On Friday, the U.S. government posted a $40,000 reward for information leading to the arrest of the Malaysian defense contractor nicknamed "Fat Leonard," who disappeared weeks before being sentenced for one of the largest bribery scandals in the nation's defense contracting history.
Francis pleaded guilty in 2015 to offering prostitution services, luxury hotels, cigars, gourmet meals, and more than $500,000 in
bribes to Navy officials and others to help his Singapore-based ship servicing company, Glenn Defense Marine Asia Ltd. or GDMA. Prosecutors said the company overcharged the Navy by at least $35 million for servicing ships, many of which were routed to ports he controlled in the Pacific.
Currently, ten U.S. agencies are searching for Francis. U.S. authorities also issued a red notice, which asks law enforcement worldwide to arrest someone with the possibility of extradition provisionally. Malaysia and Singapore both have extradition agreements with the United States.
The Bribery Scandal
The Fat Leonard scandal is a corruption scandal within the United States Navy in the 2000s–2010s involving ship support contractor Glenn Defense Marine Asia (GDMA), a Thai subsidiary of the Glenn Marine Group. The Washington Post called the scandal "perhaps the worst national-security breach of its kind to hit the Navy since the end of the Cold War." The company's chief executive, president, and chairman, Malaysian national Leonard Glenn Francis ("Fat Leonard") bribed a large number of uniformed officers of the United States Seventh Fleet with at least a half million dollars in cash, plus travel expenses, luxury items, and prostitutes, in return for classified material about the movements of U.S. ships and submarines, confidential contracting information, and information about active law enforcement investigations into Glenn Defense Marine Asia. Francis then "exploited the intelligence for illicit profit, brazenly ordering his moles to redirect aircraft carriers to ports he controlled in Southeast Asia so he could more easily bilk the Navy for fuel, tugboats, barges, food, water, and sewage removal." The Navy, through GDMA, even employed divers to search harbors for explosives. He also directed them to author "Bravo Zulu" memos, an informal term for a letter of commendation from the Navy given to civilians who have performed outstanding services for the Navy, to bolster GDMA's credibility for jobs "well done."
The first activities of the conspiracy were confirmed to have existed in 2006 when Francis recruited numerous Navy personnel to engage in corruption, including directing contracts toward his firm, disfavoring competitors, and inhibiting legitimate fiscal and operational oversight. The initial co-conspirators labeled themselves "the cool kids" and "the wolf pack."
U.S. federal prosecutors filed criminal charges against 33 people in connection with the Fat Leonard scandal. Of those, 22 pleaded guilty: Francis himself, four of his top aides, and 17 Navy officials (specifically, at least ten commissioned officers, two petty officers, one former Naval Criminal Investigative Service (NCIS) special agent, and two civilian Navy contracting officials). Nine others are awaiting trial in U.S. district court in San Diego. Separately, five Navy officers were charged with crimes under the Uniform Code of Military Justice (UCMJ) and have been subject to court-martial proceedings. An additional civilian pleaded guilty to a scandal-related crime in Singapore court.
Suffering health problems, Francis was hospitalized and released in March 2018. Rather than returning to the custody of the U.S. Marshals Service, he was granted a medical furlough and allowed to stay in San Diego at a private residence owned by one of his physicians, under 24-hour surveillance for which his family paid. At a deposition taken in 2018 in the David A. Morales case, Francis said he is being treated for kidney cancer.
Discounting whistleblower warnings
In 2006, Dave Schaus, a Naval officer, became suspicious of GDMA contracts, but Francis was alerted by an informant, Paul Simpkins, to the scrutiny. Simpkins, a decorated veteran of the U.S. Air Force employed as a civilian contracting officer by the Navy in Singapore, managed to quash any inquiry and had Schaus' position eliminated. "What else could I have done to expose this racket? " Schaus asked. Exposed as a whistleblower, he said officers "made my life hell" after discovering he had attempted to initiate an investigation of GDMA.
In 2007, the Navy's Inspector General forwarded a document claiming GDMA was grossly overcharging the Navy for providing port security, but NCIS may have failed to follow up the warning. A senior Navy officer said, "Everybody knew that [Glenn Defense] had been under investigation." "Everybody also knew that nothing ever happened with those investigations." After that, the Manila NCIS office got an anonymous letter and documents alleging GDMA had overcharged for fees, armed guards, and other services during a Subic Bay, Philippines port visit by the Fred Stockham container support ship. "I hope you share the same concern when reading these documents and take swift action to stamp out this fraud, waste, and abuse," the letter said.
Manila's NCIS agents forwarded the paperwork to the Navy's Singapore contracting office, but it had been infiltrated by GDMA's moles, and they claimed the allegations were false, closing the case. Mike Lang, a contracting officer from 2006 to 2008, said, "They'd always side with Glenn Defense and paint us as troublemakers. They'd say, 'Why are you harassing our contractors? You're doing my job hard."
Two officials from that office, Simpkins and his subordinate, Sharon Gursharan Kaur, a civilian Navy contracting officer, and a former GDMA employee, were sentenced to six years and 33 months, respectively, respectively, the latter doing her time in Singapore. NCIS reportedly opened and closed as many as 27 investigations without taking action against GDMA. NCIS has yet to explain this lack of action in a significant fraud investigation.
Tepid responses
Documents obtained by The Washington Post via Freedom of Information Act Requests (FOIAs) revealed that after al-Qaeda committed the October 2000 suicide attack on the USS Cole and the September 11, 2001 attacks on the World Trade Center and the Pentagon, the Navy's Economic Crimes unit was reduced from a staff of 140 to only nine persons, most having been reassigned to focus on terrorism. At least 27 separate investigations had been opened but later closed without action, thanks to the intervention of senior Navy personnel in league with Francis.
The lack of enthusiasm for oversight might have been motivated in part by GDMA's demonstrable ability to deliver the sometimes complex level of services the Navy sought. In 2016, Commander Mike Misiewicz, a later convicted officer, told Defense News, "He was a crook, but he was our crook." John Hogan, the NCIS executive assistant director for criminal operations, admitted, "In hindsight, maybe we could have dug a little deeper than we did."
Ray Mabus, appointed Navy Secretary by President Obama in 2009, admitted his branch was vulnerable to contracting fraud and should have performed better oversight: "I'm not going to defend at all opening and closing 27 cases. Something should have raised a red flag along there somewhere...There were people inside the Navy who were trying to shut this down, who were coming up with reasons not to pursue it." In 2010, a civilian Navy attorney drafted restrictive ethics guidelines for the 7th Fleet. Two admirals friendly to Francis were said to be responsible for seeing that it was delayed and diluted over the next 2 1/2 years before being implemented.
Eventual actions
In 2010, Navy officials became suspicious that some of the bills submitted by GDMA from Thailand were padded. The escalating costs prompted the Navy to build a logistics team to keep contracts somewhat in check, but it was frustrated because Francis had a spy, Jose Luis Sanchez, feeding its information back to him. (Sanchez has pleaded guilty to conspiracy and awaits sentencing.) Despite the increasing awareness that the Navy was being subjected to massive fraud, GDMA was able to contract to deliver $200 million in services in 2011 alone.
After a three-year investigation and having planted false information that their inquiries had been closed, putting Francis off his guard, federal agents lured him to the United States. In September 2013, he was arrested in a sting operation at a San Diego hotel. He pleaded guilty in January 2015 and was awaiting sentencing. He had been living under home detention since at least 2018 in San Diego. On September 5, 2022, he became a fugitive after cutting off his ankle monitor. Leonard admitted to using his U.S. Navy contacts, including ship captains, to obtain classified information and to defraud the Navy of tens of millions of dollars by steering ships to specific ports in the Pacific and falsifying service charges. In his plea, Francis identified seven Navy officials who accepted bribes. He faces a maximum prison sentence of 25 years and agreed to forfeit $35 million in personal assets, an amount he admits to overcharging the Navy.
