Pentagon criticised over contract for company run by 22-year-old

The Pentagon has suspended dealings with its main supplier of munitions to the Afghan government after some cartridges delivered from China and various former eastern bloc countries were found to be more than 40 years old.

Details of the Miami-based company, identified as AEY Inc – headed by Efraim Diveroli, 22, who has little experience in the arms business, and a vice-president who was a licensed masseur – were revealed yesterday by The New York Times. The suspension seems to have been triggered by evidence that the men misled US officials about the true sources of the equipment and, in particular, that large consignments of cartridges had originated in China, which may have been a violation both of its contract and United States law.

AEY struck lucky when it was chosen as the Pentagon's lead munitions supplier for Afghanistan, with one federal contract awarded to it last year worth in excess of $300m (£150m). AEY is also under criminal investigation by the Defence Department and Customs and Excise. The affair is also deeply embarrassing for the Pentagon, which decided to turn to the private sector to keep the Afghan forces supplied when the insurgency in the country intensified in 2006.

But in awarding contracts, procurement officials appear to have been astonishingly careless in vetting those contractors or stipulating limits on the provenance or quality of the munitions.

That such an important deal should have been handed to a man so young, and with a record of repeated clashes with law enforcement officers in Miami related to disputes with girlfriends and minor assaults, will leave many officials red-faced. Nor was it reassuring to discover that the main skills of the second most senior executive at AEY were in massage techniques.

Mr Diveroli told the New York Times he was unaware of the Pentagon's decision to bar him from future contracts. Officials said a letter confirming the move had been sent to him on Tuesday.

Last December, he had denied any suggestion of wrongdoing. "I know that my company does everything 100 per cent on the up-and-up, and that's all I'm concerned about," he said.

But it appears that at least some of the ammunition he supplied had come from stockpiles of obsolete and unreliable weaponry already designated for destruction by Nato. Experts say cartridges can become less efficient and possibly defective after a certain number of years. AEY also reportedly dispatched some consignments in crumbling packaging.

An Afghan commander in Nawa, an outpost near the Pakistan border, said a cardboard box of cartriges split, to reveal that they had been made in China in 1966. "This is what they give us for the fighting," said Amanuddin, a colonel, who like many Afghans uses only one name. "It makes us worried because too much of it is junk."

Also under scrutiny are the identities of shell companies and murky middle-men that Mr Diveroli apparently engaged to negotiate the purchase of the equipment from Kazakhstan and east European states including Albania, Bulgaria, the Czech Republic, Hungary, Montenegro, Romania and Slovakia.

A taped telephone conversation involving Mr Diveroli reportedly hinted at corruption in the acquisition of 100 million rounds of ammunition from Albania. Investigators also suspect that some entities who worked with AEY may appear on US lists of illegal arms traffickers.

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