U.S. Postal Service for transport of international mail, the Department of Justice said Friday.
The world’s third-largest airline falsified bar code scans of mail bins delivered to foreign postal services or military bases between 2012 and 2015 to make it appear it was performing to contract specifications and ensure full payment, which was conditioned on timely delivery, according to the federal complaint. It said United used automated delivery scans based on aspirational delivery times, not actual scans in real time.
United further admitted that it concealed problems related to scanning and mail movements that, if known, would have subjected the airline to financial penalties. The Justice Department said several individuals at United Cargo tried to cover up their actions to avoid detection.
“United was entrusted by the U.S. Postal Service with fulfilling a critical government function — the transportation of U.S. mail abroad,” said Nicholas McQuaid, the acting assistant attorney general for the Criminal Division, in a statement. “Instead of performing this duty with transparency, United defrauded the U.S. Postal Service by providing falsified parcel delivery information over a period of years and accepting millions of dollars of payments to which the company was not entitled. Today’s resolution emphasizes that companies that defraud the government — no matter the context, contract or federal program — will be held accountable.”
Under the settlement, United has agreed to strengthen its compliance program and adhere to specific reporting requirements, which require it to submit yearly reports to the Fraud Section regarding the status of remediation and efforts to strengthen internal controls.
In a statement, United said, “The U.S. Postal Service is a valued customer for United, and we are glad to have remedied these procedures and look forward to serving the Postal Service in the future.”
In August 2019, American Airlines paid $22.1 million to resolve similar civil claims that it altered on-time data under a Postal Service contract.
The Justice Department said the penalty was based on the seriousness of the offense, United’s failure to timely and voluntarily self-disclose the violations and United’s prior history, including a 2016 nonprosecution agreement in relation to potential criminal bribery to gain a slot at Newark Liberty International Airport in New Jersey. In United’s favor was the fact that it cooperated with the investigation, removed the principal manager who led the criminal scheme and hired outside counsel and advisers to establish a compliance program with regular employee training.
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
RELATED NEWS:
United Cargo’s March schedule dented by removal of Boeing 777s
United Airlines sacrifices cargo capacity to replace grounded 777s
United Airlines continues cargo hot streak in Q4
50% jump in cargo revenue helps United Airlines slow Q3 cash burn
Brokerage Compliance Symposium
The day before F3. Every compliance issue you face - fraud exposure, carrier liability, FMCSA rules, cargo theft, insurance gaps - navigated by attorneys and operators defining best practices in a changing industry.
F3 Awards Dinner
The night before F3. FreightTech100 companies honored. FreightTech 25 and Shipper of Choice winners revealed live. Cocktail reception into dinner and live music - 300 industry leaders in one purpose-built room.
F3: Future of Freight Festival
Industry-defining keynotes, rapid-fire technology demos, and industry leaders networking in experiences across Chattanooga - plus the inaugural F3 Awards Dinner featuring the FreightTech and Shipper of Choice reveals.
The day before F3. Every compliance issue you face - fraud exposure, carrier liability, FMCSA rules, cargo theft, insurance gaps - navigated by attorneys and operators defining best practices in a changing industry.
The Signal at Chattanooga Choo Choo • Chattanooga, TN Register NowThe night before F3. FreightTech100 companies honored. FreightTech 25 and Shipper of Choice winners revealed live. Cocktail reception into dinner and live music - 300 industry leaders in one purpose-built room.
The Signal at Chattanooga Choo Choo • Chattanooga, TN Register NowIndustry-defining keynotes, rapid-fire technology demos, and industry leaders networking in experiences across Chattanooga - plus the inaugural F3 Awards Dinner featuring the FreightTech and Shipper of Choice reveals.
The Signal at Chattanooga Choo Choo • Chattanooga, TN Register Now