The BBC's US Navy officer 'bribed by cash and prostitutes' begins:

Information Commander Stephen Shedd provided to the firm helped it defraud the navy of $35 billion (£26.1bn).

The plea is the latest in the 'Fat Leonard' case, considered one of the worst corruption scandals faced by the navy.

Dozens of officials have been ensnared.

and includes:

According to the Justice Department, Shedd and the other officers received "sex parties with prostitutes and luxurious dinner and travel" in exchange for military secrets and "substantial influence" for the Glenn Defense Marine Asia (GDMA) company, a Singapore-based firm founded by a Malaysian national, Leonard Glenn Francis.

According to prosecutors, information Shedd and others provided helped GDMA to win and maintain contracts and overbill the Navy by $35bn for services such as providing tugboats, security and waste removal to ships at port.

Is there some mechanism by which the US can "claw back" or otherwise recover some of this $35 billion?

1 Answer 1


The U.S. government could sue the firm for fraud or unjust enrichment (and probably also claims arising under other statutes particular to defense contracting) since the allegation is that due to bid rigging the contracts were too generous (rather than a claim that the contracts themselves were not carried out as agreed for the agreed price).

Since it was a contract with the U.S. government, U.S. federal courts would almost surely have jurisdiction over the suit. Usually, statutes of limitations run from the time that the fraud is detected, so there is a good chance that such lawsuits would be timely.

Collecting a money judgment in such a lawsuit, were the U.S. to prevail, would be another matter entirely. Presumably, the entity has distributed most of its ill gotten gains to its shareholders, doesn't have a market capitalization remotely close to $35 billion (U.S.), and may not have principals involved in the wrong doing who are collectable for anything but a small fraction of that sum.

Another complication may be that the defense department needs something that the contractor involved provides and that no one else can, in which case the U.S. may be reluctant to "blow up" its relationship with a firm whose services it needs.

  • Hmm... I guess assuming partial ownership of the company isn't an option either?
    – uhoh
    Jan 27 at 21:40
  • 1
    @uhoh People can negotiate any kind of settlement, but when you are wronged by a company, partial ownership of it is not generally a remedy available to the person bringing the lawsuit. You can seize its assets, but not the company itself.
    – ohwilleke
    Jan 27 at 21:57

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