“Fat Leonard”: The U.S. Navy’s Moral Disaster

We just started reading philosophy professor Ryan Holiday’s Right Thing, Right Now: Good Values. Good Character. Good Deeds (2024). Professor Holiday often examines the lives of historical figures—from the ancient Greek philosophers like Plato to modern figures like Martin Luther King and Harvey Milk— in order to draw both inspirational and cautionary moral tales from those lives.

In the introduction, Holiday focuses on Hyman Rickover, who rose from the most modest of immigrant circumstances to become one of the most powerful men in the world as a four-star admiral and “Father of the Nuclear Navy.” Says Holiday:

What guided [Rickover], what he spoke about repeatedly in speeches and briefings, was the importance of this idea of a sense of right and wrong, a sense of duty and honor that would guide a person through the infinite dilemmas and decisions they would find themselves in. “Life is not meaningless for the man who considers certain actions wrong simply because they are wrong, whether or not they violate the law,” he once explained. “This kind of moral code gives a person a focus, a basis on which to conduct himself.” (Holiday, p. xxii)

We were then disappointed to read about a scandal that ensnared Rickover near the end of his 63-year career that involved Rickover receiving gifts from military contractors (Holiday, p. 76).

Disappointed. But not surprised.

We were not surprised because we had just read Craig Whitlock’s simultaneously fascinating and horrifying new book—Fat Leonard: How One Man Bribed, Bilked and Seduced the U.S. Navy (2024)—about the most alarming scandal in the history of the U.S. Navy… one that makes the Navy’s Tailhook sexual harassment fiasco look like small potatoes.

The facts are shocking. Ex-felon Leonard Glenn Francis, known widely as “Fat Leonard,” ran a defense contractor, Glenn Defense, that serviced and supported Navy ships when they went into ports throughout southeast Asia. The company was generally competent, but Fat Leonard’s greed knew no bounds, and he was determined to rip off the Navy in two primary ways. First, he provided services the Navy’s ships didn’t truly need and overbilled outrageously for many services that were needed. For example, he would charge for pumping out much more bilge water than the particular ships could possibly have held. Second, he gained access to the Navy’s secret schedules of where and when ships would be coming to port. This information allowed him to save money preparing to receive the Navy ships. He even induced the Navy to change its schedule occasionally to dock in ports that his company controlled.

To accomplish these (and other related) frauds, Fat Leonard needed high-level Navy officers who would look the other way when they learned of his frauds and impede any investigations into them, and lower-level officers who would provide him with Navy secrets. Over a period of years, roughly 1992 to 2013, he systematically corrupted hundreds of sailors, including many admirals and other high-ranking officers.

His approach was simplicity itself. He would befriend some. He would flatter others. He would smother most of them with expensive gifts. And he threw endless parties that featured extravagant menus, the most expensive alcohol possible, gifts for officers’ wives if they were present (as they occasionally were), and top-drawer prostitutes if they were not. The officers would sometimes “reimburse” Glenn Defense $50 for meals that they knew were worth many hundreds of dollars and sometimes thousands. A party or two like this and most were hooked.

They’d do what was necessary to enable Fat Leonard to overbill, to escape detection, to gain more business, to lay his hands on helpful Navy secrets, and more. Some of Fat Leonard’s helpers were admirals, some were intelligence officers, some were ethics and compliance officers—it seemed there was no one he couldn’t corrupt, though a few did resist the temptations he threw their way.

The Navy has a strong ethics code. How could this have happened? A reading of Whitlock’s lengthy and detailed book highlights a few factors that surely do not tell the entire tale, but may be significant.

First, Fat Leonard was well aware of the impact of incrementalism. So many moral crises begin with a minor transgression and then grow incrementally. Fat Leonard “had a talent for spotting people who, with a little encouragement, would break the rules. He’d start by offering a modest inducement: a drink, an inexpensive lunch, a cigar. If his target took the bait, he’d ratchet up the value of the gifts.” (Whitlock, p. 34) Then the slippery slope would take over.

Second, most of Fat Leonard’s parties featured admirals and/or other top officers (and sometimes their spouses or girlfriends) on the guest list. When lower level sailors saw their senior commanders accepting the gifts, enjoying the meals and alcohol, and often cavorting with the prostitutes that Fat Leonard provided, it obviously signaled to them that this was acceptable conduct. Due to the conformity bias we all tend to take our cues as to acceptable behavior from those around us. And authority figures are certain to be especially influential in this regard. The Navy realized this and when it finally addressed the scandal, “[i]n case after case, the Navy let people off the hook for enjoying Francis’s extravagant feasts or sleeping in five-star hotels at Glenn Defense’s expense because they were following the lead of an admiral or senior officer who did the same thing.” Leaders can inspire moral actions or implicitly give permission to subordinates to engage in immoral actions (see https://ethicsunwrapped.utexas.edu/video/ethical-leadership-part-1-perilous-top and https://ethicsunwrapped.utexas.edu/video/ethical-leadership-part-2-best-practices). Whitlock’s book exposes way too little of the former and way too much of the latter among Navy brass.

Third, the top Navy officers repeatedly demonstrated an outsized sense of entitlement. Maybe because they’d been so successful in their careers and were now at the top of the hierarchical pyramid. Maybe because they were used to being put on a pedestal by civilians grateful for their service during the wars in Iraq and Afghanistan. Maybe because they viewed themselves as underpaid and underprivileged, given their high rank. Maybe because despite their high rank and numerous benefits (pensions, medical care, etc.), they viewed themselves as underpaid and underprivileged. Some combination of these influences seemed to have convinced many of these top officers that they were somehow entitled to eat Fat Leonard’s thousand-dollar meals, to drink his top-notch champagne, to accept his extravagant gifts.

Fourth, despite its clash with the explicit Navy Code of Conduct, the Navy apparently has an unwritten code of silence that has a very strong influence on sailors’ actions and provided cover for sailors, top Navy brass, and Fat Leonard simultaneously. As Whitlock noted:

Francis [Fat Leonard] knew that the officers’ commitment to ethical purity was overblown and that their honor code had an unspoken and self-defeating corollary: Snitching was considered a cardinal sin. Francis had learned that even the most upstanding officers would not dare to out their crooked shipmates for taking gifts and bribes. Their silence and tolerance perpetuated the culture of corruption that had infected the Navy. (Whitlock, p 163)

Fat Leonard was completely right about this. He targeted Lt. Commander Steve Shedd to become his new “wedding planner” (the Navy officer who would leak to him the schedule of where and when ships would go to port) when Lt. Commander Ed Aruffo left. According to Whitlock:

At [a] coat-and-tie dinner [paid for by Glenn Defense], Shedd noticed the other officers kowtowing toward Francis [Fat Leonard]. Afterward, Aruffo explained how the Glenn Defense owner paid for lavish meals and hotel rooms for a select group on the Seventh Fleet staff. Because Aruffo was preparing to leave the Navy, he asked Shedd whether he’d be interested in taking over his role as the wedding planner.

Taken aback by the overt unscrupulousness of the scheme, Shedd felt he was in “deep-crap territory.” He had to decide on the spot whether to join. If he said no, the senior officers would almost certainly ostracize him and give him low marks on his performance evaluation.

Though he realized he would be “crossing the bribery line,’ he said yes. “It only took me a few seconds.” He figured everyone would have to honor a code of silence. “We had an understanding of mutually assured destruction,” he said. “We would all go down in flames or it would all be protected.” (Whitlock, p. 113)

The hundreds of Navy officers, including admirals, who took Fat Leonard’s illicit gifts, who drank his Dom Perignon, who slept with his prostitutes, who looked the other way as he overcharged the Navy by as much as $100 million for services provided, and who handed over official Navy secrets all knew that what they were doing was wrong. They did not need a gaggle of philosophers to suss out the impropriety of their acts. Yet, despite a much-touted Navy code of conduct, they did these wrong deeds for the very human reasons we seem to find in so many modern ethics scandals.

Sources

Andrew Dyer, “Eleven Years after His Arrest, ‘Fat Leonard’ Faces Sentencing in a Massive Navy Corruption Scandal,” The American Homefront Project, May 9, 2024, at https://americanhomefront.wunc.org/news/2024-05-09/eleven-years-after-his-arrest-fat-leonard-faces-sentencing-in-a-massive-navy-corruption-scandal.

Ryan Holiday Right Thing, Right Now: Good Values. Good Character. Good Deeds (2024).

Navy Core Values, at https://www.navy.mil/About/Our-Core-Values/#:~:text=%22I%20will%20bear%20true%20faith,make%20honest%20recommendations%20and%20accept.

Office of the Inspector General, The Tailhook Report: The Official Inquiry into the Events of Tailhook ’91 (2003).

Robert Reid, “’Fat Leonard’: A Sordid Tale of Dereliction and Dishonor at the Navy’s Highest Levels” (Book Review), Stars and Stripes, June 28, 2024, at https://www.stripes.com/living/2024-06-28/book-review-fat-leonard-military-fraud-robert-reid-14282473.html.

Craig Whitlock, Fat Leonard: How One Man Bribed, Bilked and Seduced the U.S. Navy (2024).