December 27, 2007 — Sioux Manufacturing Corporation Sioux Manufacturing Corporation (SMC) has paid $2 Million to resolve allegations that it deliberately and systematically shorted an average of more than 10,000 strands of Kevlar from the helmets of U.S. Soldiers. SMC is a military defense contractor, and corporation which is wholly owned by the Spirit Lake Sioux Tribe in North Dakota. SMC contracted to manufacture and provide Kevlar cloth shields which were installed as the sole armor within the helmets of more than 2 million U.S. Soldiers and servicemen. The Department of Defense (DOD) agreed to the use of Kevlar as the sole armor within the helmets of U.S. Soldiers provided that the Kevlar cloth was woven to a density sufficient to ensure an adequate level of protection for the soldiers. To ensure such protection, the DOD adopted specifications requiring that such Kevlar cloth be woven to a “minimum” weave density of 35 x 35 strands of Kevlar (or “picks”) per square inch. Such specifications also explicitly stated that a failure to maintain the proper material composition would constitute a “critical” defect in the manufacture of the helmets. Two of SMC’s former employees commenced a qui tam action against the company, alleging that they were fired for raising objections that SMC was “shorting” the amount of Kevlar in the shields it was providing for the soldiers. More specifically, the employees alleged that, after SMC was awarded a contract under which it was paid $53 million for such Kevlar shields, the company deliberately and systematically shorted an average of more than 10,000 strands of Kevlar for each helmet, by deliberately setting their weaving looms to weave the Kevlar cloth at densities below the weave density which had been determined to be the “critical minimum” by the Department of Defense. They further alleged that, despite the fact that SMC’s own internal inspection records reflected that SMC was producing the Kevlar cloth at densities below the “critical minimum” density which had been determined by the Department of Defense, SMC proceeded to ship the Kevlar cloth shields together with false certifications, wherein SMC’s Quality Assurance Department falsely certified that each shipment met the minimum weave specifications. The two employees who filed the suit included Jeff Kenner, SMC’s weaving supervisor who was responsible for supervising SMC’s weaving operations, and Tamra Elshaug, SMC’s purchasing manager, who was responsible for purchasing the Kevlar with which SMC proceeded to weave the Kevlar shields. In support of their allegations, Mr. Kenner secured and provided the U.S. Department of Justice with various tape recorded admissions of other SMC employees, including one from SMC’s Quality Assurance Manager, who was responsible for certifying that the Kevlar met the weaving specifications required by the Department of Defense. In addition, Mr. Kenner and Mrs. Elshaug incorporated into their federal complaint copies of actual internal inspection records of SMC, within which inspectors employed by SMC had inspected the Kevlar cloth being woven by SMC, and recorded weave densities below the minimum which had been set by the Department of Defense. As part of the settlement, Mr. Kenner and Mrs. Elshaug will receive over $400,000 as a reward for having filed the claims. |