A judge has ordered Ford Motor Co. to pay the Bureau of Customs $17.2 million in civil penalties for making false statements about the value of vehicles and components it imported from 1987 through 1992.
The amount was one-half what the federal government had sought.
Judge Nicholas Tsoucalas of the U.S. Court of International Trade agreed with the Bureau of Customs and Border Protection that Ford falsely understated the prices it paid for imports such as Mercury Capris from Australia, Ford Festivas from South Korea, transmissions from France and engines from Germany.
The company acted negligently but not with gross negligence, the judge held.
The long-running dispute stems from Operation Hat Trick, a "trade-enforcement initiative" based in the Customs office in Detroit and targeting the Big 3. In hockey, a hat trick refers to a single player scoring three goals in a single game.
The investigation began in 1991 and was based on information that the manufacturers weren't declaring the full value or price paid for imported merchandise. As a result, Customs alleged that Ford evaded more than $8.6 million in duties, most of which the company paid pending the results of the litigation.
Said Ford spokeswoman Kathleen Vokes: "We are disappointed with this decision and respectfully disagree. We are considering our next steps."
The Customs press office referred questions to the Justice Department, where spokesman Charles Miller attributed the decade-long gap between the start of the probe in 1991 and the government's lawsuit filed in 2002 to administrative proceedings that failed to resolve the dispute.
Although Operation Hat Trick looked at the Big 3, only Ford was involved in litigation, Miller said.
The problem in part involved Ford's supply agreements with many foreign vendors that contained post-importation price adjustments. The company failed to promptly notify Customs when such adjustments required additional payments and, thus, higher duties, Tsoucalas found.
He also held that Ford made false statements or omissions in documents related to tooling assists that the company provided for vehicles and components, such as the value of free developmental parts for engines manufactured in Canada.
"The penalty assessed must be a substantial one," the judge said. "There was overwhelming evidence that Ford failed to declare the correct transaction value at entry for more than $350 million of merchandise. The severity of Ford's culpability and the resulting violation of its obligations were substantial."
Tsoucalas also said the automaker "failed to exercise reasonable care in carrying out its own customs compliance measure."
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