Arms dealer AEY Inc. and its 22-year-old president have been on the U.S. State Department's Arms Trafficking Watchlist for years.
But that didn't keep them from landing a nearly $300 million Pentagon contract providing ammo to the Afghan Army.
AEY is getting a lot of scrutiny since its 22-year-old president and three others from the firm were indicted last week and accused of providing useless and illegal Chinese-made ammunition under a U.S. government contract.
At a hearing on Capitol Hill today, Stephen D. Mull, Acting Assistant Secretary of State at the bureau of Political Military Affairs, said AEY Inc. was placed on the watchlist in January 2005. AEY's president, Efraim Diveroli, was individually placed on the list in 2006, Mull said. They were placed on the list for reasons that remain classified, officials said.
AEY was awarded the $300 million Afghanistan contract in January 2007.
Military officials stammered to explain how the massive deal sailed through the Army's contracting system without any red flags.
"The contracting officers that execute the contracts are not required to go and look at the watchlist," said Brigadier General William N. Phillips, U.S. Army, Commanding General at Picatinny Arsenal and head of the Joint Munitions and Lethality Life Cycle Management Command, told the committee
Jeffrey Parsons, Executive Director of the Army Contracting Command said: "I'm not sure whether that watch list is accessible to people outside the State Department."
Lawmakers also asked questions about the Albanian arms dealer who AEY who sold the ammo to AEY.
His name was Ylli Pinari. He was president of the Military Export Import Company of Albania (MEICO) in Albania. And he was placed on a U.S. State Department Arms Trafficking Watchlist back in 2005. The reasons for putting him on the watchlist are also classified.
The purpose of the watchlist is to identify people and companies who "might be unreliable recipients of defense articles and services licensed by the State Department."
Rep. Stephen F. Lynch, (D-MA) described the situation as "a disgrace"
"This kid was 19 years old and he got a $300 million contract," Lynch said. "Has anybody been fired for this? Can I ask the panel: Has anybody gotten their walking papers for this?
No, Parsons replied, nobody's been fired over the AEY investigation.