Bush Scandals List

334. Bad ammo, worse contractors

On January 26, 2006, the Pentagon let a contract to AEY for around $300 million to supply the Afghan army and police with ammunition for its war on the Taliban and al Qaeda. AEY is run by 22 year old Efraim Diveroli out of an unmarked office in Miami Beach and had until recently as its vice president David Packouz 25, a licensed masseur. Much of the ammunition AEY sold to Pentagon came from Albania through a shady Swiss arms dealer, and these sales likely involved kickbacks to Albanian officials. The Albanian ammunition came from stocks 90% of which were more than 40 years old and had not been tested for efficacy or accuracy. Much of it was in decaying condition. On top of this, since most of it had been produced in China (instead of Hungary as AEY asserted), its resale to the US government was a violation of law. For this reason on March 26, 2008, the Pentagon suspended AEY from future contracts. The suspension did not affect $155 million worth of crappy AEY supplied ammunition in the pipeline. Really you can’t make this stuff up. The Pentagon signs a contract worth hundreds of millions of dollars without a clue as to who they are dealing with or what they are buying. And even when they find out, they don’t cancel the contract but allow the contractor to finish supplying the garbage for which they took action in the first place. On June 19, 2008, Diveroli was arrested and charged with violating the Arms Export Control Act.

On June 23, 2008, Henry Waxman’s House Oversight Committee released a memo by Army Major Larry Harrison describing a November 19, 2007 meeting in which embassy personnel including the American Ambassador to Albania John Withers discussed with Albanian officials how to repackage Chinese made ammunition so as to hide its country of origin. The State Department originally reported that it had had little to do with the matter.

In other developments, it turned out that the Pentagon could have gotten a lot this ammo for free from Eastern European former Warsaw Pack members eager to get rid of their old stocks. Apparently AEY had been under investigation by Immigration and Customs Enforcement (ICE) since 2005 for violations of the Arms Export Control Act and fraud. As a result, as early as April 2006 but certainly by December 2006, the State Department put AEY on its Arms Trafficking Watchlist. Nevertheless, both State and Defense continued to do business with the company.

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