For more than a decade, Malaysian tycoon Leonard Glenn Francis — a rotund grifter better known as “Fat Leonard” — bribed scores of top Navy officers with booze, prostitutes and luxury gifts to bilk the American taxpayer out of at least $35 million in bogus bills.
Leonard’s arrest in a San Diego sting operation nearly four years ago triggered the collapse of his overseas port services company, Glenn Defense Marine Asia, the prosecution of dozens of Navy officers and civilian officials, and the ongoing internal investigation of 30 admirals and more than 200 sailors for corruption.
When the Navy began probing Glenn Defense for inflated invoices, fake work orders and inexplicable cost overruns, investigators soon realized that Fat Leonard’s moles had infiltrated key sectors of the military’s logistics and law-enforcement branches, feeding him classified information on warship movements while choking inquiries into the fraud.
While the scandal mostly has played out in federal court, the Navy quietly has been rolling out a series of reforms designed to strengthen its leaders, battle corruption and ensure a con man can’t assume Fat Leonard’s mantle.
“Our Navy functions on a foundation of trust and confidence,” Navy spokeswoman Capt. Amy Derrick said in a statement. “We must maintain the trust and confidence of the American people we are sworn to protect. We must also strengthen trust and confidence within the Navy between all parts of the chain of command. It is trust and confidence that enable delegation, which is central to operations and combat at sea.”
In an effort to back up Derrick’s words, Navy officials sent to The San Diego Union-Tribune an eight-page report detailing actions taken at the highest levels to ferret out corruption and craft better internal controls. They followed that up with six pages of answers to questions submitted by the news organization, plus reams of supporting audits and internal papers describing the changes.
Not all of these measures have been fully implemented, the Navy’s main report indicates, but the reforms have been sweeping. They range from the role auditors and comptrollers play in scrutinizing bills to the ethics training sailors get in the classroom and how they report suspected wrongdoing to their superiors or agency watchdogs.
Fat Leonard used his network of corrupt Navy officers to prey on the Navy’s onsite contracted logistics system overseas, feasting on fake fees and inflated charges for port services — what sailors call “husbanding.”
Navy reports show that by early 2014, the service had identified key weaknesses in the contracting system. That meant instituting changes to the way the Navy awards and tasks orders and contracts, schedules ships for port visits, approves the purchase of goods and services overseas, and reviews and pays invoices.
Supply officers are no longer allowed to accept gifts from contractors, disclose sensitive information or project any appearance of impropriety. A little more than a year ago, the Navy also established indefinite delivery contracts with multiple husbanding providers, allowing the fleet to competitively price orders with preapproved vendors.
Today, the Navy relies on orders at fixed prices pegged to the most current market rates for goods and services as determined by Fleet Logistics Centers worldwide, not by warship supply officers.
Between Fat Leonard’s arrest and the end of last year, the Navy suspended 566 vendors and permanently debarred an additional 548 from contracts, according to the federal Interagency Suspension and Debarment Committee. That list included Glenn Defense Marine Asia and 55 of its affiliates across the Pacific Rim.
Public corruption watchdogs told the Union-Tribune that the internal revisions to the way the Navy deals with contractors are important, but that the harder problem to fix is a culture of corruption that infested the highest ranks of the maritime service.
“Very few service members get promoted because they blew the whistle on their boss,” said Dan Grazier, a Straus Military Reform Project fellow at the Washington, D.C.-based Project on Government Oversight. “If you don’t get promoted, you get forced out of the service. If that happens before you are eligible for a retirement, you lose out on the lifetime pension. For most people, it is much safer to simply put your head down and keep going until 20 years.”
In 2013 and 2015, staffers in the office of the vice chief of naval operations fanned out worldwide to collect best practices in fighting corruption while striving to help the brass create processes for sailors and Marines to blow the whistle on dirty contractors and military leaders.
To re-emphasize the Navy’s commitment to its core values of honor, courage and commitment, the admiralty instituted new ethics training programs, with a particular focus on flag officers and their key advisers, the judge advocate general attorneys, according to a report provided to the Union-Tribune.
Now, all flag officers and civilian senior executive service officials must complete annual ethics training in conjunction with their filing of federal financial disclosure forms. Similar courses are required for the lower ranks.
To stress the importance of character and what officials call a “values-centered curriculum,” the Rhode Island-based U.S. Naval War College renamed the Command Leadership School as the Naval Leadership and Ethics Center.
“Priority is being placed on strengthening the investment in developing our people to further their competence, confidence, character and integrity, so that their daily actions and decisions are driven by the Navy’s core values and ethos at the individual, unit, community and organizational levels,” Navy spokeswoman Derrick wrote in her statement.
The Navy Personnel Command continues to modify its evaluation process to “include a more robust and genuine assessment of character” to reflect the need for both competence and ethical conduct at every level, from seaman to admiral, she said.
On the horizon: “360 evaluations” that garner feedback by everyone in a command, regardless of rank.
The Army spearheaded the surveying of supervisors, subordinates and peers 16 years ago, but private-sector companies had long used such feedback surveys to aid their personnel, promotion and salary decisions.
Because the Army’s ratings system for commissioned officers also asks about professional bearing and interpersonal tact, the evaluations can help pinpoint toxic and corrupt leaders.
Alongside “command climate” surveys, the 360 evaluations have sparked discipline against high-ranking officers.
The Navy already uses similar “command climate” studies to ferret out bad leaders, and it administers 360 evaluations to every admiral. But that setup hasn’t been extended to obtain feedback from the lowest ranks.
Derrick said the Navy is in the “early stages of overhauling our performance evaluation system” and officials are “working to develop a new one as quickly as possible” for the fleet.
When completed, the Navy hopes to revamp the way it measures sailors’ performance and provide “more meaningful, frequent and useful feedback” to personnel, she said.