March 27, 2008 / 5:10 PM / in 11 years

U.S. military suspends Afghanistan ammunition deal

WASHINGTON (Reuters) - A Florida company hired by the Pentagon to supply ammunition to Afghan soldiers sent the troops Chinese gun cartridges that were more than 40 years old, the U.S. military said in documents obtained by Reuters.

Close-up view of an ammunition case stamp is seen in this handout photo released by the U.S. Army on Thursday. A Florida company hired by the Pentagon to supply ammunition to Afghan soldiers sent the troops Chinese gun cartridges that were more than 40 years old, the U.S. military said in documents obtained by Reuters. REUTERS/U.S. Army/Handout

The U.S. Army has suspended the contractor, AEY Inc. of Miami Beach, from all federal contracting work. The U.S. government also has started an investigation into privately held AEY, its president and the ammunition contract.

According to Army documents, AEY and its president, Efraim Diveroli, 22, appear to have knowingly misled the military when they said last year the ammunition supplied was manufactured in Hungary between 1965 and 1975.

“In fact the majority of the ammunition was manufactured in the People’s Republic of China between 1962 and 1974,” the Army legal services agency told Diveroli in a letter on Tuesday notifying him of AEY’s suspension from all federal work.

If true, AEY would have violated U.S. law that prohibits the acquisition of munitions from Chinese military companies.

The suspension is temporary, pending the outcome of the investigation.

Contacted at his Miami Beach office by phone, Diveroli told Reuters, “I’m not making any comments. I have nothing to say, I mean, one way or another.”

Asked if his lawyer would be issuing any statement on the story, he said, “I don’t believe he will be.”

The contract suspension came amid an investigation by The New York Times, which found tens of millions of cartridges supplied by AEY under a $300 million federal contract were manufactured in China.

The newspaper on Thursday also said AEY worked with a company on a U.S. list of groups suspected of illegal arms trafficking.

An Army spokesman said criminal investigators have been working with the military on the case since September 2007.

Asked about possible charges in the case, Alicia Valle, spokeswoman for the U.S. Attorney for the Southern District of Florida, said, “I saw the (New York Times) article and unfortunately I will not be able to confirm or deny.”

U.S. defense officials said they first noticed problems with the packaging of the ammunition, which prompted the investigation.

As ammunition ages, it becomes less reliable and less accurate.

Pentagon spokesman Bryan Whitman said there were no reports of safety problems with the ammunition but also said that could be because the ammunition might not have been distributed to soldiers due to its condition.

Additional reporting by Tom Brown in Miami; Editing by Bill Trott and Philip Barbara

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