Lawmaker Charges State Department Covered Up for U.S. Contractor

June 23, 2008— -- A U.S. ambassador may have helped cover up for an American defense contractor now accused of selling ammo from China to the Pentagon, according to a senior House lawmaker.

And the State Department may have continued the cover-up by hiding information from Congress, charged House Oversight and Government Reform Committee chairman Henry Waxman, D-Calif., in a letter to Secretary of State Condoleezza Rice Monday.

Federal officials last week arrested top executives at defense contractor AEY Inc., including its 22-year-old CEO, Efraim Diveroli, and charged them with acquiring old Chinese ammo from the Albanian government and supplying it to forces in Afghanistan under a Pentagon contract, a violation of the Arms Export Control Act. Diveroli's lawyer has said his client did nothing wrong.

In his letter, Waxman charged that John L. Withers II, U.S. ambassador to Albania, may have conspired with the Albanian defense chief to hide the source of the ammunition from the New York Times, which first reported on the AEY scandal.

According to Waxman, Withers' defense liaison told his investigators earlier this month that Withers "held a late-night meeting with the Albanian Defense Minister at which the Ambassador approved removing evidence" showing that the ammunition sold to the Pentagon by AEY came from China.

State Department spokesman Tom Casey told reporters Monday afternoon he had "no information that would support" Waxman's allegations.

Then-Albanian Defense minister Fatmir Mediu was accused of taking kickbacks as a part of the deal, a charge he has denied. He has since resigned, maintaining his innocence.

Withers has taken a hard public stance against corruption in Albania, which is perceived to be widespread. A U.S.-funded survey released in May found that 92 percent of Albanians said corruption was widespread among public officials. That figure is down from 100 percent a year ago.

"Corruption is not an Albanian problem; corruption exists everywhere. There is a great deal of corruption in my own country," Withers told an Albanian audience in a speech announcing the survey's findings.

But "the critical ingredient is not that corruption exists, it is how we respond to corruption," Withers said, according to a copy of the speech posted to the embassy Web site.

In his letter, Waxman said that Withers' aide, Major Larry Harrison, claimed that in November 2007 Withers and his aides met with a "very concerned" Albanian Defense Minister Fatmir Mediu, to discuss how to respond to a request from the New York Times to see the Albanian location from where AEY's ammunition was being sourced.

The ambassador concurred with the Albanian official that going to the site prior to a visit by the newspaper and removing any indication the ammo was Chinese "would alleviate the suspicion of wrongdoing," Harrison allegedly told congressional investigators.

Waxman also said that information from Harrison and other sources suggested the State Department had not been completely forthcoming in responding to inquiries from his investigators, by failing to note the meeting between Withers and Mediu, and asserting that the U.S. embassy in Tirana "played little or no role" with respect to the issue.

According to Waxman, Harrison said that when he attempted to include information about the meeting into the State Department response, he was overruled.

The State Department's Casey said Monday afternoon that his department "will certainly make sure that we provide the information requested" by Waxman.

In his letter to Rice, Waxman requested interviews with Withers and five other embassy officials, as well as all documents related to the firm AEY. The scandal is scheduled to be the topic of a hearing tomorrow before Waxman's committee.