by Guy Lawson
Diveroli wanted to know how many Albanian-made ammo there were, as opposed to the Chinese rounds. He instructed Podrizki to meet with Pinari immediately. The plan was to fulfill the first shipment of 2 million rounds with Albanian ammo, buying time to try to find another source. As they spoke, Packouz was checking with companies in Hungary and Bulgaria. The other countries had stockpiles of surplus ammo, and the pricing was competitive. But the question was timing. The earlier delays had put AEY under the gun. Getting approvals and end-user certificates was time-consuming. Precious weeks had passed, and the fighting season was in full swing in the Korangal Valley and other hot spots in Afghanistan. AEY had to move fast.
In Tirana, Podrizki presented the new plan to Pinari.
“We don’t think the Chinese ammo is going to work for us,” Podrizki said. “We need you to deliver only Albanian-made ammo.”
“This is not feasible,” Pinari replied. “Most of the ammunition close to the airport is Chinese. The Albanian-made ammunition is scattered all over the country. There is not enough to fill the order. It is too difficult and expensive to truck all this to Tirana.”
The excuse sounded lame to Podrizki—because in fact it was. MEICO had Albanian-made rounds it could supply to AEY, but those rounds had brass casings, not the cheap steel casings AEY was buying. The brass-jacket rounds were being sold to another American company to be taken apart for scrap. Podrizki didn’t think Pinari was being straight with him, but how could he compel a senior Albanian official to do what he wanted, or tell the truth?
Returning to his hotel room, Podrizki felt overwhelmed. Diveroli also wanted him to arrange to have airport fees waived, obtain export licenses, and oversee the repacking operation. Now, steps might have to be taken to remove the Chinese markings. It was all too much, especially in such an uncooperative country. Podrizki e-mailed Packouz that Pinari was failing to offer necessary practical and timely assistance—typical of Albania, he was learning.
“From the wrong side of the Iron Curtain,” Podrizki ended his e-mail, trying to add a note of levity.
“We promised the government we’d deliver last week, so if we don’t deliver this week we’ll look horrendous,” Packouz replied. He signed off, “From the luxurious leather couch in my South Beach condo.”
To get approval for using cardboard packaging instead of the ancient wooden crates, Packouz sent an e-mail to Major Ronald Walck, in Kabul, titled “Packaging Issues.” It was a minor masterpiece in the art of deception:
“During one of our inspections our team discovered that some of the metal cans the ammunition was stored in were in an unpredictable, poor, and worn condition due to many years of storage,” Packouz wrote. As a result, AEY was going to have to repackage the AK-47 ammo in cardboard boxes. He attached photos Podrizki had taken showing that the actual rounds were in excellent condition. Every metal can was being opened, Packouz explained, to visually inspect every cartridge and ensure quality. He noted that extensive test-firing had been conducted by AEY’s “team” in Albania. Packouz pointed out that the Army’s Lake City Ammunition plant in Independence, Missouri, had long ago discarded wooden crates in favor of cardboard boxes, saving millions of dollars in airfreight and suffering no loss in quality for field duty.
“Since our contract does not specify any particular packaging, we want to confirm that this will not cause any issues,” Packouz concluded. “Your prompt response would be appreciated.”
Hours later Major Walck wrote back, “The ammunition in the pictures looks good. I don’t think there will be any problems with the cardboard boxes. If you band them to the pallets they should be fine.”
“GOOD NEWS!!!” was the title of the e-mail Packouz sent to Podrizki in Albania. “The Army officer who will be signing for the goods has accepted loose-packed ammo in cardboard boxes!!! We must begin repacking IMMEDIATELY if we are going to make our deadline.”
First thing Monday morning, Podrizki e-mailed Pinari, “We’re already two weeks behind schedule and we risk losing the contract and being blacklisted by the Pentagon, thus preventing BOTH of our companies from ever again doing business with the US government. Once a company is blacklisted it is nearly impossible to regain legitimacy with the government. There are literally hundreds of companies eager to replace us on this contract.”
Pinari still refused to deliver the ammunition. Podrizki didn’t know it, but part of the problem was that Diveroli had yet to pay MEICO for the rounds in advance, as the agreement required.
Exasperated, Podrizki decided he needed help—not because the ammo was Chinese but because he couldn’t get the Albanians to deliver. He was staying at the Hotel Broadway, just off the city’s main square. The US Embassy was nearby, a building surrounded by barbed wire, barricades, and scores of armed Albanian and American soldiers. Podrizki presented his passport to a guard at the gate and asked to speak to an official. He was told he wasn’t allowed to enter the embassy. But a political/military-affairs attaché named Victor Myev agreed to talk to him on the phone. Podrizki explained the situation to Myev, describing the contract and the inexplicable behavior of Pinari and the Ministry of Defense. Could the embassy put pressure on the Albanians?
“MEICO isn’t delivering,” Podrizki said. “I need help.”
“I can’t help unless there’s an allegation of corruption,” Myev said. Since AEY was a private company, even though it was doing business with both the American and Albanian governments, it would have to solve its troubles directly with the Albanians. But Myev sympathized. Doing business in Albania was frustrating, Myev allowed—especially inside the government. “That’s just the way things are done here,” Myev said, sighing.
Podrizki wrote to Diveroli to say he’d tried the US Embassy: “I spoke with the US Embassy to see if they could do something to help—like put pressure on Pinari, MEICO, or the Minister of Defense. Or all three. They said that unless something illegal is happening they can’t do anything. They also said this type of treatment and attitude (laziness) is typical of the region and especially Albania.”
Diveroli called Podrizki to discuss the situation.
“Listen, you might want to consider investing in some political capital,” Podrizki said. It seemed to him that AEY’s woes were essentially political. Diveroli needed a powerful American political voice—a senator, say, or a congressman—to make a few calls on his behalf. The Albanians would surely bend to American influence, especially with the much-desired ascension to NATO membership looming. The only way to resolve the kinds of obstacles AEY faced, Podrizki believed, was to purchase political power—and that meant giving money to powerful politicians.
“Don’t give me a geography lesson. I know what I’m doing,” Diveroli said condescendingly, as if Podrizki were talking down to him.
But Podrizki was right. If war was the continuation of politics by other means, as the military theorist Carl von Clausewitz maintained, then arms dealing was a business where the ends justify the means. AEY could—and should—have taken many political steps. The dudes should have told the purchasing officer in Rock Island about the “Chinese” ammunition. The Army could have been apprised of the choice it faced—enforce the Chinese ban and deny the Afghans sufficient ammo for the fighting season, or find a way around the ban and complete a critical mission in America’s global war on terror. The dudes could—and should—donate money to a pro-military-minded senator, or pro-Albanian congressman—and there were many—to smooth the path.
As the pressure mounted, so did the absurdities. The Pentagon was an ungainly behemoth tied down by thousands of tiny rules and regulations. None alone were crippling, but the accumulation of these hastily drafted laws, written under the pressure of two losing wars, threatened to snarl the effort to supply arms to the Afghans.
But the drafters of the defense regulations had displayed the foresight to create a fallback position for such eventualities. The law governing AEY’s contract specifically gave the secretary of defense the power to grant a wai
ver. The problem was getting word to Robert Gates.
Regardless, Diveroli didn’t dare tell the Army about the Chinese ammo, let alone try to find a back channel to the Pentagon. Diveroli was sure that if he informed the procurement officers in Rock Island about what was happening they would say no to a waiver, no matter the circumstances.
It would later emerge that Diveroli was in fact correct. If he’d appealed to the Army, no variance would have been allowed, nor would the procurement officers have gone up the chain of command to find solutions to a legal and technical issue that threatened critical supplies. AEY had been notified that Chinese ammo was not permitted, and that was the end of the matter.
Large companies like Raytheon and Boeing spent fortunes paying lobbyists to guide them through circumstances like those AEY found itself in. Lockheed Martin alone dropped more than $15 million a year on Washington lobbyists. The revolving door between the military and the conglomerates profiting from the military-industrial complex was well oiled. For a connected DC operator, fixing AEY’s dilemma would be easy. A well-placed phone call, a favor called in, an appeal to logic over lunch at a K Street steak house—the situation perfectly illustrated why lobbyists existed in the first place.
Diveroli was a kid in a hurry. He was convinced any sign of weakness or doubt—any trouble at all—would jeopardize the deal. He didn’t dare seek real guidance. Nor did he spend the money to hire a top DC law firm to advise him. He had millions of dollars in the bank but none of the maturity or experience to know when it was important to spend some of that capital—as Alex Podrizki had suggested.
Unwilling to contact the Army directly, Diveroli instead wrote to the lawyers in the State Department who were assigned to answer questions from federal contractors. Was Chinese-manufactured ammunition in Albania outside the embargo against Chinese munitions if the rounds were manufactured before the ban? Diveroli asked. He didn’t provide details or outline any of the compelling arguments a lawyer might have provided him. He asked the way a scared kid might—afraid he’d get in trouble if the grown-ups found out what he was up to.
The reply came swiftly, as if the matter required no consideration. No, the State Department’s lawyer said, there was no such provision in the law. Under State’s regime, the proposed transaction would not be authorized. “Exceptions to this policy require a presidential determination,” the lawyer wrote.
The answer was incorrect: under the State Department’s rules, the ammunition would in fact change nationality after five years. But that didn’t matter. Diveroli was now convinced AEY was cornered.
To comply with the contract, the company had to ship the ammo to Kabul by Thursday. It was Tuesday.
“It looks like we have another reason to repack,” Diveroli said to Packouz. “And this time it’s not an option.”
A meeting of AEY’s team was convened in Miami: Diveroli, Packouz, and two other dudes from the yeshiva who were now working for AEY—Danny Doudnik and Levi Meyer.
“Well, this is it, boys,” Diveroli said. “This is where we separate the boys from the men—the pussies from the big swinging dicks. We got no time to switch sources, and I’m not counting on President Bush to give a fuck about us. We can either go crying to the government that we fucked up or we can do what they want us to do anyway and deliver the motherfucking ammo.”
The arms-dealing business had a term for the situation AEY confronted. The law could be followed. Or the law could be evaded—circumvented, in the argot of gunrunning. Men like Henri Thomet regularly faced these kinds of dilemmas. Embargoes and human-rights reports and the web of international laws often made it difficult for arms dealers to act strictly legally. In such circumstances, the result was circumvention.
Ironically, the same logic applied to the Pentagon in Iraq and Afghanistan. The established system for arming allies had been created over decades by the State Department. Designed during the Cold War, it provided for orderly and sustained policies of supplying weapons to NATO allies and countries like Israel and Egypt. Conflict in the age of terror presented a new set of challenges; standing up armies in Afghanistan and Iraq was far more difficult and urgent than anything State’s laws anticipated. The Department of Defense procurement regimen had been constructed to speed the process—in effect to circumvent State’s laws.
AEY was likewise caught in a desperate situation—and would likewise have to circumvent.
Diveroli demanded an update on the repacking job in Albania. The cardboard boxes hadn’t been sourced yet, Packouz said. Nor had Alex Podrizki found someone able to physically repack the ammo, which appeared to be necessary, as the Albanian military refused to do the work. Packouz and the others reported on their search for companies in Eastern Europe that could do the job. But all the potential partners came with caveats and delays.
“We don’t have time for that bullshit,” Diveroli said. “We’ve got to get these fuckers to perform.”
“Alex told me he’s got a lead on a local guy in Albania,” Packouz said. “He only talked to him on the phone, but Alex said the guy is pretty motivated. His name is Kosta Trebicka. He’s some kind of paper manufacturer. This Trebicka guy claimed he could arrange delivery of the boxes quickly.”
“Excellent,” Diveroli said. “Now we’re rolling. Get Alex to meet this Albanian dude immediately. We’re dropping everything else until we get this resolved. If we don’t get this done, we’re all fucked.”
* * *
I. “A New Direction for China’s Defense Industry” (Rand, 2005).
Chapter Seven
GEGH
In early May of 2007, Alex Podrizki met the Albanian businessman Kosta Trebicka at the Illy Caffe in Tirana, a slick new place on Rruga Pandi Dardha. Trebicka was in his late forties, a former lawyer who’d turned himself into a prosperous entrepreneur. Years earlier, he’d lived in the United States, in Syracuse in upstate New York, with his first wife and their daughter. He spoke fluent English and considered himself knowledgeable about Americans. He’d also served in the Albanian military, rising to the rank of major and accumulating a significant fortune from the sale of state-owned assets after the collapse of Communism.
Trebicka listened intently as Podrizki told him he needed eighty thousand boxes to repack 100 million rounds of AK-47 ammo. Podrizki explained that the wooden pallets holding the ammo were too heavy to ship by plane. Fuel prices had made airfreight prohibitively expensive. Using reinforced cardboard and lighter pallets would save a significant amount of money on transportation. The US Army had approved the plan, Podrizki said.
Podrizki asked if Trebicka might be interested in doing the repacking job as well as supplying the boxes. Trebicka was indeed: he had access to a pool of workers and ambition to burn. Podrizki was excited and relieved: finding someone in Albania to do such an odd job had looked as if it would be extremely difficult, but Trebicka promised to solve both of AEY’s problems at once.
The next day, Podrizki and Trebicka went to the military section of Tirana’s airport, where 2 million rounds of ammo were stored in an open-air hangar. To begin, Trebicka brought along forty workers, drawn from the people who worked at his cardboard factory. Half of the ammo was Albanian-made, half had Chinese markings on the boxes. Podrizki told Trebicka to have the workers divide the crates into two piles—one Albanian, the other Chinese. Podrizki said to start with the Albanian rounds. Following Podrizki’s instructions, Trebicka showed his crew how to remove the metal cans from the crates. Each can contained 640 rounds of ammo, with batches of twenty cartridges wrapped in stencil paper that indicated the place of manufacture, age, and caliber. For the Albanian rounds, the ammo could be put in the cardboard boxes still wrapped in paper, making the task relatively easy. The workers were instructed to inspect the ammunition to make sure it wasn’t rusted, discolored, or obviously faulty; any rounds that were flawed were to be put aside.
Trebicka had his workers repack one pallet of ammo in order to assess the difficulty so he could come up with a quote. T
rebicka then had an extended phone conversation about the cost with Diveroli in Miami. After the inevitable dickering they agreed on $240,000.
As Trebicka’s team worked away, the supply of Albanian ammo quickly ran dry. A million rounds of Albanian ammo had been palletized and was ready to be shipped—as soon as AEY could get the logistics of the flight to Kabul organized.
But Ylli Pinari announced that MEICO would supply only Chinese ammunition from now on. The Chinese ammunition was in good condition, Podrizki could see—it was actually better quality than the Albanian rounds. But the repacking would have to be done differently, Podrizki explained to Trebicka. Instead of putting the Chinese ammunition in the cardboard boxes still wrapped in the stencil paper, the paper would have to be removed, too. Every round would still be inspected for quality, but instead of being in neatly wrapped stacks the ammo would be put loose into plastic bags.
“Be careful to make sure there are no Chinese markings on any of the material inside the cardboard boxes,” Podrizki told Trebicka.
Trebicka agreed to follow Podrizki’s new system—but with a quizzical look on his face. The stencil paper didn’t add any weight, so why take it out? It made the job messier and more time-consuming, to no purpose that Trebicka could see.
Inspecting and repacking millions of rounds was proving to be maddeningly slow and difficult. After a few days of his workers’ toiling away, Trebicka feared he’d seriously underbid his price. During breaks he complained that he was going to lose money if things didn’t speed up. Podrizki said he could do nothing to change the price. Exasperated, Trebicka called Diveroli in Miami to try to renegotiate. Removing the ammo from the cans was a waste of time, Trebicka said; the cans didn’t add significant weight. Why bother? Trebicka asked. AEY was going to have to pay him more, Trebicka said, or he would stack the cans inside the cardboard boxes, instead of removing all the rounds. The same was true for the stencil paper.
