The Navy Fraud Scandal That Just Won’t Go Away

The DOJ is continuing an investigation which has already ensnared more than a handful of Navy officials.

WASHINGTON, DC - SEPTEMBER 22: U.S. Navy Secretary Ray Mabus leaves the podium after he spoke during a memorial service for victims of the Washington Navy Yard shooting at the Marine Barracks September 22, 2013 in Washington, DC. The president and the first lady visited with families of the victims in the deadly shooting at the Washington Navy Yard. Thirteen people, including the gunman Aaron Alexis, were killed in the incident. (Photo by Alex Wong/Getty Images)
National Journal
Jordain Carney
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Jordain Carney
Dec. 29, 2013, 11:49 p.m.

A Navy fraud in­vest­ig­a­tion is be­com­ing one the largest scan­dals for the armed ser­vice in re­cent years, and the in­vest­ig­a­tion is spill­ing over in­to 2014.

Le­onard Glenn Fran­cis, the CEO for Singa­pore-based Glenn De­fense Mar­ine Asia, was ar­res­ted in Septem­ber for al­legedly brib­ing of­fi­cials with cash, trips, and oth­er items in ex­change for ship in­form­a­tion.

So far, six Navy of­fi­cials have been tied to the in­cid­ent with two ar­res­ted.

“I cer­tainly don’t think we’ve seen the end of it,” Navy Sec­ret­ary Ray Mabus said earli­er this month, dis­cuss­ing the case pub­licly for the first time dur­ing a press con­fer­ence. “I think it’s fair to say that there will be more dis­clos­ures com­ing in.”

The sec­ret­ary de­clined to say if he be­lieves those dis­clos­ures will res­ult in the ar­rest of more Navy of­fi­cials.

The in­vest­ig­a­tion — and res­ult­ing me­dia fo­cus — has put how the Navy handles its con­tract­ing un­will­ingly un­der the spot­light, but Mabus said he would “rather get bad head­lines than let bad people get away.”

John Ber­trand Be­liveau Jr., a su­per­vis­ory spe­cial agent with the Nav­al Crim­in­al In­vest­ig­at­ive Ser­vice, also plead guilty earli­er this month to par­ti­cip­at­ing in the al­leged fraud.

And the Justice De­part­ment noted in a press re­lease that the in­vest­ig­a­tion is still on­go­ing to de­term­ine the full scope of the al­leged at­tempt to de­fraud the Navy. Mabus couldn’t com­ment on the amount of money that has been de­frauded. But in court doc­u­ments, U.S. at­tor­neys char­ac­ter­ize it as a “multi-na­tion­al, multi-year, multi-mil­lion dol­lar fraud on the United States Navy.”

Mabus touted the Navy’s hand in launch­ing the in­vest­ig­a­tion. Though that star­ted in 2010, GDMA con­tin­ued to hold nav­al con­tracts well in­to this year. Mabus ex­plained that sus­pend­ing a con­tract with GDMA be­fore they were ready to move for­ward with charges would have signaled that something was wrong and “GDMA would have got­ten the con­tract back.”

“Without the Navy and Navy’s ac­tions, there would al­most cer­tainly be no story today,” Mabus said.

While the in­vest­ig­a­tion con­tin­ues, the al­leg­a­tions of fraud already have the Navy re­think­ing how it handles some of its con­tracts. Those ac­tions in­clude in­creas­ing the num­ber of items it can set a cer­tain price for while at for­eign ports, cent­ral­iz­ing and stand­ard­iz­ing how top com­mand­ers deal with sup­plies over­seas, and put­ting to­geth­er a “red team of ex­perts” who are to re­view and pos­sibly re­com­mend changes to how the Navy handles con­tract­ing. An audit of hus­band­ing and port ser­vices con­tracts is ex­pec­ted in June.

Mabus said since 2009 the Navy has sus­pen­ded more than 250 con­tract­ors and blocked ap­prox­im­ately 400 more from hold­ing nav­al con­tracts. El­li­ott Branch, the deputy as­sist­ant sec­ret­ary of the Navy for Ac­quis­i­tion and Pro­cure­ment, said that rep­res­ents a frac­tion of the tens of thou­sands of con­tract­ors the Navy deals with.

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