By David Shepardson
WASHINGTON (Reuters) - American Airlines (NASDAQ:AAL) Group Inc, the largest U.S. airline, will pay $22.1 million to settle claims it falsely reported the times it transferred possession of U.S. mail to foreign postal administrations or other intended recipients, the U.S. Justice Department said on Tuesday.
The United States Postal Service contracted with American to take possession of receptacles of U.S. mail at six locations and then deliver it to numerous international and domestic destinations. The settlement resolves claims American Airlines falsely reported the times it transferred possession of the mail. American did not immediately comment Tuesday.
"We expect companies doing business with the government to comply with their contractual obligations,” said Assistant Attorney General Jody Hunt, who heads the department's civil division. "The Department of Justice vigorously pursues all manner of fraudulent conduct that undermines the benefits that the government has bargained for."
American said in a statement it was pleased it had reached a settlement.
"The allegations focused on conduct that was remedied years ago, and we have invested in new equipment and procedures to ensure that we are in full compliance with our commitments," the statement said. It added that "the U.S. Postal Service is an important customer for American, and we are glad to have corrected these procedures and put this matter behind us."
American said in a securities filing the Justice Department in April 2015 notified the airline it was investigating American’s 2009 and 2011 contracts with the U.S. Postal Service for the international transportation of mail by air.
The contract required American to take possession of mail at U.S. locations or at various Department of Defense and State Department locations abroad, and then deliver that mail to numerous international and domestic destinations.
"To obtain payment under the contracts, American Airlines was required to submit electronic scans of the mail receptacles to USPS reporting the time the mail was delivered at the specified destinations. The contracts specified penalties for mail that was delivered late or to the wrong location," the Justice Department said.
"The U.S. Postal Service contracts with commercial airlines for the safeguarding and timely delivery of U.S. Mail to foreign posts, including the mail sent to our soldiers deployed to foreign operating bases,” said Scott Pierce, special agent in Charge, USPS Office of Inspector General.