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Navy sets special review team to avert fraud


Secretary of the Navy, Ray Mabus, photographs ice structures in the Arctic near the 2011 Applied Physics Laboratory Ice Station north of Prudhoe Bay, Alaska March 18, 2011. REUTERS/Lucas Jackson
Secretary of the Navy, Ray Mabus, photographs ice structures in the Arctic near the 2011 Applied Physics Laboratory Ice Station north of Prudhoe Bay, Alaska March 18, 2011. REUTERS/Lucas Jackson

WASHINGTON (Reuters) - Navy Secretary Ray Mabus on Monday said he had set up a special review team to investigate procurement practices after a Navy acquisition official and the owner of a small technology firm were indicted for an alleged $10 million kickback scheme.

"We will not accept any impropriety, kickbacks, bribery or fraud," Mabus told the annual conference of the Navy's biggest booster group, the Navy League.

Mabus, a former prosecutor and state auditor, said the case, described by a Navy investigator as a $10 million heist, "got my attention" and he created the review team to investigate and recommend improvements in the contracting process to prevent any future incidents.

"Things like fraud, kickbacks, anything like that, which has the ability to undermine the confidence in the procurement process I'm going to go after just as hard as I can," Mabus told reporters after his speech to the conference.

The Navy had also expanded its use of fact-based suspension and debarment actions, and had more to do, he said.

Attorney Peter Neronha in early February announced the indictments of Ralph Mariano, a civilian program manager and senior systems engineer with the Navy's Naval Sea Systems Command (NAVSEA), and Anjan Dutta-Gupta, founder and president of Advanced Solutions for Tomorrow.

The indictment alleges that the two men participated in a kickback and bribery scheme in which Dutta-Gupta funneled approximately $10 million to Mariano, Mariano's relatives, and Mariano's associates in return for Mariano's role in the funding of Naval contracts to ASFT.

The affidavit said the Navy ordered $13.5 billion in work from a subcontractor to Dutta-Gupta's firm, mostly for work that was not performed.

The subcontractor, over a period of years, allegedly kicked back about $10 million to Mariano, Mariano's relatives and associates, and back to entities controlled by Dutta-Gupta, according to the attorney's office.

"A $10 million heist is a major crime, whether the money is taken with a gun or with a keyboard," said Kirk Greffen, the acting special agent in charge for the Naval Criminal Investigative Service field office in Newport, Rhode Island.

(Reporting by Andrea Shalal-Esa; Editing by Gary Hill)

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