WASHINGTON -- A company owned by former CIA official Thomas Clines pleaded guilty and was fined $10,000 Monday for overcharging the Defense Department for shipping military equipment to Egypt.
In a plea agreement filed in U.S. District Court in Richmond, Va., Clines also agreed to pay an extra $100,000 in exchange for assurances he will not be sued for up to $8 million the U.S. government claims it was overcharged.
Clines and an Egyptian business partner, Hussein Salem, were investigated after they won a contract to ship millions of dollars worth of U.S. jets, tanks and other military equipment to Egypt following the 1979 peace treaty between Egypt and Israel.
The government claims their company, the Egyptian American Transport and Services Corp., also known as EATSCo, inflated the shipping bills they submitted for reimbursement to the Defense Department, resulting in $8 million in overcharges between November 1979 and December 1981.
Clines' partner, Salem, pleaded guilty last July to criminal charges for filing false invoices with the Pentagon and paid $3.04 million to settle allegations against him.
'Essentially, they said it cost X dollars when it cost Y dollars,' explained Assistant U.S. Attorney Theodore Greenberg. 'They jacked up the prices so they could keep more profit for themselves.'
The action involving Clines, who left the CIA in 1978, was filed against his now-defunct company, Systems Services International Inc. It combined to form EATSCo, of which Clines became vice president.
Greenberg said there is 'no present intention' to file criminal action against Clines as an individual. 'But we are continuing the investigation,' he said.
Greenberg declined comment further on the investigation or on reports that investigators at one point were examining possible ties between EATSCo and Edwin Wilson, a former CIA agent who was convicted of illegally selling weapons to Libya.
Clines' $10,000 criminal fine for filing false invoices is the maximum for that offense. The additional $100,000 payment is part of a civil settlement that carries no admission of wrongdoing but precludes the government from going back to court later to try to collect on the overcharges.
Air Freight International Inc., a company that contracted to do business with EATSCo, also pleaded guilty to filing false invoices last September and paid $10,000 in criminal fines along with $1 million to settle civil claims.