Samsung gets a $2.3 million fine for supplying Chinese made goods to Federal Government

August 20, 2014 - Written By Peter Holden

It seems that Samsung have been caught with it’s hand in the cookie jar again, after one of its former employees, Robert Simmons opened a case against them under the False Claims Act’s whistleblower provisions. This has resulted in Samsung being ordered to pay $2.3 million in fines because it wrongfully sold goods to the federal government that was produced in China instead of the US or a country that has a trade agreement with the United States.

A deal had been negotiated with the GSA* (General Services Administration) that allowed Samsung to sell its products to federal agencies, with the proviso that the goods had to be manufactured in the US or another agreed upon country. Despite agreeing to the terms of the contract, Samsung was found to have breached them between 2005-2013 by supplying products that they claimed to have produced in Mexico or South Korea, but were actually supplied from its factories in China.

It’s basically illegal to supply goods made in China to the US government because of the huge trade deficit that exists between the two countries. Stuart Delery, the Assistant Attorney General for the Justice Department’s Civil Division, said that the $2.3 million fine “upholds important trade priorities by ensuring that the United States only uses its buying power to purchase from countries that trade fairly with us.” This was backed up by the GSA’s acting Inspector General, Robert Erickson who stated that “Its unacceptable to sell unauthorised foreign electronics to the United States ” and that “We (the GSA) expect all companies doing business with the federal government to comply with contracting laws.”

2.3 million dollars might be a slap on the wrist for a company the size of Samsung, but its not the size of the fine that is important, but rather the message that the ruling sends. And Samsung won’t want to lose the stream of revenue that the federal government provides.


*In case you are wondering what the GSA does, its in charge of supply contracts for most of the government, helping to manage and support the government in the performance of its basic functions. This can take the form of supplying providing products, communications, transportation and office space to federal employees. Another of its functions is to implement government-wide cost-saving solutions. The GSA employs around 12000 federal workers.