US Navy officials charged in ‘Fat Leonard’ fraud

A Malaysian national operating from naval bases in Singapore and across Asia has managed to cause one of the biggest criminal fraud cases in US Navy history. US government investigators have detained and charged multiple US Navy officials for offences relating to bribery and corruption.

The Malaysian national is named Leonard Glenn Francis – widely known as “Fat Leonard” – who operated Glenn Defense, a maritime service company which held more than $200 million worth of contracts to resupply and refuel US Navy vessels across Asia.

The scandal became public in September 2013 when federal investigation agents Leonard Glenn Francis, from his base in Asia to San Diego in a sting operation. Leonard Glenn Francis believed that Glenn Defense was on the cusp of being awarded further US Navy contracts; instead he was arrested and charged with bribery and corruption offences. Leonard Glenn Francis has since pleaded guilty to bribing “scores” of US Navy officials with prostitutes, cash, gifts, expensive meals and other indulgences over a decade.

Leonard Glenn Francis has allegedly now admitted to cheating the US Navy out of at least US$35 million by ways of forging invoices, overbilling, running kickback schemes and gouging for standard maritime services. Essentially, Leonard Glenn Francis bribed senior officers within the US Navy so that they would turn a blind eye to the increased charges.

Leonard Glenn Francis operated a sophisticated machine to penetrate various levels of the US Navy establishment to ensure he obtained the information he needed and covered his tracks where necessary. Leonard Glenn Francis allegedly recruited three officers within the US Navy to act as paid moles for the contractor, Glenn Defense Marine Asia, by leaking intelligence about criminal investigations into the company or other information to give the firm an unfair advantage over competitors.

It is alleged that Leonard Glenn Francis and Glenn Defense had:

  • Bribed US Navy officers with access to prostitutes and gifts of cash or electronic items
  • Corruptly arranged the US Navy to grant diplomatic clearance to Glenn Defense so that it could avoid inspections and dodge customs duties into the Philippines
  • Bribed a retired commander to leak Naval Criminal Investigative Service (NCIS) files to Glenn Defense to help the firm thwart fraud inquiries.

Leonard Glenn Francis adeptly identified personnel on ship and shore, civilian and uniform, who were willing to work with him to defraud the US Navy. Leonard Glenn Francis even hired retired IS Navy officers who then helped recruit active-duty officers to assist with supplying information.

With the high level contacts with US Navy decision makers, Leonard Glenn Francis was able to have ships steered to certain ports where Glenn Defense could easily overcharge the Navy for services.

Leonard Glenn Francis benefited from the US Navy ignoring warnings over the years from honest US Navy personnel, some who requested reviews and cancellations of contracts due to the huge charges for services that Leonard’s company billed. When he fell under suspicion, Leonard Glenn Francis had a Navy criminal investigator pass him internal documents about investigations into Glenn Defense.

Leonard Glenn Francis was an adept networker and worked hard to cultivate relationships in the Navy. He chose to host lavish parties for US Navy officers at select restaurants and bars, spending freely to entertain. Leonard Glenn Francis would then start the bribery process by giving small gifts to individual officers such as whisky or the services of a prostitute – those that accepted the gifts were then targeted to obtain information whilst the gifts were increased in frequency and value.

In 2008, Leonard Glenn Francis targeted one US Navy officer based at the Fleet Logistics Centre in Yokosuka, Japan. The officer was involved in the naval supply system, responsible with providing logistics support for ships, awarding and overseeing contracts.

This officer provided internal US Navy information on ship schedules, port visits, and how the service would handle ship servicing contracts and controlling costs. Leonard Glenn Francis exploited this information so that he could charge excessive costs. In exchange, the officer received more than US$100,000 in cash, stays at luxury hotels and the services of prostitutes.

Leonard Glenn Francis built up a web of contacts throughout the US Navy – including those on contract review boards, which could recommend and approve bidders for Navy contracts. Leonard Glenn Francis would then have his contacts steer contracts for servicing ships to Glenn Defense in Thailand and the Philippines.

The federal investigation has established that Leonard Glenn Francis ran a decade-long scheme by which he defrauded the US Navy out of tens of millions of dollars by targeting a handful of key points in Asian operations of the fleet.

So far, federal investigators have charged 14 individuals and prosecutors have said that as many as 200 others are under investigation. According to US Navy officials, nearly 30 admirals are under scrutiny for possible criminal or ethical violations.