Samsung Electronics America Inc. has agreed to pay $2.3 million to resolve whistleblower allegations that its business practices led the U.S. government to unknowingly purchase foreign electronics from countries not approved under the Trade Agreements Act and thus the submission of false claims for those products.
The lawsuit concerns contracts under the federal government’s General Services Administration (GSA), which awards Multiple Award Schedule contracts to multiple companies that provide comparable products and services. Once the GSA negotiates and awards the contract, any federal agency may purchase under it.
Generally the Trade Agreements Act requires the U.S. government to buy products made in the United States or a designated country that has a trade agreement with the U.S. South Korea and Mexico are two of the leading foreign suppliers of products purchased under the GSA’s Multiple Award Schedule.
Robert Simmons, a former employee of New Jersey-based Samsung, filed a whistleblower lawsuit under the False Claims Act alleging that from January 2005 through August 2013, Samsung knowingly provided inaccurate information to its authorized resellers about the country of origin of its products. The authorized resellers in turn sold products to federal government agencies that were made in China, which is not a country approved under the Trade Agreements Act.
GSA Acting Inspector General Robert Erickson said that selling unauthorized products to the U.S. is “unacceptable” for companies awarded government contracts. “We expect all companies doing business with the federal government to comply with contracting laws,” Mr. Erickson said.
Assistant U.S. Attorney General Stuart Delery said the Justice Department would continue to protect public funds and guard against the “abuse of federal procurement programs” by Samsung and other companies selected to contract with U.S. “This settlement upholds important trade priorities by ensuring that the United States only uses its buying power to purchase from countries that trade fairly with us,” Mr. Delery said.