Navy to Review Port Contracts in Light of Bribery

Secretary of the Navy Ray Mabus has ordered a review of how husbanding and port service contracts are handled after the recent corruption and bribery scandal ensnared a handful of high-ranking officers.

In a Dec. 5 memo, Mabus instructed Assistant Secretary of the Navy for Research, Development and Acquisition Sean Stackley to review “all acquisition strategies” worldwide and determine whether proper procedures are being followed. He also told the Navy auditor general to audit the contracts to improve internal controls.

Husbanding and port service contracts assist Navy ships and sailors when they pull into a foreign port and include everything from goods and services such as fuel or docking, to water and sanitation. Mabus’ memo is in addition to guidance laid out in September after investigations by the Naval Criminal Investigative Service and audits by the Naval Audit Service raised concerns.

“This review will ensure we have the proper procedures and policies in place to ensure we live up to our responsibility to the American taxpayer,” Mabus said in a Navy statement released Monday. “This is a responsibility I take seriously, and we will take the necessary steps to ensure we do not violate their trust.”

The GDMA scandal — named after the Singapore-based defense contractor Glenn Defense Marine Asia — broke in September when the Justice Department announced the arrests of Cmdr. Michael Vannak Khem Misiewicz, former deputy operations officer aboard the USS Blue Ridge for the Yokosuka-based U.S. 7th Fleet; NCIS supervisory agent John Bertrand Beliveau II; and GDMA head Leonard Glenn Francis.

U.S. prosecutors alleged that Francis swapped prostitutes and luxury travel for classified information, the steering of Navy ships to ports where his company operated and millions of dollars in inflated and fraudulent contracts. Beliveau was accused of informing Francis as investigators closed in.

Subsequently, Navy Cmdr. Jose Luis Sanchez, a deputy 7th Fleet logistics officer, and one of Francis’ top executives, Alex Wisidagama, have been arrested and charged. Navy Capt. David Haas of San Diego’s Coastal Riverine Group 1 has been suspended. Vice Adm. Ted Branch, director of Naval intelligence, and Rear Adm. Bruce Loveless, director of intelligence operations, were put on leave and saw their access to classified material suspended. Capt. Daniel Dusek of the Sasebo-based USS Bonhomme Richard was relieved of his command.

Prosecutors have said the fraud cost the Navy and the American taxpayers more than $20 million and is likely to keep rising. In September, the Navy canceled approximately $200 million in contracts with GDMA.

Officials have said they expect more Navy officers and possibly even Navy civilians to be implicated in the investigation.

It remains unclear how the fraud went undetected for so long. Court documents indicate some Navy officials complained about the company overcharging for services. Navy officials have admitted they were warned about Francis’ criminal past, which did not forbid him from bidding on contracts.

Mabus’ memo, which was also sent to the Commandant of the Marine Corps, the Chief of Naval Operations, General Counsel of the Navy, NCIS and the leadership at the Naval Supply Systems Command, orders cooperation.

“All Department of the Navy components and personnel shall cooperate fully in the execution of this review and audit and be responsive and timely to all requests for relevant information or other support,” the memo states.

Stackley’s final report featuring findings of fact, opinions and recommendations will be turned in by Jan. 31, 2014, memo states. The auditor general’s report will be turned in by June 2, 2014.

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