This article is more than 6 years old

This article is more than 6 years old

A gregarious Malaysian businessman nicknamed "Fat Leonard" is accused of obtaining military secrets by arranging prostitutes, Lady Gaga tickets and other bribes for a US commander.

Michael Vannak Khem Misiewicz, a US navy commander, passed confidential information on ship routes to Leonard Francis's Singapore-based company, Glenn Defense Marine Asia Ltd (GDMA), according to court documents.

The accusations unfolding in a federal court case signal serious national security breaches and corruption, and threaten to sweep up more people, including those of higher ranks, as the investigation continues. A hearing on 8 November could set a trial date.

Misiewicz and Francis moved navy vessels like chess pieces, diverting aircraft carriers, destroyers and other ships to Asian ports with lax oversight where Francis could inflate costs, according to the criminal complaint. The firm overcharged the navy millions for fuel, food and other services it provided, and invented tariffs by using fake port authorities, the prosecution alleges.

"It's pretty big when you have one person who can dictate where ships are going to go and being influenced by a contractor," said the retired rear admiral Terry McKnight, who has no direct knowledge of the investigation. "A lot of people are saying: 'How could this happen?'"

So far, authorities have arrested Misiewicz, Francis, his company's general manager of global government contracts, Alex Wisidagama, and the senior navy investigator John Beliveau II. Beliveau is accused of keeping Francis updated on the investigation and advising him on how to respond in exchange for luxury trips, prostitution services and more.

All have pleaded not guilty. The defendants face up to five years in prison if convicted of conspiracy to commit bribery. Defence attorneys declined to comment.

Senior navy officials said they believed more people were likely to be implicated in the scheme, but it was too early to tell how many or how high it would go in the naval ranks. Other unnamed navy personnel are mentioned in court documents as getting gifts from Francis.

Francis is legendary in military circles for his extravagance. His bungalow in an upscale Singapore neighbourhood has drawn spectators for years with its lavish, outdoor Christmas decorations, which the Straits Times newspaper described as rivalling the island city state's main shopping street.

"He's a larger-than-life figure," McKnight said. "You talk to any captain on any ship that has sailed in the Pacific and they will know exactly who he is."

A navy spokesman, Rear Admiral John Kirby, said navy criminal investigative service agents had initiated their probe in 2010, but declined to comment, citing the investigation.

Francis's company cheated the navy out of $10m in just one year in Thailand alone, the US attorney Laura Duffy said.

The federal government has suspended its contracts with Francis.