Contractor at Center of Navy Bribery Scheme Pleads Guilty

A Singapore-based contractor at the center of a U.S. Navy bribery scheme pleaded guilty to charges he provided officers with cash, gifts and prostitutes in exchange for classified information and sending ships to ports where he provided services.

Leonard Glenn Francis, chief executive officer of Glenn Defense Marine (Asia), is the seventh person to admit wrongdoing in the case that already led to guilty pleas by four U.S. Navy officials, including a captain who entered his plea earlier Thursday, and two of Francis’s employees. One commander still faces bribery charges. Glenn Defense Marine had contracts worth hundreds of millions of dollars for servicing American ships at ports in Southeast Asia.

The corruption scandal ranks among the worst for the U.S. armed forces in 25 years. Congress passed the Procurement Integrity Act in 1988 in response to an investigation into fraud in the defense contracting industry known as “Operation Ill Wind.” By 1991, that investigation had resulted in 52 convictions, the Justice Department said at the time.

Francis, 50, pleaded guilty Thursday to conspiracy to commit bribery, bribery and conspiracy to defraud the government. He faces as long as 25 years in prison.

Under his plea agreement with the Justice Department, Francis and his company will forfeit $35 million and pay at least $25 million in restitution for defrauding the Navy, Assistant U.S. Attorney Mark Pletcher said after Thursday’s hearing in federal court in San Diego.

‘Gaining Momentum’

“We still have one defendant charged in the case and the investigation is continuing and gaining momentum,” Pletcher said.

A Malaysian citizen, Francis was arrested in September 2013 in San Diego. Known as “Fat Leonard” in Navy circles, he paid two commanders for classified information about where U.S. ships were scheduled to dock and for help steering vessels to ports that were the most lucrative for his company, according to prosecutors.

“Today Mr. Leonard Francis has taken accountability for his actions,” his lawyer, Ethan M. Posner, said in an e-mailed statement. “He looks forward to a brighter future.”

Glenn Defense Marine worked with the U.S. Navy for 25 years, providing goods and services for American ships in at least a dozen countries in Asia, according to court filings. Among three regional contracts the company was awarded in 2011 was one worth as much as $125 million over five years to provide tugboats, fuel, trash removal and other services for the Navy in Southeast Asia.

Seventh Fleet

U.S. Navy Commander Jose Luis Sanchez, 42, pleaded guilty on Jan. 6 to accepting bribes from Francis. Sanchez was deputy logistics officer for the commander of the U.S. Navy Seventh Fleet in Yokosuka, Japan, and later director of operations for Fleet Logistics Command in Singapore.

Sanchez, who referred to Francis as “Lion King” and “Boss” in e-mails, received more than $100,000 in cash and prostitutes that Francis arranged for him and his friends in Kuala Lumpur and Manila, prosecutors said when Sanchez was arrested in November 2013 in Tampa, Florida.

U.S. Navy Captain Daniel Dusek pleaded guilty Thursday to one count of conspiracy to commit bribery, becoming the highest-ranking officer to admit a role in the scheme.

Dusek, 47, helped send the USS Abraham Lincoln and its carrier strike group to Port Klang, Malaysia, in 2010 at the request of Glenn Defense Marine, according to his plea agreement. Dusek also provided classified ship schedules, prompting one Glenn Marine Defense manager in Japan to call him “an official GDMA cardholder,” according to the court filing.

Gifts, Entertainment

In exchange, Dusek received gifts and entertainment, including “approximately eight nights in lavish hotel rooms, entertainment, and the services of prostitutes during port visits by the USS Blue Ridge to Manila, Philippines and Hong Kong,” according to the plea agreement.

Dusek’s lawyer, Douglas L. Applegate, didn’t immediately respond to a phone message seeking comment on the plea.

A Navy criminal investigator who Francis bribed for information about a probe of Glenn Defense Marine pleaded guilty in 2013. A petty officer first class also pleaded guilty in the scheme.

U.S. Navy Captain-Select Michael Misiewicz, 47, who was first charged in 2013 at the same time as Francis, was indicted Jan. 6 for bribery conspiracy and seven counts of bribery.

Francis and Dusek are scheduled to be sentenced April 3. Sanchez’s sentencing hearing is set for April 27.

Two other Navy officials, a contract specialist and a lieutenant commander, have also been identified by Francis as taking bribes from him, according to a statement from the U.S. attorney’s office in San Diego. Those two haven’t been charged, according to the statement.

The cases are U.S. v. Francis, 13-cr-03781, 13-cr-03782, 13-cr-04287, U.S. District Court, Southern District of California (San Diego).

Before it's here, it's on the Bloomberg Terminal.