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Reports surfaced in late March that a company with several hundred million dollars worth of contracts, acting as the main supplier of munitions to Afghanistan's army and police forces, has been delivering substandard ammunition and violating military export regulations. It operates out of an unmarked office in Miami Beach, FL, and employs 22 year old Vice President who is a licensed masseur. Here on Winds, hypocrisyrules recommended it - and it definitely struck me as an April Fool's Day story. Except that it's true, and involves solid investigative reporting of a military issue by the New York Times. How's that for an April Fool?
In March 2007, "$298M to AEY for Ammo in Afghanistan" covered the firm's key contract. I thought Miami Beach was an unusual place for that kind of contract winner, but my time is very limited and investigation is not an option unless I have far more reason that that to wonder.
Turns out that wondering would have been very justified. As of March 25/08, AEY, Inc. is barred from future contracts with any agency of the US government, and is under investigation by the Department of Defense's inspector general and by Immigration and Customs Enforcement. Complaints include the quality and origins of ammunition it provided, and allegations of corruption. I'm just as puzzled as y'all are that the present contract isn't suspended as well, but it sounds like the company has more or less come apart, and the question may be purely academic by now. Here's what's going on...
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Reports indicate that AEY shopped across the former Eastern Bloc for Soviet-caliber small arms ammunition supplies, including significant business with Albania whose stocks are considered substandard. That business was reportedly conducted through Evdin Ltd. in Cyprus, and its terms raise issues on two fronts. One is the possibility of corruption in Albania, using Evdin as a middleman firm to divide the profits with officials while remaining outside of US government accountability. Another is the issue of sourcing, given that millions of those rounds were produced in China and may thereby violate American law.
The quality of the other stocks reportedly varied widely from excellent to sub-standard, and significant quantities of the ammunition delivered by AEY reportedly dated from the 1960s. Other allegations include dealings with Petr Bernatik, who had been accused by Czech officials of illegal arms trafficking and was listed on the US State Department's Defense Trade Controls watch list.
A March 27/08 DefenseLINK release states:
"As of today, the Army has issued five task orders, collectively worth $155.3 million, the official said. AEY has made about 80 deliveries, with an estimated value of $54.6 million, into Kabul. Those deliveries violated two specific terms of the contract, the official said. One stated that the ammunition could not be acquired directly or indirectly from the People’s Republic of China, and the other specified that it must be packaged to comply with best commercial practices for international shipment."
The Pentagon's deputy assistant secretary of defense for public affairs Bryan Whitman added that:
"Safety and performance has not apparently been a factor, according to our folks in Afghanistan.... They have had no safety incidents reported and no reports of any ammunition that has malfunctioned associated with this particular contract."
The New York Times, whose persistent investigation and enquiries were reportedly instrumental in sparking the US Army's investigation and suspension, offered its own in-depth report. It suggests that Whitman's statement may be strictly true, but misleading:
"In January, American officers in Kabul, concerned about munitions from AEY, had contacted the Army's Rock Island Arsenal, in Illinois, and raised the possibility of terminating the contract.... And yet after that meeting [in late February], AEY sent another shipment of nearly one million cartridges to Afghanistan that the Combined Security Transition Command-Afghanistan regarded as substandard. Lt. Col. David G. Johnson, the command spokesman, said that while there were no reports of ammunition misfiring, some of it was in such poor condition that the military had decided not to issue it. "Our honest answer is that the ammunition is of a quality that is less than desirable; the munitions do not appear to meet the standards that many of us are used to," Colonel Johnson said. "We are not pleased with the way it was delivered."
It would seem that even a Kalashnikov has limits on what it will fire. Ammunition that is not issued will not malfunction - but neither does it qualify as acceptable performance and safety.
Nor is this merely a contracting issue, given the tactical and relationship implications for key allies in a war:
"But problems with the ammunition were evident last fall in places like Nawa, Afghanistan, an outpost near the Pakistani border, where an Afghan lieutenant colonel surveyed the rifle cartridges on his police station's dirty floor. Soon after arriving there, the cardboard boxes had split open and their contents spilled out, revealing ammunition manufactured in China in 1966. "This is what they give us for the fighting," said the colonel, Amanuddin, who like many Afghans has only one name. "It makes us worried, because too much of it is junk."
Unfortunately, betrayal of the corporation's duty to its customers on the front lines is only the beginning of the problem. Allies who believe they have been given "junk" to fight with, for instance, are far less likely to fight at all.
Afghan forces are the only long-term solution to security in Afghanistan, and countries like Britain and Australia are expressing unease about the willingness and ability of NATO to lead the Afghan mission. Its popularity is low, and is contested in many of the East Bloc countries that are taking risks and contributing fully.
Given these circumstances, AEY's performance under this contract may well end up having international reverberations that reach beyond the mere investigations into its arms dealing partners and practices.
Readings & Sources
- DID (March 21/07) - $298M to AEY for Ammo in Afghanistan. DID has not found any other DefenseLINK announcements pertaining to AEY, Inc., though the New York Times notes a number of smaller contracts below $10 million in Afghanistan and beyond.
- NY Times (March 27/08) - Supplier Under Scrutiny on Arms for Afghans. DID has criticised NY Times defense reporting in the past, and deservedly so. This story, on the other hand, is an excellent example of well-done investigative journalism.
- US DoD DefenseLINK (March 27/08) - Army Suspends Ammo Contract for Afghan Security Forces
- Deutsche Presse Agentur, via Military.com (March 27/08) - Firm Sent Cold War Ammo to Afghanistan
- Reuters (March 27/08) - NATO meet a test for Afghanistan, says Australia. Defence Minister Joel Fitzgibbon says of the April 2008 Bucharest meeting: "It's a watershed meeting. It will determine the strength of will of so many of the participating nations."
- UK House of Commons Defence Committee (Session 2007-08, March 20/08) - Future Of Nato Threatened By Lack Of Political Will, Say MPs. "Succeeding in Afghanistan must remain at the top of NATO's agenda. The Alliance is facing real difficulties in generating sufficient forces and national caveats continue to hamper the ISAF mission. The burden in Afghanistan is not shared equitably and other nations should contribute more. The future of the Alliance does not depend on the outcome of Afghanistan but failure there would deal a severe blow to the unity and cohesion of NATO."
The order was for 52 kinds of ammunition, including RPGs. So, the order was not realistic.
In Iraq, commonality of supply meant switching over the Iraqi Army and Police to M-16's, sharing the same .223 ammo, magazines, etc. Training is key to keeping the M-16 operational, so that also reduces risk of the rifles being sold on the Black Market and being used against allied forces. Since AQ is not big on training, and would still need ammo.
It's been suspected that this was one giant fishing expedition. The contract given deliberately to a corrupt, connected, somewhat bizarre (one Boteach is the "Shalom in the Home" guy) family to see what connections they turn up as they go hunting for ammo.
If you wanted to predict a coup or armed uprising or guerilla movements in say, Pakistan, Tunisia, Kosovo, Albania, Georgia, Turkmenistan, and the like, you'd want to watch not just guns but ammo supplies. These guys might have been ruses, probably unknowingly, to see who and what they connect with and watch their connections. Movements and funds transfered in and out of bank accounts.
Normally you'd expect government to government orders for ammo -- Hungary, Bulgaria, Poland all have good arms manufacturers who could probably whip something up for the basic 7.62.39 order fairly quickly. That this was not done should tell you something.
thanks for the follow up - good review.
I have to say I'm of two minds on the current order processing for the pentagon.
On one hand, in the wild and wooly world of the afghanistans and Croatians, etc - there probably is no way to avoid some weirdness, corruption, influence peddling, etc.
On the other hand, there has been so MUCH corruption, loss of funds, shadowy groups of contractors inheriting huge amounts of our nations's wealth u can't help but be disgusted and appalled, because it is real money, though it seems to get treated like playdough - and the various military lobbyists cozying up to Congress leads to a lot of egregious results.
Also, I hate to say, as much as I hope someone in the procurement office is forced to resign foe this - and that procurement officer is investigated to see that there are no kickbacks or future employment offers- I can't help but feel just a little admiration for these 20year olds. Maybe I shouldn't t but that type of entrepreneurialism is to be admired. I mean arranging fly by night ammunition deals involving, what, 8 countries?
That takes some balls!
I can hardly wait for the movie. What do you guys think - a fast talking Colin Ferrell ( if he can manage a good american accent) as the main dude? He has the energy and the shady character to pull off afast absurdly dark comedy - which this real life situation seems to call for.
a fast talking Colin Ferrell ( if he can manage a good american accent) as the main dude?
Israeli accent transplanted to Florida, judging by the names.
Geez. Another unclosed tag.
Don't comment late at night?!
Nailed it. Sleep tight, America... Your Italics Marshals are on guard.
I am stunned to find myself agreeing with hypocrisyrules again - this is, what, the second time?
Russel Crowe might actually fit the principal character better, but even Hollywood may find the age thing a stretch. Colin Ferrell seems like a good choice. And I want Catherine Zeta-Jones somewhere in there as a hot Albanian babe. Just because.
Jim, your idea is very interesting, and might be plausible - IF the collateral damage wasn't so high. On a second-supplier order or an ancillary order, maybe. On the main source of ammunition for a fighting ally? Game's not worth the candle.
Jim,
I would like to think that, but being on the inside of the procurement behemoth in my day job, I would not bet on it.
The US Army's contracting system in Iraq broke down from lack of everything including competence, and most of their mission was handed off to DCMA -- Defense Contracts Management Agency -- the agency I work for.
What I am hearing from friends who were thrown into that briar patch. I'd bet on simple incompetence aided and abetted by corruption.
Joe, I'm late to this party, but I'd like to add something.
Last year, as a judicial clerk, I was periperally involved in a fraud trial involving military procurment. The winners of the contract received millions of dollars. Their office was the back room of a convenience store; their contact number was the number of that store, and their fax machine had to be plugged in to that same phone line after you called in advance and told them a fax was coming.
At the close of the evidence (several days of testimony) nobody was able to say what, exactly, the contract required them to provide.
I think this is a not an isolated incident. Hell, at least these guys did supply something.