Supply Side
Admiral Gilbeau Is Sentenced In Fat Leonard US Navy Corruption Case

We last updated you on the corruption scandal in the US Navy here, as the Washington Post dug into the “Fat Leonard” affair. You may remember that we first reported on it back in 2015 and featured the colourful character of “Fat Leonard” (Leonard Glenn Francis). He ran a business based in South-east Asia, Glenn Defense Marine Asia, that provided services for ships docking at various ports, and was a major supplier to the US Navy. But in a court case last year, he was found guilty of bribing US naval officers to make sure they chose his firm, then significantly over-charging the Navy – presumably to cover the costs of his bribes (and generate more profit for him). Bribes included cash but also the services of prostitutes.

In the latest development this month, US Navy Rear Admiral Robert Gilbeau was sentenced  to 18 months in prison, three years of probation, 300 hours of community service, and $150,000 in fines and restitution to the US Navy, as part of a plea deal in which he admitted guilt for making false statements.  An estimated 30 other admirals remain under scrutiny for possible criminal or ethical violations in the corruption case, Navy officials have said. The Washington Post described the relationships between Gilbeau and Leonard like this.

“In a plea agreement, Gilbeau admitted to lying to federal agents about the nature and extent of his relationship with Francis, a longtime Navy contractor known as “Fat Leonard.” Prosecutors said the pair met 20 years ago during a port visit in Bali, Indonesia, and that Francis immediately began supplying the officer with prostitutes, lavish dinners and stays in hotel suites.

Over the years, Francis learned that Gilbeau particularly liked to have sex with Vietnamese women — two at a time — so he provided the Navy officer with pairs of prostitutes on at least three occasions, according to federal authorities and others familiar with the case”.

Gilbeau was a professional supply expert, not a military fighting man seconded into an unfamiliar procurement type role (not that such an individual would have a greater excuse for corruption, we should say). But we would always hope that procurement and supply chain professionals would put the need for ethics and propriety right at the top of our list of necessary behaviours, so this seems particularly sad. It is worth quoting from the official statement.

“He was the supply officer on the USS Nimitz, where he was responsible for procuring all goods and services necessary for operation of the ship. He later served as head of the Tsunami Relief Crisis Action Team in Singapore, heading the Navy’s logistics response to the Southeast Asia tsunami in December 2004, and in June 2005, Gilbeau was assigned to the office of the Chief of Naval Operations as the head of aviation material support, establishing policies and requirements for budgeting and acquisitions for the Navy’s air forces, according to the plea agreement. In August 2010, after he was promoted to admiral, Gilbeau assumed command of the Defense Contract Management Agency International, where he was responsible for the global administration of DOD’s most critical contracts performed outside the United States, according to admissions made in connection with his plea”.

So a real supply chain expert with a glittering career – all in ruins. Gilbeau blamed his misconduct on post-traumatic stress, survivor’s guilt and a head injury he suffered as a result of a mortar attack in Iraq in 2007. He was allowed to bring his “therapy dog” into court to help him manage stress. But this did not stop him being sentenced to prison.

“This is the first time our nation will incarcerate a Navy admiral for a federal crime committed during the course of his official duty, and it is truly a somber day”, acting US Attorney Alana W. Robinson said in a statement. “When tempted by parties and prostitutes, one of our most respected leaders chose karaoke over character and cover-up over confession, and in doing so he forever tarnished the reputation of a revered institution.”

There must still be many questions about how this fraud was able to continue for so long unchecked. One factor was clearly that so many people were involved, probably hundreds, so even if you knew something was wrong, who would you tell – how would you know they were not also on the wrong side? But if the Navy was paying well over the odds for certain services, which was the case, one might have expected some sort of audit to have discovered that during the 20 years or so this scam was running, or questions to be asked about what must have been unsatisfactory competitive processes.  Anyway, we would hope that lessons will be learnt.