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Navy seeks to sever ties with tainted contractor

Nov. 14, 2013 - 02:52PM   |  
The Arleigh Burke-class guided-missile destroyer USS Mustin (DDG 89) transits Oct. 11 during a training exercise underway. A logistics officer for Mustin was charged with accepting prostitutes, luxury travel and $100,000 in cash from the CEO of a Singapore-based company.
The Arleigh Burke-class guided-missile destroyer USS Mustin (DDG 89) transits Oct. 11 during a training exercise underway. A logistics officer for Mustin was charged with accepting prostitutes, luxury travel and $100,000 in cash from the CEO of a Singapore-based company. (MC3 Paul Kelly / Navy)
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WASHINGTON — The Navy has terminated more than $200 million in contracts with the defense contractor at the center of a widening scandal involving high-ranking officers, prostitutes and bribes.

The Navy ended three contracts for cause with Glenn Defense Marine Asia valued at $196 million, according to a Navy official who spoke on condition of anonymity to discuss the case that remains under investigation. Another $7.5 million in contracts were terminated "for convenience" as the Navy seeks to sever its ties with the contractor.

The scandal, which spreads "day by day," according to Acting U.S. Assistant Attorney General Mythili Raman, has rocked the Navy from the Pacific to the Pentagon. Meanwhile, a member of the House Armed Services Committee said the allegations expose problems that go "to the core" of the Navy.

"Classified information in exchange for prostitutes and in one case $100,000 in cash?" said Rep. Jackie Speier, D-Calif., who on Wednesday introduced the latest in a series of bills aimed at sexual assault in the military. "That suggests that to the core the institution needs to be scrubbed clean with peroxide or something. It needs a good cleaning. It is an absolute frat house."

The schemes allegedly involved Navy officials steering business to the contractor in exchange for kickbacks, prostitutes and luxury travel. The CEO for the Singapore-based company, Leonard Francis, was arrested in September after investigators tricked him into traveling to San Diego using a business meeting as an excuse.

Navy officers provided Leonard with classified information about their vessel's movements, the kind of insider information that he parlayed into cash, according to the Justice Department, which is prosecuting the case. In one instance, a logistics officer arranged for the USS Mustin to bypass a cheaper option to refuel the ship, instead steering the business to Leonard and doubling the cost to $1 million. That officer, U.S. Navy Cmdr. Jose Sanchez, 41, was charged last week with accepting prostitutes, luxury travel and $100,000 in cash from Leonard.

The payback allegedly spread to more than just Sanchez, according to the Justice Department and Naval criminal investigators.

On Oct. 16, 2009, Sanchez and Francis allegedly discussed a trip to Kuala Lumpur and Singapore for Sanchez and the Navy friends he called his "Wolf Pack," according to the Justice Department. They discussed hotel rooms for the"Wolf Pack," and Sanchez asked for pictures of prostitutes for "motivation."

Francis replied: "J, got it we will hook up…will arrange a nest for you guys and some birds [women]."

Glenn Defense Marine Asia, based in Singapore, has provided hundreds of millions of dollars of services to the Navy throughout the Pacific. It has supplied food, water, fuel, tugboats, security, transportation, trash and sewage disposal to ships and submarines. The Navy is now working with other contractors to service its ships in the region, the official said.

Glenn Defense won its first contract in 1997 for servicing an aircraft carrier at Port Klang in Malaysia, according to the Navy official. Leonard was a common sight at piers throughout southeast Asia as ships pulled into port. Colorfully dressed and huge at more than 300 pounds, he was hard to miss, Navy officers say.

The scandal's taint smeared the Pentagon last week. That's when the Navy suspended two of its most senior officers over unspecified allegations involving the contractor. The Navy placed Vice Adm. Ted Branch, director of Naval Intelligence, and Rear Adm. Bruce Loveless, director of intelligence operations, on temporary leave and cut their access to classified information.

Rear Adm. John Kirby, the Navy's top spokesman, has said that more Navy officers and civilians may be charged in the scandal.

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