San Diego (AP) — Dozens of U.S. Navy officers have admitted to being bought off by the gregarious and rotund Malaysian defense contractor known as “Fat Leonard” who offered them prostitutes, Cuban cigars and free stays at the Shangri-La hotel in the Philippines. , among others.
Now that the final five of the 34 defendants are on trial in federal court in San Diego, what’s more shocking is how little the case has changed the way the Navy does business, according to former military officers and government watchdog advocates.
“One would expect one of the greatest corruption scandals in the history of the United States Navy to cause changes dramatic enough to prevent something like this from happening again in the future. But unfortunately, this does not happen. That’s not really the case,” said Dan Grazier, a former Marine who now works as a military analyst at the Project on Government Oversight in Washington.
The case centers on Leonard Glenn Francis who admitted in 2015 to offering $500,000 in bribes to Navy officers. In return, the officers passed him classified information and even went so far as to redirect military vessels to lucrative ports for his Singapore-based ship maintenance company, Glenn Defense Marine Asia, or GDMA.
Twenty-nine people, mostly Navy officials, have pleaded guilty to helping Francis, including providing classified ship schedules in exchange for extravagant trips to South Asia with prostitutes and meals with tabs totaling over $20,000.
“As dozens of Navy officials partied with Leonard Francis, a massive breach of national security was in full swing,” U.S. Attorney Randy Grossman said recently.
Prosecutors say Francis and his company overcharged the U.S. military by more than $35 million for services between 2004 and 2013, including providing food and water to ships at Pacific ports in Asia.
Francis, who is due to be sentenced in July, has been cooperating with the US Department of Justice since his 2013 arrest in San Diego.
Five officers – Rear Adm. Bruce Loveless, Capt. David Newland, James Dolan and David Lausman, and Cmdr. Mario Herrera — claimed their innocence and were tried.
It is unclear whether Francis, who is in poor health and under house arrest, will testify at the trial, which is expected to last months. Defense lawyers tried to stop him from speaking out after he gave his version of events in a podcast last year.
Navy officials pledged to clean up their contracting processes in response to the scandal and instituted greater oversight. Sailors received more ethics training. Procurement officers have less independence. Goods and services must now be priced at current market rates, as determined by Navy Fleet Logistics Centers.
But that’s not enough for Grazier, who said the military needs to stop contracting out much of its work. As bases have closed around the world, the Navy has increasingly turned to contractors to do what it once did in-house.
“I think unless the Navy really changes the way it does business, future Fat Leonards will just be more cautious, but that won’t change their practices,” Grazier said.
Grazier fears the biggest impact of the case has been on young people like his son who is an enlisted sailor.
“They think they’re standing up for something really noble, and then they see all these people they’re supposed to look up to behaving in such an unethical and often illegal way,” Grazier said. “It is extremely overwhelming for these young idealists. I think that’s one of the biggest tragedies of all of this.
Craig Hooper, a defense contractor, said the Navy needs to increase its audit teams and also adapt its rules to match the cultural norms of where it operates.
In Asia, for example, it is common to go out for drinks or dinner to build business relationships, but many junior officers have to pay out of pocket, although many cannot afford it. Hooper said the Navy should pay those bills rather than create situations ripe for corruption.
Hudson Institute fellow Bryan Clark said the Navy’s top brass have also long turned a blind eye to contractors who might be unscrupulous but could get things done. When he was a sailor in the Pacific more than 20 years ago, Francis was known to be “shady”, but he also had good connections in the region, he said.
He hopes the case will teach officers that these things can no longer be ignored, although he said it is unfortunate that many high-ranking officers who have been investigated have retired anticipated while lower-ranking officers were charged.
“It’s just a huge black eye for the Navy from a cultural standpoint and from a legal standpoint,” Clark said. “Because it wasn’t just, you know, a few bad apples.”
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