Each Dollar A Bullet
I posted my first blog on a new site: Urbanagora.com. I’ll still be posting here, but also there. Anyway...on with the show.
AEY, one of many defense contractors hired to supply US armed forces, is not a name that inspires confidence among those that know it. "They weren’t reliable, or if they did come through, they did after many excuses," said one federal official. But then no one asks the troops to fill out comment cards. No one looks to see that contracts are being fulfilled responsibly. And on the rare occasions when some reporter actually bothers to tell us about it, the Bush administration sticks its fingers in its ears and shouts, "La-la-la-la-la! Can’t hear you! La-la-la!" And the beat goes on.
The Story So Far…
Defense contractor AEY has had its contracts with the government suspended as Congress begins investigating the company for fraud. The company was paid to supply a variety of different types of ammunition to Afghan forces combating the Taliban resurgence and Al-Qaeda remnants. Now I know what you’re thinking. But Diogenes, can’t we just pay one of the usual crony corporations ungodly amounts of money to do it? Well, yes, we could, but the thing is, they don’t do arms trading, just production. And the Afghans were armed with old Soviet weapons, as those things can be bought on any street corner for less than cab fare. None of the usual suppliers do, say, ammo for AK47’s, which means it has to be bought from them what has it. Enter a variety of unsavory types ala Nick Cage in Lord of War, though I imagine their performances were more convincing. The vetting form was apparently pretty straightforward. There were two questions: "How much?" and "How would you like your name spelled on the check?" AEY was the low bid. The company claimed that the ammo it was offering was from Hungary, but the rounds the company shipped to Afghanistan were in fact Chinese in origin, up to forty years old, corroded, decomposing, and unusable.
The gear wasn’t all bad. Some was from climate-controlled stockpiles in the old eastern block. Some was scrap off Soviet junk heaps. But AEY’s contact with the government did not distinguish between these different grades of ammunition. The only requirement, according to an official at Army Sustainment Command, was that the ammunition fit in the weapon for which it was intended. Because the Soviet-made arms used by the Afghan fighters are considered "nonstandard," that is, not kept as part of the regular inventory for the US Army, it is mostly unregulated.
While providing useless ammo may not be enough to get AEY in trouble, shipping arms from China is illegal under US government contract. And it has been enough to set off an investigation in Washington of the company and its practices along with its 22-year-old operator.
That’s right! The company president is 22 years old. Efraim E. Diveroli took over the company from his father when he was 19, netting a $5.7 million dollar contract to supply rifles to the Iraqi military. Let me say that again. The DoD gave the contract for supplying guns to the people in charge of securing Iraq to a teenager!
Diveroli’s father had started AEY as a printing company. But according to his grandfather, Angelo Diveroli, Efraim was a genius when it came to guns. Angelo laid it out like this. "His passion is weapons, since he was a child," the AP reports. "I used to take him to gun shows. He knew every weapon." Somewhere along the way, Efraim got AEY listed as a defense contractor and began bidding on government contracts. Public documents state that the company has received more than $300 million worth of contracts from the government since 2004. Diveroli claims to have done somewhere in the neighborhood of $600 million.
The New York Times broke the story on Thursday. It states that the Army will continue to accept ammo it has already ordered from the company, which, as of March 21, totaled $155 million worth. American munitions inspectors are examining all rounds for small arms provided by AEY.
Same As It Ever Was
AEY (no one seems to know what, if anything, this stands for) is by no means the first shady contractor to do something questionable in the name of profit. Endless stories over the last few years detail how Halliburton and its subsidiaries lost 363 tons of cash, supplied contaminated water to troops in Iraq, and billed the government for countless services never provided. What has happened is the take-over of the American government by politicians who do not believe in oversight, but rather put their faith in the magic of privatization. The prevailing dogma is that government is inherently inefficient and ineffective whereas corporations will invariably find the most efficient way of getting the job done in order to maximize profit. It is a philosophy advocated by those who seek to break government and then declare with glee, "See? It’s broken! Told ya!"
What is even more startling than the complete lack of any accountability is the apparent belief that government has no role in the market even when it is the sole customer. Even the most rabid Thomas Friedmanite would tell you that part of the whole free market deal is that you, as a consumer, may stop doing business with a company should you be dissatisfied with the product you’re given. However, when government is the customer, the implication that it may have a legitimate role within the free market paradigm seems to cause a short circuit in the mental wiring of the neo-cons. The result is a complete paralysis of any and all mechanisms that might kick the greedy little piggies to the curb.
This case is exemplary of the utter disaster that the privatization of war has been for both the federal budget and the troops on the ground who must now deal with the complete and total lack of accountability that is being brought to bear against those who cut every corner to enrich themselves at the expense of those serving. This is what the Bush administration calls, "supporting the troops." When it comes to stomping around and waving the flag, there is no equal. If Congress attaches one string to one dollar, even something as simple as, say, demanding a receipt, the Bushies are out in front of the cameras saying that Congress doesn’t support the troops. By not shoveling more money down the gullets of these contractors, they argue, Congress is denying the troops the equipment and supplies they need to "win." But at the end of the day, they just don’t care what’s happening. As long as the check clears and no one asks any serious questions, there’s nothing to worry about. It’s someone else’s problem.
The argument invariably comes back that the case of AEY proves the system works. Any company supplying a substandard product will lose its contracts. But AEY isn’t in trouble for supplying substandard products. It has been doing so for years and no action has been taken. What landed Diveroli in hot water was shipping arms from China. The quality of the arms has nothing to do with the pending fraud charges against the company.
By law, the first loyalty of a corporation is to profit. When oversight is non-existent, when Congress is infested by an entire political party dedicated to obstructing any investigation of its contributors, the idea that any contractor that fails to perform up to a certain standard will face repercussions for their actions is either naïve or deluded. Taped conversations make it clear that when it came to where the munitions were coming from, Diveroli took the Sergeant Schultz line. "I hear nothing, I see nothing, I know nothing!" It seems that he and his employers have something in common.