Investigators are looking into civil fraud allegations that a company owned by the Dubai government, Inchcape Supply Services, with the help of subcontractors, overcharged the Navy, court documents show.
Inchcape, which last week was suspended from winning new federal contracts, is accused of paying commissions to subcontractors willing to offer it large discounts, and then pocketing the difference instead of refunding it to the Navy, The New York Times reported Saturday.
The marine shipping management company, which also works with commercial shipping lines and other navies, works for U.S. Navy ships in the Middle East, Africa and South America.
The issue is an embarrassment to the U.S. Navy, which is already focused on another scandal involving a shipping service working with the Pacific Fleet, the newspaper said.
Leonard Glenn Francis, owner of Glenn Defense Marine Asia, the Navy's main supplier in the Pacific, was arrested in September on charges of conspiring to bribe Navy officials with cash, trips and prostitutes.
Investigators say the officials diverted Navy ships to certain ports, after which Glenn submitted inflated bills for service.
Three Navy officers have been charged with crimes and four others, including two admirals, have been suspended over their ties to Francis, the newspaper said.