Ship Workers Charged With Corruption

Several employees of one of the nation’s largest ship management companies are accused of cheating the government while working under a $200-million contract to repair Navy ships, federal officials said Thursday.

Bribes and kickbacks allegedly accepted by some employees of Bayship Management Inc. of Englewood Cliffs, N.J., included dinners, golf outings, country club memberships and trips from subcontractors that were later billed to the government as part of the contract price.

Four former Bayship employees were charged in criminal bills of information last week in Texas. Charges include fraud and kickbacks. Two other Bayship employees were charged earlier.

To date, the four-year investigation has produced charges against 21 people and two companies working as subcontractors.

Charges target individuals ranging from Jacksonville to Boston to San Francisco. Federal authorities said the investigation continues and more charges are likely.

“This case is an egregious example of corruption within a Department of Defense program that has undermined the procurement process, cost the American taxpayers a significant amount of money and eroded the trust and confidence of the public in the operation of the government,” said John F. Keenan, director of the Defense Criminal Investigative Service, the investigative arm of the Defense Department’s inspector general.

The focus of the investigation was alleged fraud in a $200-million contract Bayship had with the Military Sealift Command for maintenance and repairs of eight Navy ships. Bayship was responsible for soliciting subcontractors to do the work.

After receiving reports of the allegations in 1994, federal agents set up an undercover subcontracting business known as Coastal Marine Engineering Group with offices in areas including Houston; New Orleans; Norfolk, Va.; and San Francisco.

During the four-year investigation, more than 27 agents had undercover roles and made more than 3,000 telephone and hidden-wire recordings, officials said. Dozens of meetings among the undercover agents and subjects were videotaped, they said.