The Complex

Navy Benches Intel Chiefs in Bribery Scandal ... And Promises That More Heads Will Roll

The U.S. Navy's widening scandal involving prostitutes, cash bribes and the fat-cat defense contractor who allegedly supplied them for sensitive military information just expanded to colossal proportions. The Navy announced Friday night that it has suspended access to classified information for two senior intelligence officers, effectively relieving them from duty. It's all part of the ongoing investigation into global defense Glenn Defense Marine Asia.

And the Pentagon is warning that more officers are likely to be implicated in this scandal, the Navy's biggest in decades. 

Vice Adm. Ted Branch, pictured above, and Rear Adm. Bruce Loveless -- the service's director of naval intelligence and director of intelligence operations, respectively -- have not been charged with any crimes. But the suspension "was deemed prudent given the sensitive nature [of] their current duties and to protect and support the integrity of the investigative process," said Rear Adm. John Kirby, the Navy's top spokesman, in a statement.

The allegations against Admirals Branch and Loveless "involve inappropriate conduct prior to their current assignments and flag officer rank," Kirby said. Intelligence officers need to maintain high standards in their personal lives because they're such tempting targets for blackmail by a hostile spy service. The military frequently pulls personnel from vital intelligence jobs if it believes their credibility could be compromised. Any association with a scandal involving prostitutes and bribery would certainly count as a reputational threat. At the moment, however, "there is no indication, nor do the allegations suggest, that in either case there was any breach of classified information," Kirby added.

The announcement takes a growing scandal and expands it to the most senior levels of the U.S. military. The Navy has not seen a scandal this large since dozens of naval officers were accused of sexually assaulting about 80 women and a handful of men at the Tailhook Association Symposium in Las Vegas in 1991. That incident ultimately ruined or harmed the careers of more than a dozen admirals.

Kirby told Foreign Policy on Friday night that he expects the scandal to continue expanding. Branch and Loveless's clearances were suspended at the direction of Navy Secretary Ray Mabus, he added.

"I believe there will be more naval officers and perhaps Navy civilians implicated in this scandal," Kirby told Foreign Policy. "These allegations are personal misconduct."

Already, three Navy officials and two Glenn Defense executives have been charged in U.S. federal court in connection with the case. All three other Navy personnel -- two active-duty commanders and a senior agent with the Naval Criminal Investigative Service -- are accused of sharing sensitive or classified information with Glenn Defense CEO Leonard Glenn Francis in exchange for prostitutes, cash and other favors. Francis allegedly used that information, in turn, to overbill the U.S. military millions of dollars while servicing Navy ships in ports across the Pacific.

The Navy also relieved of command Capt. Daniel Dusek, the captain of the amphibious ship Bonhomme Richard, in connection with the investigation. He has not been charged with any crimes, but officials said that commanders lost confidence in him.

The Navy's announcement Friday came as Francis, the Glenn Defense CEO, appeared in court with two others already facing charges: Cmdr. Michael Vannak Khem Misiewicz, the first officer accused, and NCIS agent John Beliveau.

Also charged in the case are Cmdr. Jose Luis Sanchez and Glenn Defense executive Alex Wisidagama of Singapore. Misiewicz, Beliveau and Sanchez allegedly accepted bribes in the forms of prostitutes while traveling in the Pacific and luxury hotels in exchange for a variety of Navy information, including ship schedules. Sanchez is accused of accepting $100,000 in cash and prostitutes. Wisidagama is accused of serving as a lynchpin in his company's alleged scheme to overbill the Navy throughout Southeast Asia.

"According to the allegations in this case, a number of officials were willing to sacrifice their integrity and millions of taxpayer dollars for personal gratification," U.S. Attorney Laura Duffy said this week in announcing the charges against Sanchez. "While the overwhelming majority of the 400,000 active-duty Navy personnel conduct themselves in a manner that is beyond reproach, we and our law enforcement partners at Naval Criminal Investigative Service and Defense Criminal Investigative Service continue to investigate the allegations of fraud and corruption that tarnish the stellar reputation of the U.S. Navy."

The scandal has rocked the Navy's 7th Fleet, headquartered in Yokosuka, Japan, just as it was set to boost operations in the Pacific. Court documents in the cases of both Misiewicz and Sanchez say that other unidentified Navy personnel were aware of malfeasance, and either did nothing or participated in the schemes. In one example, the criminal complaint against Misiewicz says he attended a Lady Gaga concert on May 25, 2012, with other Navy personnel who visited Laem Chebang, Thailand, during a port stop by the Blue Ridge, the command ship of the Navy's 7th Fleet. Several of the officer ensnared in the scandal served on the ship during their careers.

Francis allegedly purchased the concert tickets and paid for prostitutes for the men who attended, according to Misiewicz's complaint.

"Don't chicken out bro we need u with us on the front lines :) ... Who can we trust in the Office for Lady Ga Ga?" Francis said in a May 2012 email to Misiewicz, prosecutors allege, noting the playful use of emoticons in the message. "Tickets are not the issue who will keep silent :)"

Beliveau is accused of passing information about NCIS's investigation into Glenn Defense to Francis in exchange for prostitutes, airfare, posh hotel rooms, and a laptop computer for Beliveau's girlfriend. In particular, it outlines one trip Francis allegedly arranged for Beliveau in March 2011 to Bangkok, Thailand.

"According to one email, Francis asked: ‘Joyce your kinda Babe'? Beliveau replied ‘Nice. You bet. Hopefully I'm her kinda guy, hehe,'" the criminal complaint against him says. A photograph of the woman was allegedly attached to the email.

The complaint against Sanchez includes similar allegations. Prosecutors say he received $100,000 cash from Francis's company in January 2009, and continued to share sensitive Navy information with him until earlier this year. It included internal information that Glenn Defense used to its advantage while servicing U.S. ships. The company has locations in Japan, Singapore, Thailand, Malaysia, Korea, India, Hong Kong, Indonesia, Australia, Sri Lanka, the Philippines, and the United States, and deliberately overcharged the Navy while "husbanding" the ships, providing food, fuel, water, waste removal, and other tasks, prosecutors say.

Sanchez's complaint also has a variety of specific allegations regarding the officer accepting prostitution. Francis is accused of emailing a woman in Indonesia early in March 2011 to arrange prostitutes to meet Sanchez, another unidentified Navy commander, and two other men in Singapore.

One of the emails described one of the "girls" as "Alda 167 cm [height] 36b [bra size] very young n still study, 17 yr," the complaint says. Francis later sent an email cancelling the planned meeting due to a tsunami in the region that allegedly kept Sanchez and his friends away from Singapore, prosecutors say.

Later that month, however, Francis sent Sanchez an email containing a picture of one of the prostitutes that had planned to meet the Navy officers in Singapore, court documents say. A brief message was attached: "I miss you BABE :)." Sanchez allegedly emailed the Glenn Defense CEO back the same day, saying "Nice pictures.....Brings back good memories :)."

U.S. Navy

The Complex

Exclusive: Hagel Defends ‘Phenomenal’ NSA Chief as the Rest of the Administration Backs Off

The White House and Secretary of State John Kerry may be keeping their distance from the embattled Director of the National Security Agency, Gen. Keith Alexander. But Defense Secretary Chuck Hagel, under whom the NSA resides, is standing by him, even as Hagel takes part in high-level talks that could undermine Alexander's legacy.

"Gen. Alexander's just done a phenomenal job," Hagel said in an interview with Foreign Policy in his E-Ring office. "He is one individual who is capable of doing that job the way he did it at a very difficult time, and he deserves great credit."

By the way he did it, Hagel was referring in part to the unique way Alexander has done the job. The general serves as both the director of the NSA -- the government's largest intelligence agency -- and the head of U.S. Cyber Command, overseeing all the armed forces' computer defense and warfare units. Alexander is the first NSA chief to serve in that "dual-hatted" manner. But administration officials are reconsidering whether one person should have both jobs, prompted by concerns that Alexander has amassed too much power over both military and intelligence operations.

Hagel said the broad debate over the NSA's power, its snooping on world leaders, and the issue of whether to split the NSA director and Cyber Command positions "is being forced" by revelations of NSA's global spying apparatus and by the former contractor Edward Snowden. "I'm not afraid of that debate," he said. "We have discussed it in a number of meetings. At the White House and other places. It needs to be discussed."

Hagel didn't share his view on how to settle the matter. He said he'd "had my opportunity" to voice an opinion within the administration, but that President Obama will make the ultimate decision. Congress will also have a say, Hagel said. But he didn't rule out maintaining the status quo, which he said has worked well under Alexander.

"There has been tremendous advantage to having the system the way it is now," he said, emphasizing the benefits of a strong NSA director who is responsive to the needs of military commanders and policymakers.

"Whatever decision we make, if we're going to make any changes, we need to be very careful, think through these changes, and always have the bottom line determine it: Is this really in the best interests of our country short term, long term -- again, within the boundaries of what's legal. I have not given any advice to anyone on an issue of how we should separate or we should keep them the same."

Hagel said that effect of Snowden's disclosures has been profound. "He has done terrible, terrible damages to our country. The irresponsibility of it. It's just crept into every component of our intelligence capability."

Hagel said the administration "should make sure our intelligence community is held accountable, is responsible," but he would not say, as Kerry did, that the NSA had overstepped its authorities in hoovering up data around the world, including on Americans, nor did he criticize the agency for monitoring the communications of foreign leaders. "Some of these actions have reached too far," Kerry said, "and we are going to try to make sure it doesn't happen in the future."

Hagel noted that he served in the Senate when Congress passed the Patriot Act. "I remember the intense debate, and it should've been," he said, acknowledging that the authorities granted to the intelligence agencies to monitor communications had significant implications for the civil rights of Americans and people around the world. Hagel voted in favor of the law, along with 97 of his colleagues.

But Hagel defended the work of NSA and other agencies work as vital to U.S. national defense, and showed no signs that he favors any dramatic changes to the spy agencies' powers. "Everything our intelligence community has been doing has been within the scope of the law. ... It's a dangerous world. Intelligence is critically important, it saves lives, it is as critical a component of our national security as anything."