Both admirals are being investigated for their ties to a Singapore-based defense contractor, Glenn Defense Marine Asia, whose chief executive was arrested in September on charges that he bribed other Navy officers into giving him classified or privileged information in exchange for prostitutes and cash.
Two Navy commanders and a senior Naval Criminal Investigative Service agent have already been arrested, and a captain was relieved of his ship’s command last month in connection with the case.
But the announcement that two admirals in charge of protecting the Navy’s secrets have been swept up in the investigation makes the crisis the worst to tar the Navy since the 1991 Tailhook scandal, when a convention of naval aviators sexually assaulted scores of women.
Navy officials said they were bracing for even more bad news to emerge from a corruption case that has expanded swiftly since it became public in September. “We do believe that other naval officers will likely be implicated in this scandal,” Rear Adm. John F. Kirby, the Navy’s chief spokesman, said in a telephone interview.
The Navy did not disclose why Loveless and Branch had drawn the scrutiny of investigators but said their alleged misconduct occurred prior to their current assignments and before they became admirals.
“There is no indication, nor do the allegations suggest, that in either case there was any breach of classified information,” Kirby said in a statement.
But a Navy official who spoke on the condition of anonymity because of the sensitivity of the case said the NCIS recently uncovered evidence of “personal misconduct” against Branch and Loveless as the investigation into Glenn Defense Marine widened.
Neither Branch nor Loveless has been charged with a crime or service violation, and both men retain their rank while the investigation proceeds, the Navy said. The decision to suspend their access to classified information was made by Navy Secretary Ray Mabus.
The suspension of two senior intelligence officials raises serious questions about whether national security may have been compromised because of improper contact between Navy officers and Glenn Defense Marine.
Prosecutors from the U.S. attorney’s office in San Diego have charged the two Navy commanders with passing classified information about ship and submarine movements to Leonard Glenn Francis, a Malaysian national and the chief executive of Glenn Defense Marine.
Navy contracting officials raised suspicions about Francis — who is known as “Fat Leonard” in Navy circles because of his imposing girth — as far back as 2005. But prosecutors allege he was able to dodge scrutiny by bribing Navy officers and the NCIS agent for inside information about law enforcement probes and contract audits.
To recruit the moles, Francis plied the officers with female escorts, cash, paid travel and other perks, including tickets to a Lady Gaga concert in Thailand and a performance of “The Lion King” in Japan, according to court records.
Glenn Defense Marine has serviced and supplied Navy ships and submarines at ports around the Pacific for a quarter-century, providing fuel, tugboats, sewage disposal, wharfside security and other assistance.
Francis and his company were familiar faces to Navy brass, including the commanders of most vessels in the Pacific. The company was rewarded in 2011 with new contracts valued up to $200 million.
Prosecutors, however, allege that the firm routinely overbilled for everything from tugboats to fuel to sewage disposal, defrauding the Navy of more than $10 million.
Francis sought inside information on ship deployments and pressed at least one commander to steer aircraft carriers and other vessels to ports where his firm could easily overcharge the Navy for services, court documents allege.
Earlier Friday, Francis and one of the Navy commanders charged in the case, Michael Vannak Khem Misiewicz, appeared in federal court in San Diego for a procedural hearing. Misiewicz had been a rising star in the Navy; he escaped Cambodia’s “killing fields” as a child, then made a triumphant return to the country decades later as the skipper of a U.S. destroyer.
Prosecutors told the court that they would be seeking an order to prohibit defense attorneys from circulating or sharing evidence. They noted that the NCIS agent, John B. Beliveau II, is charged with giving sensitive law enforcement files to Francis to help him duck charges.
Francis is being held without bond because prosecutors have argued that, as a Malaysian citizen, he poses a flight risk. He was arrested in San Diego in September after investigators lured him to the United States in a sting operation. His attorney and a spokeswoman for Glenn Defense Marine have declined to comment on the allegations against him.
Another Glenn Defense Marine executive, Alex Wisidagama of Singapore, was arrested at the same time in San Diego and also faces bribery charges.
The second Navy commander, Jose Luis Sanchez, was arrested Wednesday in Tampa on charges that he gave classified information to Glenn Defense Marine in exchange for prostitutes and more than $100,000 in cash. Sanchez is a former senior logistics officer for the Navy’s 7th Fleet in Japan.
Charging documents show that Francis enjoyed a cozy and familiar relationship with the two commanders and the NCIS agent, referring to them as “bro” or “brudda” in e-mails and sending them photos of call girls he was planning to set them up with.
In return, the Navy officers playfully called Francis “Lion King” or “Big Bro.” Court records describe him as standing 6 feet 3 inches tall and weighing 350 pounds.
Pentagon officials have identified Capt. Daniel Dusek, former commander of the USS Bonhomme Richard, as another target of the investigation. He has not been charged, but the Navy relieved him of command Oct. 2, citing the investigation.
The U.S. military has never been immune from contracting scandals, but it is extremely rare for senior uniformed commanders to face fraud or corruption charges.
It is unclear how well Branch or Loveless may have known Francis. But both admirals have spent parts of their careers deployed to Asia.
Branch, an aviator, previously was an executive assistant to the commander of the Pacific Fleet. He was promoted to vice admiral in July when he took over as director of naval intelligence.
Loveless assumed his current job at the Pentagon in February. He also commanded the U.S. Pacific Command’s Joint Intelligence Operations Center, based at Pearl Harbor, from 2009 to 2012.
Agents from the NCIS, the Defense Criminal Investigative Service and the Defense Contract Audit Agency are working together on the probe. The criminal investigation is being overseen by the U.S. attorney’s office in San Diego and Justice Department officials in Washington.