U.S. suspends Afghanistan ammunition deal

WASHINGTON - The U.S. Army has suspended a munitions contractor from government contract work for reportedly providing Chinese-made ammunition to the Afghanistan army in violation of its contract and U.S. law.

AEY Inc., a company based in Florida with just eight employees, is under criminal investigation for reportedly claiming that the munitions were made in Hungary, according to documents obtained Thursday by The Associated Press.

Pentagon spokesman Bryan Whitman said there have been no reports that the ammunition was unsafe or failed to work properly. He said some of it may not have been used because of its substandard packaging.

But The New York Times reported in Thursday editions that some of the ammunition was more than 40 years old and Afghan officers complained that it was junk.

In a letter Tuesday, the Army told company owner Efraim Diveroli that the investigation could lead to AEY being barred from any U.S. government work.

Diveroli's attorney, Hy Shapiro, said Thursday he had not seen the Army's letter and declined further comment until he had. No one answered the door at the Miami Beach apartment listed in Florida state records as Diveroli's.

According to an Army Legal Services memo, AEY began contracting for the Defense and State departments in 2004, and to date has been awarded more than 150 contracts, worth in excess of $200 million.

The main contract, awarded in 2007, was for various types of ammunition for the Afghan National Army and the Afghan National Police. It included ammunition for machine guns, assault rifles, shotguns and pistols.

After questions arose about the origin of the munitions, U.S. Army investigators in January reviewed shipments at an Afghan Army weapons depot. Stamps on munitions in 14 containers showed that the ammunition was manufactured in factories in China, the memo said.

According to the contract, based on federal law, companies doing business with the U.S. government cannot buy any munitions directly or indirectly from a Chinese military company, or any entity that is part of China's defense industrial base.