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World_Bunkering_legal_2018

Fraud case duo jailed

Two Singaporeans sentenced for fraud in US$34 million US Navy corruption scandal

Two former executives of Singapore-based defence contractor Glenn Defense Marine Asia (GDMA) were sentenced to jail terms for conspiring to submit bogus claims and invoices to the US Navy for services including bunkers for warships. Neil Peterson, 39, and Linda Raja, 44, were sentenced to 70 and 46 months respectively for their part is what has become known as the ‘Fat Leonard’ scandal.

While the pair held senior roles at GDMA, the mastermind behind the frauds and corruption was Malaysian national Leonard Francis who is expected to be sentenced by the end of the year.

 

According to press reports Francis agreed to work with the prosecution when it was discovered that US Navy officers had been bribed with prostitutes and stays at luxury hotels to get them to help GDMA win inflated contracts to service US ships in the Asia-Pacific region.

 

As of mid-August, 18 of 27 defendants, including Francis, had pleaded guilty.

 

According to a US Justice Department statement the frauds were committed in an effort to win contracts and overcharge the US Navy by tens of millions of dollars as part of a years-long corruption and fraud scheme. Press reports put the amount defrauded at over US$34 million.

 

Both defendants were arrested by authorities in Singapore at the request of the US government and were extradited in October last year. They each pleaded guilty in May 2017 to one count of conspiracy to defraud the US government.

 

According to admissions made as part of Peterson’s and Raja’s plea agreements, they and other members of GDMA’s management team created and submitted fraudulent bids that were either entirely fictitious, contained falsified prices supposedly from actual businesses, or fraudulently stated that the business shown on the letterhead could not provide the items or services requested.

 In this manner, Peterson, Raja and other members of GDMA’s core management team could ensure that GDMA’s quote would be selected by the US Navy as the supposed low bidder. GDMA could thus control and inflate the prices charged to the US Navy without any true, competitive bidding, as required, they admitted.

 

Peterson and Raja admitted that they and other members of the GDMA management team knowingly created and approved fictitious port authorities with fraudulently inflated port tariff rates, and approved the presentation of false documents to the US Navy. In that way GDMA thus charged inflated prices to the US Navy, rather than what GDMA actually paid to the bona fide port authorities.

 

In an example presented to the court Peterson and Raja admitted that for the visit of the USS Bonhomme Richard to Kota Kinabalu, Malaysia, in or about October 2012, under the direction of Peterson and other members of GDMA’s core management team, false documents and inflated invoices were presented to the US Navy. The full amount billed to the US Navy for this visit was $1,232,858, of which approximately $877,413 was fraudulently inflated, Peterson and Raja admitted.

 

An Australian Associated Press report in August said that two senior Royal Australian Navy personnel were also being investigated in connection with the case.

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