The Washington Post

Navy suspends business with defense contractor Inchcape Shipping Services

The Navy announced Wednesday that it has suspended business with a major defense contractor over “questionable business integrity,” the second time in two months that it has revealed deep problems with a company that services its ships around the world.

In a statement it released Wednesday night, the Navy said it had suspended Inchcape Shipping Services, an old-line maritime trading firm based in Britain that delivers cargo and provides port services in 66 countries. Inchcape held current Navy contracts that had been valued at more than $240 million, mostly for supplying ships in the Persian Gulf and elsewhere in the Middle East.

The Navy was vague about what prompted the action, saying the matter remained under investigation. Rear Adm. John Kirby, the Navy’s chief spokesman, said in a statement that the decision was “based upon evidence of conduct indicating questionable business integrity.” He declined to give details.

The suspension follows the Navy’s decision in September to terminate business dealings with one of Inchcape’s chief competitors, Glenn Defense Marine Asia, which held similar contracts in the Pacific valued at more than $200 million. That company’s chief executive, Leonard Glenn Francis, was arrested and charged in federal court with bribing several Navy officers with prostitutes and cash in exchange for inside information about contracts and ship movements.

Navy officials said that the two cases are unrelated and that the problems surfaced separately. Along with other recent investigations, however, they raise fresh questions about the Navy’s dealings with contractors and its ability to prevent fraud, waste and misconduct.

Read court filings

Glenn Defense Marine and its president, Leonard Glenn Francis, are principal characters in one of the biggest contracting fraud investigations in the Navy's 238-year history, with accusations of bribes involving prostitutes and cash. Explore the government's evidence.

• U.S. attorneys offer details of the investigation, argue Francis is a flight risk

• Government lays out case on alleged conspiracy between Francis and Cmdr. Michael Misiewicz

• Affidavit on alleged ties between Francis and Cmdr. Jose Luis Sanchez

Also Wednesday, a former Navy employee reported to federal prison in Massachusetts to begin serving a 10-year sentence in an $18 million kickback scheme. Ralph M. Mariano, who worked for the Naval Undersea Warfare Center in Rhode Island, had pleaded guilty to stealing money over a 15-year period by funneling it through contractors and shell companies.

And in yet another unfolding case, federal authorities are investigating three senior Navy intelligence officials in an alleged contracting scheme that charged the military $1.6 million for homemade firearm silencers that cost only $8,000 to manufacture.

The Navy has depended on Inchcape, Glenn Defense Marine and other contractors in the naval husbanding industry to resupply its global fleet of ships and submarines. The private companies provide fuel, tugboats, security, sewage disposal and anything else a vessel might need during a port visit.

Inchcape, for example, holds a $194 million contract to support the Navy’s 5th Fleet, which is responsible for all maritime operations in the Persian Gulf and other parts of the Middle East. That contract is scheduled to expire in January. Inchcape also holds Navy contracts for services in Mediterranean ports and parts of Africa.

Navy officials said they would honor the minimum requirements of existing contracts with Inchcape but would not renew any deals or approve options or extensions — a common practice with military contracts.

An Inchcape spokeswoman did not immediately respond to requests for comment Wednesday night.

The firm was purchased in 2006 by Istithmar PJSC, a private-equity firm from the United Arab Emirates. The Dubai-based company sought to resell Inchcape in 2010, but a deal was scuttled after media reports that the shipping firm was under scrutiny by the U.S. Justice Department.

Craig Whitlock covers the Pentagon and national security. He has reported for The Washington Post since 1998.



Success! Check your inbox for details. You might also like:

Please enter a valid email address

See all newsletters

Show Comments

Sign up for email updates from the "Confronting the Caliphate" series.

You have signed up for the "Confronting the Caliphate" series.

Thank you for signing up
You'll receive e-mail when new stories are published in this series.
Most Read



Success! Check your inbox for details.

See all newsletters

Your Three. Videos curated for you.
Play Videos
This isn't your daddy's gun club
A look inside the world of Candomblé
It's in the details: Five ways to enhance your kitchen makeover
Play Videos
A fighter pilot helmet with 360 degrees of sky
The rise and fall of baseball cards
Is fencing the answer to brain health?
Play Videos
John Lewis, 'Marv the Barb' and the politics of barber shops
How to prevent 'e-barrassment'
The art of tortilla-making
Play Videos
Circus nuns: These sisters are no act
How hackers can control your car from miles away
How the new credit card chip makes purchases more secure

To keep reading, please enter your email address.

You’ll also receive from The Washington Post:
  • A free 6-week digital subscription
  • Our daily newsletter in your inbox

Please enter a valid email address

I have read and agree to the Terms of Service and Privacy Policy.

Please indicate agreement.

Thank you.

Check your inbox. We’ve sent an email explaining how to set up an account and activate your free digital subscription.