Chemonics has brought an action based on ACE’s refusal to pay legal fees and
expenses (Defense Costs) that Chemonics has incurred while defending a claim made by the US Department of Justice (DOJ) on behalf of USAID.
On March 9, 2021 – The Global Fund’s Office of the Inspector General (GFOIG) issued the following report related to supply chain management services to the Global Fund and USAID for HIV and malaria treatment programs on behalf of various recipients in Nigeria where Chemonics’s local subcontractor Zenith is incriminated. Here is the report:
Nigeria Supply Chain
Sub-contractor invoice fraud resulted in substantial overcharging
In the report, it is stated that “Chemonics approved and paid Zenith’s fraudulent invoices for over two years.”
June 10, 2021 – The Global Fund (GF) sent a letter to Chemonics seeking reimbursement of non-compliant expenditures in the amount of $3,155,515.”
July 19, 2021 – The US Department of Justice (DOJ) informed Chemonics that the DOJ was opening a False Claims Act matter on behalf of USAID regarding Zenith’s overbilling, that Chemonics may be liable for treble damages and penalties, and that the government would attempt to resolve the matter through settlement with Chemonics prior to filing any litigation.“
August 17, 2023 – ACE, the insurer, sent a denial letter to Chemonics, in which ACE … “denied coverage for the USAID Claim based on Chemonics’ purported breach of the consent-to-settle provisions of the Policy, despite the nascent stage of the USAID Claim, and …raised, for the first time, a wholly new defense that Chemonics has not incurred Damages that this Court rejected in a similar context.”
July 15, 2024 – Chemonics sued ACE. According to the Complaint, “this is an insurance coverage action in which Chemonics seeks both damages from ACE for breach of contract and declaratory relief pursuant to 28 USC §2201.