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Whistleblower Costs FedEx £4.87m


Last week, FedEx agreed to pay the US government $8 million to settle a lawsuit alleging that the company blamed late deliveries on 9/11-related security to avoid penalties for missing shipping deadlines.

The lawsuit was filed in a federal court by a whistle-blowing employee, Mary Garofolo, who claimed that FedEx used a series of false entries in its delivery tracking system to cover up the late delivery of thousands of government packages. The Department of Justice agreed that this practice allowed FedEx to fraudulently avoid reimbursing the government millions of dollars in compensation.

Ms Garofolo, a FedEx employee for 23 years, filed the lawsuit in 2006 after supervisors ignored her complaints of malpractice. She stands to receive $1.4 million from the settlement even though she retired in 2007.

Investigators found that, although security delays did indeed exist after the 9/11 attacks, FedEx continued to exploit the security issue for many years and built the fictitious delays into their business model, court documents alleged.

It was claimed that the fraud became so rampant that drivers would code entire truckloads of deliveries as “security delayed” even before the trucks had left FedEx shipping stations.

A FedEx spokesperson denied any wrongdoing by the firm, but said: “We determined it was in the best interest of employees, customers and shareowners to avoid a costly, protracted legal battle with the government.”

Sussex Transport wonders what Ms Garofolo may spend her award on – perhaps a dessert island holiday, reminiscent of the film ‘’Castaway’’ where Tom Hanks played a Fedex System Analyst who is marooned for years on a remote island!