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Arms fraud inquiry takes political turn

A congressman says a U.S. ambassador may have played a key role in helping hide evidence of a crime.

July 14, 2008|Paul Richter and Tom Hamburger | Times Staff Writers

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.

Withers' version has been supported by at least four other U.S. officials. In addition, a criminal investigator working on the case credited embassy staff with providing "outstanding support" to the criminal inquiry, according to a Nov. 28, 2007, Defense Department e-mail that was reviewed by The Times.

"Far from covering this up, we were helpful to this investigation, and proud of it," said Withers, a 24-year Foreign Service veteran. Withers has been given permission by State Department officials to speak publicly providing he does so as an individual and not as a representative of the U.S. government or the State Department.

The developments have sharpened tensions between State Department officials and Waxman's committee, an aggressive panel that frequently embarrasses the Bush administration. Withers and his supporters say the panel moved too hastily in this case to publicize an erroneous allegation.

Withers' decision to speak out is likely to further inflame the tensions and represents a rare instance in which a career diplomat personally and publicly challenges a high-ranking lawmaker.

On Saturday, he wrote Waxman to ask for a meeting "to refute the unfounded aspersions that have been cast upon the reputations of an outstanding and dedicated cadre of public officials." He said Waxman's conclusions were "wrong in their entirety."

Diveroli has been the largest provider of munitions to the Afghan security forces, and the investigation that began last year led the U.S. military to reassess how it purchased arms for Afghan and Iraqi forces.

Investigators think AEY was buying the Chinese cartridges, having them repackaged by an Albanian subcontractor and shipped to Afghanistan. The ammunition was part of a mountain of aging and deteriorating munitions stockpiled in Albania.

The events that drew Waxman's attention to Withers occurred Nov. 19, when, U.S. officials say, the Pentagon's investigation was nearly complete. Differing accounts of what transpired that night are the source of the dispute over Withers' role.

Withers said he received messages that a panicked Fatmir Mediu, then Albania's defense minister, needed to see him.

Fearing the defense minister had news about terrorism or similarly grave problems, Withers agreed to meet him with other embassy officials. The meeting lasted from 11 p.m. until midnight.

Mediu told the U.S. officials he was upset by a call he received from a New York Times reporter, asking about past legal problems and possible corruption and asking to visit the airport the next day to see a munitions stockpile under ministry control, Withers said.

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