Arms and the Dudes: How Three Stoners from Miami Beach Became the Most Unlikely Gunrunners in History (2015)

Chapter Six

CIRCUMVENTION

What Alex Podrizki wanted from life was intangible—adventure, the chance to do good in the world, the courage to find his own path. For months Podrizki had listened with a mixture of amazement and alarm as his best friend, David Packouz, described his life as an arms dealer. Since Efraim Diveroli had started his business at the age of eighteen, Podrizki had quietly distanced himself as the young gunrunner’s obsession with war profiteering grew in intensity, even as he’d grown concerned about Packouz’s involvement. Like his two friends, Podrizki had rebelled against his Orthodox faith. But Podrizki wasn’t motivated by money or material possessions, or other superficial rewards.

Politics was Podrizki’s main interest. As a teenager, he’d given speeches, usually over a joint, to his posse of friends exhorting them to take up radical leftist causes. Podrizki also enjoyed pranks, like turning off the lights in the synagogue during prayers on the Sabbath, a major problem for Orthodox Jews, as they couldn’t turn the lights back on and were forced to pray in the dark.

By the spring of 2007, Podrizki had graduated from college with a degree in international relations and defense studies, but he was living at home with his mother. Slim, with curly brown hair and an intelligent face, Podrizki was twenty-four, unemployed, and increasingly frustrated by his inability to find a job. He was also discouraged by the turn American politics had taken with the invasion of Iraq and the reelection of George W. Bush—and appalled by Diveroli’s campaign to cash in on the war.

“Efraim was viciously pro-war and ready to profit from it—but he didn’t have the balls to go there himself,” Podrizki recalled. “Like Dick Cheney with his five draft deferments in Vietnam, Efraim was happy to have others do the actual fighting and dying. To me, the invasion of Iraq was a naked, cynical grab for resources. It was obvious that Saddam Hussein had nothing to do with 9/11 and there were no weapons of mass destruction. I was only a kid and I could see that, so I was very disturbed by the overwhelming support the war was receiving. Before Iraq, I was planning on joining the Army, but the invasion changed everything for me. I went to a couple of antiwar protests in Miami, but it was frightening how small they were.”

Like most of the dudes in their posse, Podrizki had been approached by Diveroli to come work for AEY. It was one of Diveroli’s many quirks, like his coarse manners and his drug consumption. Podrizki had said no to Diveroli with a laugh.

But Podrizki was interested in traveling to a war zone, as a relief worker not a gunrunner. Fluent in French and Spanish, he’d spent a year as an English instructor for a paratrooper regiment in the south of France, which included basic military training. He’d tried to volunteer in Haiti, on a water-purification project, and he’d applied for an internship with the International Rescue Committee to work on its initiatives, like refugee resettlement, protecting children, and combating human trafficking. But his lack of foreign experience had held him back.

Broke and adrift, subsisting on bad part-time jobs, Podrizki made pocket money dealing small amounts of pot to tourists in Miami Beach. When Diveroli and Packouz decided the company needed a new office, AEY paid Podrizki $500 to find the space. But in the end Diveroli had decided to stay in their tiny space, where he had the lone office, a room he’d decorated with a bong on a side table and a giant poster of Nicolas Cage from Lord of War on the wall behind his desk—a gift from Packouz.

“I went to AEY’s office to pick up my check,” Podrizki recalled. “The vibe was awful. Diveroli was yelling at everyone, and everyone seemed really submissive. David was really stressed out. He was constantly telling me how miserable he was working with Efraim.”

Despite the obvious dysfunction at AEY, when Packouz approached Podrizki with the idea of going overseas for the company, he didn’t dismiss the idea. He’d have nothing to do with Diveroli, Packouz said. The company needed someone to travel to Albania, Bulgaria, and Hungary to be AEY’s eyes and ears on the ground. Packouz said that he and Diveroli were having difficulty communicating with their suppliers and costs were running out of control, especially for a large amount of surplus ammunition AEY was buying in Albania that needed to be repacked. The ammo was packed in heavy wooden crates and aluminum cans and would have to be put into cardboard boxes and plastic bags to save money on airfreight. The idea was that Podrizki would fly to Albania and supervise the job.

Podrizki was intrigued.

“Mostly, I took the job because I didn’t have anything else going on,” Podrizki recalled. “I told David and Efraim that I wouldn’t have anything to do with any deals involving Iraq. I was strictly going to work on the Afghan contract. My job was to get the Albanians to actually deliver the ammo and to make sure the quality was good. It sounded like an adventure to me—a chance to be on my own in a third-world country with a difficult assignment.”

Podrizki’s pay would be $1,100 per week, plus expenses. He was given the title Logistics Coordinator. Business cards were printed and a power of attorney was executed granting him the authority to conduct business in Albania on behalf of AEY.

“Before I left, the three of us met at Efraim’s condo to talk the plan over,” Podrizki said. “Efraim was much calmer than he’d been in the office. He wasn’t so overbearing.”

Diveroli fetched his pipe and packed a tight cone. The first shipment of $2 million worth of 7.62x39 mm ball and tracer rounds had already been paid for, Diveroli said—which wasn’t true, an ominous beginning to the relationship; in fact, Diveroli was holding out on payment until the rounds were actually delivered, a ploy that was partly responsible for the delays.

Diveroli said Podrizki’s first priority should be to get the Albanians to finally start trucking ammo to the airport in Tirana. Podrizki was given a copy of AEY’s contract with Henri Thomet and Evdin. It showed AEY paying four cents each for the rounds. The Army was paying AEY eight cents a round.

“Don’t show this contract to the Albanians,” Packouz told Podrizki. “We don’t want the Albanians to see our prices with Thomet.”

According to the plan, Albania would be the first stop on Podrizki’s trip. When he was done there, he’d travel on to manage AEY’s deliveries from Bulgaria (grenades) and Hungary (more AK-47 ammo). He’d be gone two months in total, back in time to start graduate school in the fall, proudly burnishing his résumé with overseas experience.

Diveroli said that when Podrizki got to Tirana, he should inspect the ammo to make sure it was serviceable without qualification. Diveroli explained that the term meant it had to work—it had to go out of the barrel and go bang. Podrizki was experienced with weapons, so he was sure he could conduct a basic firing test.

“Don’t tell anyone that you’re an arms dealer,” Diveroli advised Podrizki. “Tell them you import heavy equipment. When people hear about weapons, things get complicated.”

The pipe was passed to the left, per decorum, followed by a shot of tequila.

On April 17, 2007, a bleary-eyed Alex Podrizki arrived in Tirana. He immediately learned that nothing was going to be straightforward in Albania. Struggling through the jostling crowd at Mother Teresa International Airport, he caught a cab and directed the driver to the two-star hotel in the city he’d booked. The driver nodded and they set off. After a few minutes, the cab turned into what appeared to be a village. The car stopped. Podrizki looked around in confusion as the driver insisted this was his destination in downtown Tirana. Handing over the agreed fare, Podrizki got out of the car reluctantly, protesting that he was in the wrong place. The cabbie feigned incomprehension and sped away, full fare in hand. Thus was Podrizki left in a cloud of dust in the middle of nowhere, chickens roaming the dirt road, old ladies dressed in black watching him suspiciously.

Finally catching another taxi to Tirana that afternoon, Podrizki arranged to meet Ylli Pinari, the Albanian official in charge of the ammo deal. Pinari was heavyset, short, with a five-o’clock shadow and dressed in a drab suit. MEICO was supposedly an autonomous commercial entity, but it was an instrument of the government and Pinari’s office was located in the Ministry of Defense. Greeting Podrizki, Pinari was surprisingly friendly, Podrizki thought, given the nature of what he did for a living. Pinari also spoke excellent English, not an unusual attribute among Albania’s ruling class; he possessed a green card from the years he’d lived in the United States, and like most every Albanian he was rabidly pro-American.

Podrizki raised the subject of the first 2 million rounds of AK-47 ammo: “When are you going to start delivery?”

“It’s not so simple,” Pinari said. “I need approval of the minister of defense and the officials at the airport. Let’s go look at the ammunition now.”

They got in Pinari’s Mercedes and drove into the mountains outside Tirana. Podrizki could see little white pillbox bunkers scattered throughout the countryside—small, mushroomlike structures with a slightly comical appearance. The bunkers had been built all over Albania by the former Communist government, Pinari explained. For decades, hard-line leader Enver Hoxha had believed the country faced imminent attack from all directions. Russians, Americans, Yugoslavs—all were going to assault Albania simultaneously. Total War was the name of Hoxha’s defense strategy. Every man, woman, and child would become a resistance fighter. He’d planned for the Albanian people to engage in a brutal, endless war of attrition using the stockpiles of weapons and ammo he’d stashed in bunkers in every street and field and valley and mountain. More than a billion rounds of AK ammo had been amassed, making Albania by far the most heavily armed nation in the world. This was why Albania was the perfect supplier for AEY, Pinari said, smiling.

Up a remote switchback dirt road, past soldiers manning a checkpoint, Podrizki was led to a giant steel door, the entry to a vault built into the side of a mountain. Inside, a catacomb was filled with a vast supply of Albania’s ammo. Standing on the threshold, Podrizki couldn’t see the end of the tunnel; off to the left was another tunnel stretching into the distance. Somehow Podrizki had to figure out how to get Pinari to transport 100 million rounds of AK-47 ammo from bunkers like this to Tirana’s airport and then on to Afghanistan, and it clearly wasn’t going to be a simple task.

Podrizki walked into the cave. Some of the ammo crates had Albanian markings, some Russian, some Yugoslavian; most had Chinese. Podrizki paused in front of crates of British ordnance dating back to the Second World War. The ammo was in all kinds of calibers, from large-scale howitzer rounds to the AK-47 cartridges AEY was going to buy. The small-caliber ammo came from all over the former Communist world. But it was effectively identical: after the AK-47 had been invented in the 1940s, factories had been built in many nations to clone both the gun and the exceedingly durable and effective cartridges it used.

A crate of bullets was pulled down for Podrizki to inspect. Because ammunition was heavy, a single crate measuring only eighteen inches long, fourteen inches wide, and six inches deep weighed sixty pounds. The dimensions and heft were designed to enable an average soldier to handle one crate. Each box contained approximately fourteen hundred rounds. The lid was pried open. Podrizki found a placard stating that the ammo had been manufactured in 1964. The words were in English, the digits in Roman numerals. But next to the Western markings were Chinese characters indicating the date of production and the caliber of the rounds.

Podrizki looked underneath the placard and found the aluminum cans. Rusty and old, they were also marked in English and Chinese. A can was opened. The ammo had been packed in nitrogen to displace oxygen and humidity and prevent the steel jackets from rusting. Despite being more than forty years old, the ammo was in amazingly good condition. All ammunition degraded over time, but it wasn’t unusual for AK-47 surplus to last for decades, provided it had been stored in a reasonable manner—as these rounds had.

Podrizki took out a handful of individual rounds and inspected them closely. The ammo really was good, it seemed to Podrizki, given the amount of time it had spent in the dank cave.

As Podrizki admired the ammo, a potential problem occurred to him. Packouz and Diveroli hadn’t told Podrizki about the Chinese embargo before he left. Why would they? Podrizki was going to Albania, not China. But Podrizki was a student of international affairs. He was aware of the military rivalry between the United States and China and rising tensions.

Podrizki wondered if buying from the Albanians meant AEY was somehow buying from China. The ammo had been brought to Albania decades before the ban was imposed. Was the ammo Chinese or Albanian?

Podrizki perceived the problem in the blink of an eye. Anyone could see the ammo was literally “Chinese” by the markings on the crates. Podrizki figured he should at least ask what the deal was—because he was pretty sure it wasn’t okay to trade in Chinese weapons.

“This is Chinese,” Podrizki said to Pinari, holding up a round.

Pinari shrugged. “Is okay. We send the same ammunition to American Special Forces in Stuttgart in Germany last year. It was for them to train with. AEY did this deal. There was no problem.”

Podrizki nodded. Perhaps Pinari was right. The ammo had been sitting in caves in Albania for decades, so it couldn’t fairly be described as “Chinese.” It was far more sensible to say the ammo was now “Albanian.” And the reality was that the place of manufacture didn’t change the quality of the rounds, or the urgency of getting the shipments to Afghanistan to fight the Taliban.

“Let me run this by my people in Miami,” Podrizki said.

“Of course.”

Podrizki thought Pinari was looking at him with pity, like he was a dumb kid with no idea what he was talking about. That much of the ammo in the cave had been manufactured in China would be obvious to anyone who knew the slightest thing about Albanian history. The country’s alliance with China wasn’t a footnote but one of the foundational facts of its strange past. In the 1950s, Albanian leader Hoxha had split from the Soviet Union, declaring the leader Nikita Khrushchev “defeatist.” Albania had then formed a close friendship with China, at the time the sworn enemy of the Soviets. The unlikely alliance had resulted in Mao Tse-tung’s sending thousands of tons of his country’s surplus ammunition to Albania in the 1950s and 1960s—artillery pieces and surface-to-air missiles and tanks and armored vehicles. Pinari must have assumed that anyone in the arms industry would understand that if Albania was selling surplus ammunition, the likelihood was extremely high that some or all of it would be Chinese-manufactured.

Podrizki said he wanted to test the ammo to see if it was “serviceable.” He said he needed to fire some rounds. An AK-47 was produced and he was taken to what passed for an Albanian shooting range: stones were placed on a nearby fence as targets. He loaded the magazine and let loose. The casings were steel, not brass, which made them of inferior quality and much cheaper. But as Podrizki unloaded the AK he could see that the ammo worked great.

Late that night, Podrizki called Packouz in Miami. It was April 20—4/20, or 420, the stoner nickname for marijuana, and an annual day for pot smokers to celebrate weed. The two dudes shared a joke, each wishing the other a happy “four twenty.” Packouz was gently buzzed from a morning hit on the vaporizer.

“Hey, man, I inspected the stuff and it seems good,” Podrizki said. “They’ve got a massive stockpile. All sorts of ordnance. Huge bunkers.”

“How did the ammo look?” Packouz asked. “Any rust? The containers still sealed? You test some rounds?”

“Yeah. It all worked perfectly. No rust anywhere on the rounds. The vacuum seals are still intact. The ammo looked good.”

“Great. That’s a relief. Did you weigh the pallets?”

“I have to buy a proper scale. But they’re around three and a half kilograms. So seven or eight pounds each. The tins weigh about two pounds.”

“Excellent. That’s significant weight we’re going to get rid of.”

“But, bro, you know the ammo is Chinese, right?”

“What are you talking about?” Packouz asked.

“The ammo is Chinese.”

“How do you know it’s Chinese?”

“There are Chinese markings all over the crates.”

“You sure?”

“Yeah. It’s definitely Chinese.”

“Oh, fuck,” said Packouz. “That’s not good. What about on the metal tins? Any markings?”

“There were some, but I can’t remember if they were Chinese. I’ll have to get another look.”

“This is what you’ve got to do. Tomorrow, you ask to see the ammo again. You take pictures from all angles—the crates, the tins, inside the tins. See if there is stencil paper inside the tins. We have to see what this looks like so we can decide what to do.”

“Will do.”

Packouz felt panic rising in his gut. He went back into the office and told Diveroli what he’d just learned.

“You got to be shitting me,” Diveroli said, startled.

“I’m serious. There are Chinese markings on the boxes.”

The entire contract was at stake, the pair instantly decided. Weeks of delays had pushed AEY to the outer limit of the schedule, so there wasn’t time to find another supplier. Diveroli muttered that Henri Thomet hadn’t mentioned the Albanian ammo was Chinese, a calculated and cunning omission, as he had to know that the ammo was “Chinese.”

“Of course Thomet had quoted me ‘Albanian’ ammo,” Diveroli recalled. “When I called him, he swore to me a hundred times that the Army had bought the same ammo before. He said the Army was buying Chinese-made AK-47 rifles from Albania from one of my competitors named Taos. He was brokering that deal. But he knew what was going on. He’d been dealing with Albania for years. He wanted to stick me in a position where I was locked into using him, and he did a great job at that.”

Diveroli instructed Packouz to read the Afghanistan contract carefully to see what kinds of modifications they might be able to get from the Army. Diveroli said he’d try to figure out what could be done legally.

The next four hours were frantic. Packouz and Diveroli had never physically opened a crate of surplus AK-47 ammo, despite the deals AEY had done. So they had little understanding of how the rounds were packed. Their first idea was to simply paint over the Chinese markings on the crates. E-mails flew back and forth between Miami and Albania as they tried to find a solution.

The dudes were in the midst of a classic wartime snafu: the Army desperately needed ammunition that worked perfectly, but it couldn’t buy the rounds, it appeared, because of a ban that self-evidently was never meant to apply to munitions shipped from China to Albania decades earlier. Faced with a situation in which the law seemed to defeat a necessary war purpose—for reasons that had nothing to do with the ban on Chinese munitions—the obvious solution for AEY would have been to tell the Army what was happening. They could explain to the Army that the ban shouldn’t apply to the ammo. The rounds had been manufactured decades before the ban was imposed. It was ridiculous to retroactively outlaw ammo—and thus leave the Afghan armed forces without rounds for their guns.

The State Department’s foreign-military-sales laws had a clause that dealt with exactly this scenario. The provision stated that if munitions had left their country of origin, after five years their nationality was transferred to the new country of their location. Under this rule, the ammo that had been in Albania for decades would now legally be “Albanian,” not Chinese.

In a world of shifting alliances, the State Department’s rule was a sensible policy. Once an implacable enemy of the West, Albania was now a close ally of the United States. The US Embassy in Tirana was deeply involved in helping the Albanians dispose of their surplus munitions through “demilitarization”—essentially taking the rounds apart. It was costly, dangerous, and cumbersome. Sending 100 million rounds of AK-47 ammo where they were so badly needed saved the expense and also helped an ally in Afghanistan.

But the Defense Federal Acquisition Regulation Supplement that governed AEY’s contract had no such provision. Many of the Pentagon’s regulations had been enacted quickly, under the strain of war. The Pentagon’s haste in constructing its alternate procurement system meant that all of the consequences and implications of the new regime hadn’t been considered. The law had no mechanism to change the place of origin and nationality of munitions.

Even so, if the Army had been informed, its lawyers could simply have found that MEICO wasn’t a “Communist Chinese military company” so the ban didn’t technically apply to the ammo in Albania. Moreover, there had been no such thing as a “Communist Chinese military company” when the ammunition had been manufactured. The ammunition had been made in the 1950s and 1960s by organizations called machine-building industries, the Chinese term for the entities running its military-industrial complex.I

If Diveroli had the wit to hire a topflight law firm, AEY could brandish a legal opinion marshaling compelling arguments that the ban didn’t apply. If the matter had been thoroughly studied, AEY would have discovered that much of the “Chinese” ammo hadn’t actually come from China. Many of the rounds had been manufactured in Albania but packaged in containers with Chinese markings. This oddity resulted from yet another obscure page of history. The ammo had been part of a much larger Chinese “gift” to Albania. As part of the alliance in the 1950s and 1960s, China had aimed to help industrialize the agrarian nation. The Chinese had built all kinds of facilities for the Albanians, from clothing manufacturers to steel foundries and arms factories. The Chinese had exported everything from the steel and brass for the cartridges to the wooden crates, paintbrushes, stencil machines, and head-stamping equipment. Like a Hollywood movie-production team going to the jungles of Africa to shoot a film, bringing along everything from gaffer tape to Evian water, the Chinese had transported all the material they needed to Albania so they wouldn’t have to rely on local materials.

Albanian laborers had put cartridges with Chinese headstamps in ammo cans with Chinese markings, layered in stencil paper with Chinese markings, then sealed the ammo in wooden crates stating that it had been manufactured in China. This ammunition looked exactly as if it had been made in China. Or nearly exactly. The dudes would have to have been world-class experts on Kalashnikov ammunition, which they most certainly weren’t, to tell the difference.

Trapping a small contractor like AEY in a maze of federal regulations like this was a well-founded fear of Congress when new laws and regulations were enacted. The Regulatory Flexibility Act required the Pentagon to study the impact any new regulations would have on small companies fulfilling federal contracts. This was to ensure that small companies weren’t overburdened and put at a disadvantage by larger companies with legal departments and funds for fancy law firms. But the Pentagon claimed that no such study was required, because the ban applied only to Chinese military companies—not American companies.

The Pentagon was wrong about its own regulation. The ban had been drafted broadly, forbidding any acquisition “directly or indirectly,” which could be taken to include AEY’s purchase of Chinese-made ammunition from an Albanian company fifty years after the rounds were manufactured—an interpretation that would strain credulity and common sense.

But the dudes were the dudes. Podrizki and Diveroli and Packouz didn’t grasp the legal niceties of the situation, or the political realities. The trio comprehended only what was directly in front of them: the ban, the Chinese markings, the need to deliver.

Unsure what to do next, Diveroli called Ralph Merrill in Utah. The older businessman had imported Chinese AK-47 ammunition to the United States for years. Instead of leveling with Merrill about the China problem, Diveroli dissembled and said the idea of changing the packaging came from the Albanians.

Over the next few hours, the deceptions within deceptions multiplied. AEY would either have to supply the Albanian ammo, or renege on the contract. The consequences of not delivering on such a large and vital contract would be harsh. In the language of FedBizOpps, it would result in a termination for default, not only costing AEY the Afghan deal but also severely undermining its ability to win contracts in the future. There was really no choice to make: AEY was dead if they didn’t deliver.

First, the dudes decided they needed to be doubly sure the ammo really was “Chinese.” The next morning, in Albania, Alex Podrizki went to check the rounds again and take pictures. He was escorted to another vault filled with ammo. He randomly opened ammo cans filled with a variety of Soviet Bloc ammo for different guns—AK-47s, Dragunov sniper rifles, SKS semiautomatics.

The Albanian soldiers accompanying Podrizki opened the locks on boxes with axes and smoked cigarettes while surrounded by tons of explosives—a remarkable lack of precaution. They grinned when Podrizki recoiled in fear: Look at the stupid American kid, he thought they were thinking.

But there was no doubt now: the ammunition was definitely “Chinese.” Podrizki carefully took photographs, as instructed by Packouz—the crates, the tins, the stencil paper inside the tins. Then Podrizki went and fired the rounds. To him, all the fuss about the origin of the ammunition was a distraction. He was working for AEY and would do his best to follow instructions, but he believed he had a larger duty to fulfill—to the war effort in Afghanistan and the soldiers going into battle who lacked ammo for their guns. The rounds worked perfectly well, despite the place of origin.

“All I was interested in was serviceability,” Podrizki recalled. “That was all I ever really gave a fuck about. What were the Afghan soldiers in the field going to take into battle? I was concerned about how things worked. I had trained as a soldier. I wanted to make sure that the ammo could be used to fight the Taliban.”

Podrizki called AEY in Miami. This time he spoke to Diveroli.

“Diveroli told me that in the worst possible scenario it would be a civil matter, not criminal,” Podrizki recalled. “Diveroli said he had lawyers looking into the matter. He said the ammo had been purchased by the Albanians before the embargo was imposed, so the law couldn’t be applied retroactively. He said the weapons weren’t coming from a Chinese company and the contract wasn’t benefiting China in any way. He said the embargo only applied to certain kinds of weapons. It was about technology going to China, not ancient ammo in Albania. He had a bunch of explanations that made sense. “I knew Efraim and David were going to make a lot of money out of the contract, so they had a motive to perform.”

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 waiver. 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).