Big Frauds

U.S. Navy corruption on the high seas

The $35 million “Fat Leonard” corruption scandal threatens to decimate an entire generation of experienced U.S. Navy officers. What unfolds is the rise and fall of the defense contractor who bought off Navy brass with meals, liquor, women and bribes.

The $35 million “Fat Leonard” corruption scandal is so vast that it threatens to decimate an entire generation of experienced U.S. Navy officers. This story of inflated prices and bid rigging spanned decades, touched hundreds of Navy personnel, damaged the country economically and threatened national security. Here I analyze the fraud to help show the direct and indirect causes and how we might help our organizations identify and prevent similar scandals.

Leonard Glenn Francis, nicknamed “Fat Leonard” behind his back, operated the family business, Glenn Marine Defense Asia, which specialized in servicing ships in the Navy’s 7th Fleet in the Pacific. According to Rolling Stone, Francis’s firm would do almost anything to help the fleet: empty ships of sewage, provide divers who scanned harbors for explosives, drive drunken sailors into town. (See Fat Leonard’s Crimes on the High Seas, by Jesse Hyde, Rolling Stone, March 11.)

Hyde wrote that Francis took the family business to high levels of success because of his incredible ability to identify long-term strategic opportunities to sell Navy contracts and his master manipulation of personnel at any rank. Hyde describes how Francis maintained a self-proclaimed “brotherhood” in the Navy even when it was constantly rotating officers and civilian employees around the world.

Even though multiple internal whistleblowers in the 7th Fleet filed official complaints for years against Francis, the Navy would always close investigations without action. Hyde writes that Francis’s embedded informant, John Beliveau, one of the highest-ranking officers in the Naval Criminal Investigative Service (NCIS), regularly fed him classified investigative reports.


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