Two US admirals - including the director of naval intelligence - are under investigation as part of a major bribery scandal involving an Asian defence contractor, US Navy officials announced.
Vice Admiral Ted "Twig" Branch, the service's top intelligence officer, and rear admiral Bruce Loveless, the navy's director of intelligence operations, were placed on leave on Friday and their access to classified material was suspended.
Both admirals are being investigated for their ties to a Singapore-based defence contractor, Glenn Defence Marine Asia, whose chief executive was arrested in September on charges that he bribed other navy officers into giving him classified or privileged information in exchange for prostitutes and cash.
Two navy commanders and a senior Naval Criminal Investigative Service agent have already been arrested, and a captain was relieved of his ship's command last month in connection with the case.
But the announcement that two admirals in charge of protecting the navy's secrets have been swept up in the investigation makes the crisis the worst to tar the navy since the 1991 Tailhook scandal, when a convention of naval aviators sexually assaulted scores of women.
Navy officials said they were bracing for even more bad news to emerge from the corruption case that has expanded swiftly since it became public in September. "We do believe that other naval officers will likely be implicated in this scandal," said rear admiral John Kirby, the navy's chief spokesman.
The navy did not disclose why Loveless and Branch had drawn the scrutiny of investigators but said their alleged misconduct occurred prior to their current assignments and before they became admirals.
Neither Branch nor Loveless has been charged with a crime or service violation, and both men retain their rank while the investigation proceeds, the navy said.
Prosecutors from the US attorney's office in San Diego have charged the two navy commanders with passing classified information about ship and submarine movements to Leonard Glenn Francis, a Malaysian national and the chief executive of Glenn Defence Marine.
Navy contracting officials raised suspicions about Francis as far back as 2005.
But prosecutors allege he was able to dodge scrutiny by bribing navy officers and the NCIS agent for inside information about law enforcement probes and contract audits.
Glenn Defence Marine has serviced and supplied US Navy ships and submarines at ports around the Pacific for a quarter of a century. Prosecutors, however, allege the firm routinely overbilled for everything from fuel to tugboats and sewage disposal, defrauding the navy of more than US$10 million.
Francis sought inside information on ship deployments and pressed at least one commander to steer aircraft carriers and other vessels to ports where his firm could easily overcharge the navy for services, court documents allege.