WASHINGTON — A top-priority federal investigation of military procurement fraud in Afghanistan has been forced to shift direction because of a congressional panel's allegation that a senior U.S. diplomat sought to cover up the scheme.
The accusation against the ambassador appears to be unraveling, however, and prosecutors are scrambling to assess the effects on a case involving what is considered to be one of the most serious procurement abuses in years.
The case centers on a Miami arms dealer who sold ammunition to the U.S.-backed Afghan army through a $298-million Pentagon contract. Investigators found evidence that the contractor bought millions of aging Chinese rifle and machine-gun cartridges stored in Albania during the Cold War, then had them repackaged and shipped to Afghanistan.
The arms dealer, who has been indicted and is facing trial in Miami, is free on bond after being arraigned last week. The government has halted all shipments from the dealer and suspended payments to his firm.
The prosecution was complicated when the chairman of the House Oversight and Government Reform Committee, Henry A. Waxman (D-Beverly Hills), said his panel heard from a witness last month that a U.S. diplomat may have played a key role in helping hide evidence of fraud.
Waxman, in a letter to Secretary of State Condoleezza Rice, cited information that John L. Withers II, the U.S. ambassador to Albania, had approved a plan to cover up the Chinese origins of the munitions being shipped to Afghanistan.
The U.S. prosecutor overseeing the case, racing to answer questions raised by Waxman's allegation, took the unusual step last week of summoning Withers and five other senior officials from the U.S. Embassy in Tirana, Albania, to Miami, where a grand jury is taking testimony.
A lawyer for principal defendant Efraim Diveroli, the 22-year-old president of arms dealer AEY Inc., said the allegations from the committee might provide new grounds to seek dismissal of the case.
"It doesn't appear to be a crime if the U.S. ambassador approved it," said Howard Srebnick, the lawyer.
Important questions about Waxman's allegations emerged last week as Withers spoke out for the first time in interviews with The Times, denying any embassy involvement in a cover-up and insisting officials there worked closely with investigators to secure evidence for the prosecution.
