A tribal business has agreed to pay $1.9 million to settle claims that it did not follow instructions in making protective material for military helmets used by U.S. soldiers fighting in Iraq and Afghanistan.
The Justice Department announced the settlement Tuesday with Sioux Manufacturing Corp., of Fort Totten, a business owned by the Spirit Lake Sioux tribe. Company officials said they did nothing wrong and blamed disgruntled employees for filing the complaint.
"It is unfortunate that such allegations can be made and don't require the burden of proof," said Carl McKay, the company's president and chief executive officer.
The government said the company failed to follow specifications in making Kevlar cloth material, a protective synthetic fiber used in helmets and body armor. However, the cloth underwent ballistics safety tests and passed all of them, U.S. Attorney Drew Wrigley said.
"The military is satisfied there were no injuries sustained because of this," Wrigley said. "No matter how you look at it, you have to recognize that the entire effort in this case was to secure the safety of the troops and anyone who would be using this material in a combat situation."
The settlement should not be viewed as an admission of wrongdoing by Sioux Manufacturing, McKay said.
"We deny any and all of the allegations originally brought to the attention of the (Justice Department) by disgruntled former employees," McKay said.
Wrigley said the settlement was fair and said company officials cooperated in the investigation.
"Our knowledge of this came from witness statements, people who worked at Sioux Manufacturing, and inspection reports," Wrigley said, adding "They were underweaving. That is not debatable."
McKay said there were problems with language in a quality control form, which he said was corrected early in the investigation.
The lawsuit was filed by two former company employees under a federal law that allows private citizens to act as "relators" and sue on behalf of the government. They will get $406,350 as their share of the settlement.
"That's the way the law is set up," Wrigley said. "That's the way you get relators, which otherwise you might not have."
Sioux Manufacturing, which opened in 1974, operates a 250,000-square foot facility and employs about 200 people. The company reported earnings of more than $20 million in 2005.
Federal agents raided the plant in June 2006.
McKay said it was a business decision to settle rather than fight the matter in court and spend millions of dollars.
(This version CORRECTS SUBS 13th, 14th grafs to correct relators sted realtors. Minor edits)
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