Linde GmbH Settles US Allegations of Import Fraud For $22 million

Date: Tuesday, September 29, 2020
Source: American Shipper

Linde GmbH, a German multinational corporation that makes industrial gases for transportation and other applications, and U.S. subsidiary Linde Engineering North America have agreed to pay the U.S. government $22.2 million to settle claims the company made false statements on its customs declarations to avoid import duties, the Justice Department announced Friday.

The settlement is one of the largest for a whistleblower case alleging avoidance of customs duties, according to Philips & Cohen LLP, the law firm that represented the employee who tipped off government investigators.

The government alleged Linde undervalued $500 million worth of products imported between 2011 and 2017 for the construction of natural gas and chemical manufacturing plants. According to the government’s complaint, Linde avoided customs duties, including antidumping and countervailing duties (AD/CVD), by misrepresenting the nature, classification and valuation of merchandise, as well as the applicability of free trade agreements, in violation of the False Claims Act.

“This settlement reflects our commitment to hold accountable those who evade duties owed on imported goods, including antidumping and countervailing duties that level the playing field for U.S. manufacturers,” said Acting Assistant Attorney General Jeffrey Bossert Clark. “The Department of Justice will zealously pursue those who seek an unfair advantage in U.S. markets by bringing underpriced goods into this country.”

Linde serves a variety of end markets, including chemicals and refining, food and beverage, electronics, health care, manufacturing and primary metals. Specialty gases it produces include hydrogen for trucks and other vehicles. It has installed more than 180 hydrogen refueling stations worldwide for cars, buses, trucks and trains.

Crystal Johnson, who worked for Linde in Oklahoma for 10 years, most recently as a purchasing and logistics manager, filed a whisteblower suit and will receive $3.7 million from the settlement. The complaint alleged Linde avoided paying tariffs and the full amount for duties and anti-dumping and countervailing duties

Among the false claims alleged against Linde was that it failed to report raw materials and components, known as “assists,” that it provided to manufacturers to make imported goods. The assists add value to the goods and are required to be disclosed on the customs forms. Submitting invoices and entry forms to the Customs Border Patrol (CBP) that falsely identified imported goods by using incorrect HTS (Harmonized Tariff Schedule) codes, which are used to assess duties.

Johnson claimed, for example, that Linde described stainless steel pipes from China as carbon steel pipes, which have a lower tariff and no AD/CVD duties. The change in classification saved the company millions of dollars.

“The system depends on importers providing truthful information on customs forms,” said Dave Jochnowitz, an associate with Phillips & Cohen. “The amounts that companies save by falsifying information on one form can be small, but over time, the sums are enormous.”

The $22.28 million settlement includes $15 million that Linde paid previously in two separate payments after it self-disclosed that it had underpaid customs duties.

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