The US Department of Justice announced a USD 23 million settlement on 13 October 2014 with the Boeing Company. Boeing allegedly submitted false claims for labour charges on maintenance contracts with the US Air Force for certain aircraft. The whistleblowers who filed the suit under the False Claims Act will receive a USD 3.9 million award. The Department of Justice announced in mid-September that it is increasing its review of False Claims Act complaints. Companies are advised to keep these developments in mind and to also have strong compliance/whistleblowing programs in place to prevent fraud.

According to the DOJ, Boeing wrongly charged labour costs under contracts with the US Air Force for the maintenance and repair of the C-17 Globemaster aircraft, one of the military’s major systems for transporting troops and cargo throughout the world. The government alleged that the company deliberately and improperly billed a variety of labour costs in violation of applicable contract requirements, including for time its mechanics spent at meetings not directly related to the contracts.

The False Claims Act imposes liability on persons and companies (typically federal contractors) that defraud governmental programs. The law includes a provision which allows private persons (the whistleblowers) to file suit for violations of the False Claims Act on behalf of the government. Whistleblowers can be awarded a portion, usually 15–30%, of any damages recovered. The highest penalty so far under the False Claims Act is USD 17.2 million awarded in June 2014.

At a conference on 17 September 2014, Leslie Caldwell, chief of the DOJ’s criminal division, said that her office will increase its review of complaints for potential criminal prosecution under the False Claims Act. Caldwell encouraged whistleblowers to reach out to criminal authorities and civil authorities in preparing and filing complaints.

These developments show that authorities are increasingly focusing on criminal prosecution for fraud matters and are eager to investigate new complaints. Companies are advised to have a strong compliance/ whistleblowing program in place to prevent cases of fraud within their firms. Doing this will also help to identify challenges upfront before they become systemic and costly, and will mitigate legal threats and reputation damage.