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U.S. suspends supplier of arms to Afghanistan

  • Story Highlights
  • AEY Inc. is under investigation for reportedly dealing in Chinese ammunition
  • According to government contract, company cannot buy munitions from the Chinese
  • Army memo: Government awarded AEY contracts worth in excess of $200 million
  • Army Documents reveal ammunition arrived in Afghanistan corroded, poorly packed
  • Next Article in U.S. »
From Mike Mount
CNN
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WASHINGTON (CNN) -- U.S. investigators are looking into accusations that a company hired by the U.S. military supplied corroded and decades-old Chinese ammunition to the Afghan Army and police.

art.efraim.diveroli.wplg.jpg

Efraim Diveroli, 22, is president of AEY Inc., an arms dealer suspended by the Defense Department.

The U.S. government has suspended AEY Inc. of Miami, Florida, for violating its contract, according to U.S. Army documents obtained by CNN.

The Army and House Oversight Committee identified the president of AEY Inc. as Efraim E. Diveroli.

He is a 22-year-old whose father started the company as a small printing company, according to WFOR-TV, a CNN affiliate in Miami. Video Watch father describe 'boy genius' »

The government is conducting a criminal investigation into allegations that AEY Inc. knowingly misrepresented what the company would provide the Afghan security forces.

Under the contract, AEY said it would supply ammunition manufactured in Hungary. But an investigation by the Army found most of the bullets were made in China, a violation of the contract, according to the Army documents.

U.S. regulations bar companies from purchasing weapons or ammunition from a Chinese military company directly or indirectly, according to U.S. military officials.

U.S. government investigators took numerous photographs of the ammunition showing that it was improperly packaged and corroding, according to the Army documents.

The Department of the Army, the contracting authority for the government, sent a letter to Diveroli on Wednesday informing him that he and his company were suspended from contracting with the U.S. government until the investigation is complete.

The Army documents show that since 2004 the company entered agreements with the U.S. government that totaled about $10 million.

The papers also reveal the company struck it big in 2007 with contracts totaling more than $200 million to supply ammunition, assault rifles and other weapons to the Afghan National Army and Police.

When that ammunition arrived in Afghanistan, U.S. officials were contacted because of its unsatisfactory condition.

Army criminal investigators were sent to look at the packages in January. They took hundreds of pictures showing ammunition dumped in deteriorated and broken cardboard boxes and wrapped in plastic, according to the Army documents.

The documents also reveal ammunition was corroded and made in China from 1962 through 1974.

According to U.S. government regulations, the alleged misrepresentation by AEY could bring a fine, five years imprisonment or both. Additionally, if AEY is found in violation of the contract the company will be permanently barred from doing business with the U.S. government.

The House Oversight Committee plans to hold a hearing into the matter on April 17.

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"The hearing will examine the company's financial history, past performance and compliance with U.S. law and government contracting regulations," the committee said in a statement late Thursday.

The hearing also will examine "the federal government's efforts to investigate allegations that AEY may have violated U.S. law and government contracting regulations," the committee said. E-mail to a friend E-mail to a friend

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