It’s Not Just Navy Admirals Being Naughty—The Pentagon’s Got a Major Behavior Problem

The ‘Fat Leonard’ scandal is symptomatic

by MATTHEW GAULT

When U.S. Navy Cmdr. Jose Luis Sanchez sent an email asking to see pictures of the prostitutes he had been promised, Leonard Glenn Francis complied. Days later Sanchez replied via Facebook, “Yummy … daddy like.”

Francis — “Fat Leonard” to many — is the larger-than-life Malaysian businessman in charge of shipping-support empire Glenn Defense Marine. He allegedly doled out cash, hookers and concert tickets to senior officials in the Navy in exchange for classified information and preferential treatment involving contracts worth millions of dollars.

“Not since ‘Ill Wind’ in the 1980s have I seen such clear-cut signs that the rot includes the top,” Winslow Wheeler, the director of the Straus Military Reform Project, told War is Boring via email. Ill Wind was the FBI’s sweeping 1986 investigation targeting federal corruption.

The Fat Leonard affair is just the latest corruption case to come out of the U.S. military, an organization that has seen more than its share of scandals in the past decade. For generations the Pentagon has run the world’s mightiest armed forces with inadequate budgetary oversight. The system is broken.

Something needs to change, and it needs to change yesterday. If it doesn’t, the Fat Leonard debacle—with its self-serving commanders, misspent millions and compromised military secrets—could become the norm.

Vice Adm. Ted Branch, at center, aboard the aircraft carrier USS George H.W. Bush in 2011. Navy photo

‘The Tony Soprano of Singapore’

On Nov. 8, Navy officials announced that two admirals were under investigation for their connection to the shipping magnate Fat Leonard.

Vice Adm. Ted Branch, the director of naval intelligence, and Rear Adm. Bruce Loveless, who heads the Navy’s intelligence operations branch, have not been charged with a crime. They’ve been put on temporary leave and had their access to classified material suspended.

Three officers beneath them, however, have not been so lucky. Cmdr. Michael Misiewicz, Cmdr. Jose Luis Sanchez and John Bertrand Beliveau II—a supervisory special agent with the Naval Criminal Investigative Service—have been arrested and charged with conspiracy to commit bribery. All three have pleaded not guilty.

It doesn't look pretty. Court documents released by the Department of Justice detail a history of Misiewicz, Beliveau and Sanchez allegedly working to keep Fat Leonard happy so they could share in his profits.

Sanchez and Misiewicz allegedly helped to convince the Navy to dock their ships in Fat Leonard’s ports, where Leonard would overcharge for his services and bilk the government out of millions. Beliveau also allegedly used his position at the NCIS to keep tabs on any investigations into the practice—all to give advance warning to Fat Leonard if investigators took notice.

But it didn't work. Fat Leonard has lost his lucrative Navy contracts worth $203.5 million and is now facing jail time. It’s not the first time he’s been on the wrong side of the law. He’s also been jailed for weapons charges in his home country and suffered lashes from a cane.

It all adds credence to one former Navy officer’s description of him as “the Tony Soprano of Singapore.”

But the Pentagon’s recent history is infested with cases like this, and the lack of oversight and murky prosecutorial measures mean there is likely much more to come.

The crew of the USS Donald Cook resupplies in Djibouti. Navy photo

Ill Wind blows

In 1986, the FBI launched a three-year investigation into corruption within the U.S. government, military staff and civilian contractors. Dubbed “Operation Ill Wind,” the case is still the biggest corruption crackdown in U.S. history. More than 90 convictions were handed out to individuals and companies including GE, Boeing and Unisys.

Unisys took home eight felonies. Melvyn Paisley, at the time the assistant secretary of the Navy, was found to have accepted hundreds of thousands of dollars in bribes. Paisley’s successor James Gaines was also found guilty. Victor Cohen, the deputy assistant secretary of the Navy, was sentenced to a six months in prison.

The problem was too big to ignore, and in 1988 Congress passed the Procurement Integrity Act. It bars the disclosure of procurement information and the obtaining of said information, requires the disclosure of conflicts of interest by procurement officers and institutes a one-year ban on government personnel accepting compensation from contractors.

In addition, the CFO act was passed in 1990 and requires all government agencies to audit their own paperwork and bring their finances under control.

But the CFO act and the Procurement Integrity Act are failures—and epic ones at that.

Darleen Druyun in December 1999. C-SPAN capture

Boeing’s ‘Dragonlady’

In 2002, Air Force Deputy Undersecretary Darleen Druyun retired, ending a 30-year career where she was hailed for saving the Air Force an estimated $20 billion for her policy of “better, faster cheaper” acquisition.

The forceful management and negotiation tactics earned her the nickname “Dragonlady.” After leaving the Air Force, she accepted a position at Boeing with a six-figure income. A year later, she was charged with corruption, plead guilty, paid a $5,000 fine and began a nine-month prison sentence..

It turns out that Druyun was negotiating acquisition contracts with Boeing at the same time she was negotiating her own contract with the Chicago plane-maker.

At the time, the Air Force was looking to replace a large number of their refueling tankers. Druyun negotiated a deal with Boeing whereby the Air Force would pay $23.5 billion dollars for a package of KC -767 tankers that would have cost only $15 billion if they were purchased individually. Druyun said that price inflation was her “parting gift to Boeing.”

And why not? Druyun was already on her way to $250,000 a year from Boeing, a company that had already given her daughter and her daughter’s fiance jobs. This wasn't the first time Druyun had been scrutinized either: she had also been investigated as part of Operation Ill Wind.

Thunderbirds wooing the people. dbking/Flickr photo

Thunderbirds are go

Air Force Gen. Michael Moseley, the chief of staff, loved the Thunderbirds, the Air Force’s demonstration squad. They’re less well-known than their naval counterparts the Blue Angels , but Moseley had a plan to change that.

Or rather, his recent acquaintance Ed Shipley had a plan to change it. Shipley, a z-list producer of workout videos, cozied up to Moseley in the early years of the War on Terror. In 2004, he pitched a plan to Moseley to jazz up the Thunderbirds.

He called it “Thundervision.”

Shipley wanted to film the Thunderbirds doing stunts and display those stunts on jumbotrons during the Thunderbirds’ normal performances. The idea being that seeing the planes in person wasn't enough—audiences also wanted to view pre-recorded stunts on giant screens during the live show.

The cost: a mere $50 million.

The contract went through the bidding system and Shipley’s company SMS won. Unfortunately for Shipley and Moseley, people started asking questions.

SMS was only a few years old. A competing bid for the Thunderbirds project came in at $25 million but was not considered. Maj. Gen. Stephen Goldfein, a friend of Moseley, seemed to be pushing really hard for SMS to win the contract. SMS had just hired a retired Air Force general, Hal Hornburg, another friend of Moseley and Goldfein.

All of this was outrageous enough to get the bid for the project thrown out. “I cannot support burning that kind of money to fix something that isn't broken, when I am not buying fixes to things that are broken,” Gen. Ronald Keyes, the Air Combat Command commander, wrote in an email to Moseley.

Shipley wasn't happy about the bid being thrown out. He sued the Air Force for the work he’d already put in, and the Department of Justice awarded him $1.9 million.

David B. Gleason photo

Something has to change

The Thunderbirds incident and the Dragonlady’s dalliances are just two of the worst scandals in recent memory. It doesn't take much digging to find more. Overshadowed by the Fat Leonard scandal, the feds also launched an investigation this week into three Navy intelligence officials who colluded to charge the government $1.6 million for silencers that cost $8,000 to manufacture.

Then there’s the case of the twin sisters who own C&C Distributors in Lexington, South Carolina. Over the course of six years the sisters, one of whom later committed suicide, collected $20.5 million from the Pentagon by exploiting the purchasing system. One time they charged $455,000 in shipping fees to send three screws to Marines in Iraq.

What the Hell is going on? War is Boring reached out to Scott Amey — a lawyer with the Project On Government Oversight — to ask how exactly the Pentagon pursues charges of corruption and if the methods are effective.

“The federal government has laws and regulations to prevent bribery, ethics violations and conflicts of interest,” Amey said. “Additionally, there are many disclosure requirements to help deter and detect violations or the appearance of violations. Investigations are conducted by Inspectors General and the Department of Justice, and can result in criminal, civil or administrative actions against government officials or contractors who violated the laws.”

“Unfortunately, the federal laws and regulations are very complex, which makes it difficult to navigate the system,” Amey added. “The system also places a lot of emphasis on the federal employee to seek ethics advice. Simply stated, the system is inadequate and leads to a lot of violations by employees who try follow the laws, and it does little to deter the bad apples who think they won’t get caught.”

The system isn't just inadequate, it’s broken. Even the Pentagon is aware that cases like this are on the rise. And there are also real concerns that people who report ethical and moral violations are open to reprisal.

Auditing the Pentagon—finding out just where the money is going and to whom—is a step in the right direction, but at this point it seems like a dream. The Pentagon claims it’s impossible.

“The oversight is so lousy,” said Wheeler of the Straus Military Reform Project. “People think they can get away with it. We have no idea whether these cases are exceptions to the rule or the normal practice, because the Pentagon has kept itself unauditable. The dark thought has crept into my mind that it’s not a question of competence but design on the part of the Pentagon leadership. It goes beyond malfeasance.”

There are plans in the works to get an audit of the Pentagon by 2014 and a congressional act, up for a vote this year, demanding an audit. Meanwhile, it seems the only thing that the Pentagon as an institution learned from Operation Ill Wind was how to better cover its tracks … and who to throw under the bus when thieves and cheats gets caught.