Navy suspends contracts with second firm in scandal over foreign ports

In a widening scandal, the Navy cut ties Wednesday with a second international company over “questionable business integrity” involving lucrative contracts to service U.S. ships in foreign ports.

The Navy announced that it has suspended contracts with British-based Inchcape Shipping Services Ltd. and its affiliated companies. The firm has provided “ship husbanding” services to U.S. ships in the Persian Gulf and Mediterranean.

Navy officials said that the suspension of Inchcape is not connected to the investigation into another longtime contractor in the Asia-Pacific region, Singapore-based Glenn Defense Marine Asia.

The investigation into Glenn Defense Marine Asia has led to criminal charges in San Diego against two Navy commanders, a Naval Criminal Investigative Service agent, and two Malaysian business executives.

Also, two admirals have been put on leave, a Navy captain transferred to a lesser job, and another captain relieved of command of his ship.

Speaking about Inchcape, Rear Admiral John F. Kirby said the suspension “reflects the mandate of the secretary of the Navy, Ray Mabus, to ensure that [Navy] contractors are fully compliant with contracting regulations and procedures.”

The Navy did not release details about its concerns about Inchcape.

The Inchcape and Glenn Defense cases highlight the enormous expense of keeping U.S. ships deployed. The Navy currently has 86 ships deployed.

When it cut ties with Glenn Defense, the Navy said that it had canceled contracts worth more than $203 million.

Contracts with Inchcape exceed $250 million, according to Navy documents. The largest contract was $194 million to service ships in Manama, Bahrain.

At the center of the Glenn Defense Marine Asia case is the firm’s flamboyant owner, Leonard Glenn Francis.

Charged with bribing the two Navy officers and NCIS agent for confidential information about Navy ships, Francis, 49, remains in federal prison in San Diego, awaiting trial.

A federal judge this week set bail at $1.1 million but federal prosecutors appealed that decision, arguing that Francis is a flight risk. A second judge agreed and revoked the bail.

Also charged in the case are Alex Wisidagama, Francis’ cousin; Navy commanders Michael Vannak Khem Misiewicz and Jose Luis Sanchez; and Naval Criminal Investigative Service agent John Beliveau II.

Francis’ firm, Glenn Defense Marine Asia, provided services to the U.S. Navy for more than 25 years in ports from South Korea to Hong Kong.

According to the indictments, Francis bribed Misiewicz, 46, and Sanchez, 41, with first-class air travel to exotic locations, five-star hotel accommodations, the use of a Mercedes-Benz, cash, prostitutes, and tickets to see Lady Gaga in Thailand and “The Lion King” in Tokyo.

Both officers were on the staff of the Japan-based 7th Fleet and privy to inside information.

Prosecutors say the two Navy officers used their influence to make sure Navy ships such as the aircraft carriers John C. Stennis and George Washington, and the 7th Fleet command ship Blue Ridge, were routed to ports where Francis’ company was influential.

Francis’ firm submitted bills that were padded or included services that were not rendered, according to prosecutors. Among the items: food, water, trash removal, security, tugboats, fenders, port and warehouse fees, fuel, transportation and more.

The loss to the Navy is calculated in the tens of millions of dollars, prosecutors said.

Beliveau II, 44, is charged with leaking to Francis confidential documents about an investigation that began in 2010 and with tutoring him on how to avoid giving incriminating statements.

Francis was known for living large in a palatial estate in Singapore and throwing lavish parties. Even before his arrest, he was known by the nickname Fat Leonard.

“He’s a larger-than-life individual,” retired Navy Capt. Kevin Eyer told CNN during a discussion about the Glenn Defense scandal. “He’s charming. He’s social. Whereas I might be at this party and drinking a Budweiser, Leonard is having Dom Perignon.”

When a Navy ship pulled into port, Leonard would be there, dressed in designer shirts, wearing a gold watch and stepping out of his bullet-proof Hummer.

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