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“WASTE, FRAUD, AND ABUSE IN PUBLIC SPENDING” mentioning the U.S. Dept of State was published in the Senate section on pages S9115-S9117 on Sept. 8, 2009.
The publication is reproduced in full below:
WASTE, FRAUD, AND ABUSE IN PUBLIC SPENDING
Mr. DORGAN. Mr. President, when Senator Kennedy would come to the floor with a booming voice, full of passion about an issue, it was an extraordinary thing to watch and to listen to. He had that kind of passion. I do want to say there are a lot of things for us to be passionate about. One of the things I have talked about on the floor of the Senate is the waste, fraud and abuse in public spending. All of us believe in investing in programs that work to try to help make life better in this country and advance the interests of this country. But it makes me furious to see the kinds of things I see from time to time that represent waste, fraud, and abuse and unbelievable incompetence. Let me describe just one.
We know this not because of some extraordinary work by this body. We know this because of some extraordinary work by C.J. Chivers and Eric Schmitt at the New York Times because they wrote a story about it.
Let me tell you the story, and I am sure it will make every American as angry as it makes me. This is a picture of Efraim Diveroli, a 22-
year-old CEO of a firm awarded $300 million in U.S. contracts to provide armaments, bullets, and guns to the Afghan fighters. That is right. A 22-year-old man using a shell corporation established by his father, working out of a building with an unmarked door in Miami, got
$300 million in contracts from the Department of Defense. He was a CEO. By the way, there is no evidence of any other employees except him and his vice president. Yes, his vice president was older, 25 years old and a massage therapist.
Let me say that again. The Department of Defense gave $300 million in contracts to a 22-year-old CEO of a company--a company that was run by a 22-year-old CEO--and a 25-year-old vice president massage therapist.
Why do I tell you this today? Because a new story just recently described the fact that Mr. Diveroli pled guilty to a fraud conspiracy charge relating to the $300 million in U.S. contracts. He faces up to 5 years in prison.
I have spoken about this man and this circumstance probably three or four times on the floor of the Senate to ask the question: How on Earth could this have happened?
Let me just show, if I might, what this was about. This was about products. No, not staplers or reams of paper. These were killer products, ammunition; ammunition that was supposed to be provided to the Afghan fighters. As it turns out, ammunition that spills out of boxes. Here are some other examples.
In this chart, these are bullets, 40-year-old, Chinese-made cartridges they found somewhere in the world and sent them over to Afghanistan and the Afghan fighters.
Here we can see spilling out of boxes 42-year-old Chinese ammunition that was delivered in Afghanistan from these two folks.
The 22-year-old CEO with whom both the Defense Department and the State Department did business, by the way had previous contracts with the State Department. They were unsatisfactory, and despite that, he got $300 million in contracts from the Defense Department. This photograph is from 2007. That is when he got the $300 million in defense contracts. This photograph happens to be a police photograph because he was arrested for assaulting a parking lot attendant. At the time, he was found to have had a forged driver's license which made him out to be 4 years older than he really was. He said he forged the license and didn't need it any longer now that he is 21 because he only wanted to buy alcohol in the first place.
They ran the company, AEY--the 22- and 25-year-olds getting $300 million in defense contracts after they had gotten contracts with the State Department and judged to be unsatisfactory--out of a building in Miami. It was an unmarked door in a Miami Beach building. That is all you could see. The only evidence that exists suggests that this was a company with just two people.
Mr. Packouz, the 25-year-old massage therapist, has also pled guilty. So both have now pled guilty. I have shown examples of the arms they were supposed to have procured for the Afghan fighters, and when they were delivered, the Afghan fighters called them ``junk''--junk--stuff that was made in the 1960s in China.
The way they purchased this so-called junk violated U.S. law in the first place. The New York Times originally published this story. That is when I saw it. That is when I came to the floor of the Senate and asked a very simple question: How did this happen? How on Earth could this have happened? Who is minding the store? If the Army had made the slightest effort to look into the backgrounds of Mr. Diveroli and Mr. Packouz, they never would have granted contracts to them.
The award was made in January 2007 by the Army Sustainment Command. On May 7, 2008, I met with Army LTG William Mortensen to find out why on Earth they gave contracts in this circumstance. Mr. Mortensen was a three-star general, Deputy Commander of the Army Materiel Command, which commanded authority over the Army Sustainment Command. They had awarded this contract. General Mortensen has since retired. He was completely unapologetic about this, by the way. He said the Army contracts were with companies, not individuals, and on paper the Diveroli company looked just fine.
Of course it didn't because they had not looked at the paper. Had they looked at the State Department with which that company previously contracted, they would have found out this is nobody with whom to contract. He told me nobody in the Army had thought to look through the background of Mr. Diveroli and Mr. Packouz, even though this was a company which consisted, as we know, of just two people. He told me, under similar circumstances, the Army would probably make the same decision again and give contracts to such people again. Then he told me if Mr. Diveroli and Mr. Packouz were acquitted, the Army would go back to doing business with them.
If General Mortensen had wanted to know a little bit about with whom they were doing business to the tune of hundreds of millions of dollars he could have gone to MySpace. Mr. Diveroli had a page on MySpace. He describes himself as a super nice guy. He said on MySpace:
I had problems in high school so I was forced to I work and probably grew up way too fast.
He said:
Basically I'm just chilling with my boys.
And he likes to go clubbing and see movies.
He could have checked, of course, more than MySpace.
He could have checked perhaps a criminal record and found he had been charged with domestic violence and with drunk driving. He could have Googled his name and discovered the vice president, in addition to being a massage therapist, was a professional song writer.
With these kinds of backgrounds, I am just wondering, where is there accountability? Where is the accountability? I understand that because two enterprising reporters for the New York Times broke this story, and we probably would not know it now because this did not come from oversight hearings, it did not come from a Truman committee we should have in this Chamber investigating these things, but it was enterprising reporting that did this. I understand that. So because of that, we have a couple of people charged criminally.
The question I ask is, where is the accountability in the Department of Defense for deciding they are going to move $300 million through the hands of these two? Who did that? Who is responsible? Were they asked to account for it and to answer for it to the American taxpayers and the government for which they worked?
The answer is no, and that is what is wrong, and it is why I come to the Senate floor to recite this again. There is some good news. Finally, we have criminal charges that have been adjudicated, and the fact is, two people have pled guilty. But will this be happening today somewhere in the Pentagon? Will it? Did it happen with water that was sent by a contractor to all the military bases in Iraq, the nonpotable water that has more contamination than raw water from the Euphrates River? Did it happen there? The Army said no. The inspector general, at my request, investigated and said, yes, it did happen.
I can go on at length about dozens and dozens of similar circumstances. The question is, who is accountable for the spending of this money? Who has been made to be accountable? Who had to answer for it?
I ask the Secretary of Defense and others: Is there somebody made accountable for this situation? I understand there is criminal accountability for these two people. But is there accountability for the people who decided to employ them, despite all the evidence that this made no sense for our country?
I ask that question for a very important reason. We are going to have a debate about Afghanistan. I have very strong feelings about that issue as well. What we are seeing now is more and more contracting being done in Afghanistan just as the ratcheting up of contracts occurred in Iraq. More and more and more contracting. Who is minding the store? What kind of oversight can we expect? Or will we a week from now, a month from now, or a year from now read another story by a couple of good reporters who dug it out to say something happened that is unbelievable and the American people got defrauded to the tune of millions of dollars or, in this case, hundreds of millions of dollars.
All of us have responsibility at this point to make accountable those who allowed this sort of thing to happen and not just in this case. I have done 20 hearings now as chairman of the Policy Committee, which have helped to unearth a great amount of evidence of waste, fraud and abuse.
Well, I know my colleague in Oklahoma is patiently waiting, and I wish to give him an opportunity to speak. I only want to say this. This is a conclusion with criminal charges and guilty pleas with respect to this issue, which I think is a metaphor for a much larger set of problems that we in the Congress and in the administration have a responsibility to address and to address soon. This issue of big Federal budget deficits is very real. They are unsustainable and dangerous. One of the ways to deal with them is to tighten our belts and start cutting spending where spending is being wasted. This was an unbelievable waste of the taxpayers' money, and my hat is off to the reporters who discovered it. I have been following it now for a couple years on the floor of the Senate, and at least I am able to say guilty pleas have been received.
I yield the floor.
The PRESIDING OFFICER. The Senator from Oklahoma.
Mr. INHOFE. Mr. President, I have been here this afternoon and hope to get a little more time than we are getting. Right now we are into the final debate on the vote that will take place at 5:30. The Senator from Nevada, Senator Ensign, has agreed to let me have 10 minutes, so I ask unanimous consent to speak for 10 minutes as in morning business.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DORGAN. Mr. President, could we point out that we are to go to the bill at 4:30. I discussed with my colleague that we have 30 minutes on each side on the bill, and if we could go to the bill and then have my colleague speak on that portion of the bill, I think that would be the right approach.
The PRESIDING OFFICER. The Senator from Oklahoma is recognized for 10 minutes.
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