This is not entirely news, as the indictment happened on June 20 followed by more disclosure in the ensuing couple of weeks, yet I was unable to find a reference to this on DKos. So here's a summary of the events.
In 2007, the company AEY was contracted by the US Army in January 2007 to supply munitions to the Afghan police and security forces. The contract was worth $298 Million. AEY was an unknown entity that started business only in 2005 with a dubious address and a staff of a handful of 20-somethings. The New York Times threw the case open in March of this year as it reported that the shipments by AEY were arriving in terrible shape, obviously repackaged and at least partly unusable. The contract was subsequently yanked.
On June 23 federal indictments came down on Efraim Diveroli, president of AEY (22), David Packouz, vice president of AEY (a former masseur, 25); Alexander Podrizki an agent of AEY in Tirana, Albania; Ralph Merrill, a business associate of Diveroli. The charge:
Count one of the indictment charged all defendants with conspiracy to defraud the U.S. by making false representations to the government and by conspiring to commit procurement fraud. Counts 2 through 36 charge defendants AEY and Efraim Diveroli with making false statements to the U.S. Army regarding the country of origin of the ammunition. Lastly, all defendants are charged with procurement fraud.
-Source
What AEY did was buy 40-year-old Chinese ammunition in Albania, repackage it to hide its origin and ship it to Kabul with false papers. But how were they able to do this? They had help from high places. Possibly even from the US Embassy in Tirana:
US Army military attache Major Larry D Harrison II, who is chief of the embassy's office of defense cooperation, told investigators that John L Withers II, the US ambassador to Albania, endorsed a plan by the Albanian defense minister, Fatmir Mediu, to hide several boxes of Chinese ammunition from a visiting reporter.
-Source, good amount of additional detail
What's more, it has been revealed that AEY has been on a State Department watch list since April 2006 because of its past dealings, which included a botched $5.6 million contract for 10,000 Beretta pistols for Iraq's security forces, and unsafe helmets for Iraq in 2005 (source).
Lawmakers also criticized the government officials for failing to review several AEY contracts that had been canceled or delayed, many of which never raised red flags with contracting officials because they fell under the $5 million contract value that was the warning threshold.
-Source
So as long as you take in less than $5 Million per contract you're ok no matter what you did in the past? What kind of stupid rule is that? And why was AEY status upgraded to 'Good' without further explanation paving the ways for the infamous Afghan ammunition contract?
As these gangsters are likely headed to jail for a long time (here's hoping) time cannot be turned back and who knows whether any of the tens of millions already paid out can be reclaimed. What's for certain is that the munitions now have to be reacquired certainly causing delays in a very difficult effort to stabilize the country that is Afghanistan. I wonder how many such other fraudulent contractors are out there and how much of American taxpayers' funds they have sucked up. And finally, is Withers II going to be held accountable?