FedEX charged with shipping illegal drugs, faces fine of $1.6 billion

FedEx has been charged by the US Justice Department with shipping prescription drugs and painkillers for illegal pharmaceuticals. The company operates the world's largest cargo airline.

The shipping company has allegedly made $820 million in shipping drugs. According to a statement from the US attorney's office in the Northern District of California, if found guilty FedEX will be fined around $1.6 billion, along with restitution and forfeiture of profits, 

The company has been under investigation for years by the Drug Enforcement Administration (DEA) and federal prosecutors in North California. It is to appear in court on July 29 in San Francisco.

In a statement released on Thursday, Patrick Fitzgerald, senior vice president of marketing and communications, said "We will defend against this attack on the integrity and good name of FedEx and its employees." The company will not be pleading guilty, he said.

United Parcel Service Inc. (UPS) was also targeted as part of the investigation. However, the company signed a non-prosecution agreement last year in March with the Justice Department. It acknowledged dealing with illegal pharmacies and also forfeited $40 million of the money made with these sales.

In 2004, federal prosecutors had filed a 15 count indictment against FedEX accusing it of  shipping drugs from illegal pharmacies to anyone who filled out a form. It said that the company ignored government warnings and repeatedly violated drug laws. The indictment stated that company revenues had been affected by pharmacies shut down by the DEA and had set up a special credit policy for such stores approved by the CFO of the company.

The indictment stated that FedEX had shipped packages to individuals without prescription, shipping packages to parking lots and vacant houses.

FedEX says it has always asked for a list of online pharmacies engaged in illegal sales which the DEA had failed to provided. Fitzgerald said,"Whenever DEA provides us a list of pharmacies engaging in illegal activity, we will turn off shipping for those companies immediately,"

Melinda Haag, the US Attorney in Northern California, said the indictment "highlights the importance of holding corporations that knowingly enable illegal activity responsible for their role in aiding criminal behavior." The company had continued to ship for pharmacies that had been shut down by the DEA and for doctors charged with illegal distribution of drugs, Haag said.

FedEX claimed that it couldn't be held criminally liable for the contents of over 10 million packages that it delivered daily as it would undermine the privacy of its customers. "We are a transportation company — we are not law enforcement," said Mr. Fitzgerald.

The company claimed that it had delivered packages with valid prescriptions from pharmacies that had been approved by the DEA.

"We continue to stand ready and willing to support and assist law enforcement," Fitzgerald said. "We cannot, however, do the job of law enforcement ourselves."

(With inputs from agencies)