How 'Fat Leonard' Scammed the US Navy

Glenn Francis Leonard recruited US Naval officers as moles.

The U.S. Navy may be the most powerful military force on the planet, but that doesn’t mean it isn’t subject to a scam now and then. After a series of suspicions for the past four years that something was awry, Navy officials and federal prosecutors have figured out how one Malaysian businessman was swindling the Navy for millions of dollars in lucrative contracts. What’s worrisome is how easy it was for him to glean classified and sensitive information through bribery.

Glenn Francis Leonard – known within the navy as “Fat Leonard” – and his Singapore-based firm, Glenn Defense Marine Asia (GDMA), not only managed to scam the U.S. Navy during a time of relative defense austerity, but did so by recruiting senior naval officials as moles. The controversy is thus being reported widely as an episode of corruption rather than mere incompetence. According to the Wapo, "The informants allegedly leaked sensitive information about contracts as well as closely guarded details about law-enforcement probes targeting Glenn Defense Marine, enabling the company to bilk the U.S. government out of more and more money as it fended off the investigations.”

One of these informants – Michael Vannak Khem Misiewicz – allegedly abetted Leonard’s activities directly. According to the AP and court documents, "Misiewicz and Francis moved Navy vessels like chess pieces, diverting aircraft carriers, destroyers and other ships to Asian ports with lax oversight where Francis could inflate costs, the criminal complaint alleges. The firm overcharged the Navy millions for fuel, food and other services it provided, and invented tariffs by using phony port authorities.” The AP further reports that the only arrests made so far are "Misiewicz; Francis; the general manager of global government contracts for Francis' company, Alex Wisidagama; and a senior Navy investigator, John Beliveau II.”

Another informant, Jose Luis Sanchez, a deputy logistics officer for the U.S. 7th Fleet, alerted Francis to episodes that raised suspicions that his firm was cheating the navy – according to the Washington Post, Sanchez told Francis that the officials were raising eyebrows at a US$110,000 charge for a docking fee during a naval ship’s visit to Malaysia. In return "Francis provided Sanchez and other Navy personnel with female escorts and upscale hotel rooms during visits to Singapore and Malaysia."

The nature of the bribes offered to Naval officers by GDMA encompassed everything from prostitutes, to luxury goods and Lady Gaga tickets. In an interview with Voice of America, Carl Thayer – Professor emeritus at the Australian Defense Force Academy and a defense columnist for this very blog at The Diplomat – said that he had seen occasional slip-ups resulting in leaks of classified information, but "not on this organized a scale itself and not involving, specifically, in this area of the world in my recent memory.” Indeed, the episode is almost certain to prompt a heavy audit of the U.S. Navy’s contract activities in across the Asia-Pacific for similar cases of corruption.

The reverberations across the Navy have already been immense. According to VoA, Captain Daniel Dusek of the USS Bonhomme Richard is undergoing investigation as part of the scandal and has been relieved of his duties by Rear Admiral Hugh Wetherhald. Commander William Marks, spokesman for the U.S. 7th Fleet, notes that the scandal has created gaps in trust across the chain of command.

Naturally, the U.S. federal government has suspended all its dealings with GDMA. If convicted, the defendants face up to five years is prison for conspiracy to commit bribery. The episode is sure to lead to an increase in the level of scrutiny applied to U.S. defense contracts across the region.