Reyzl's evidence - Part 1

[Reyzl Kalifowicz-Waletzky <reyzl...>]

Everything below is from the US News and World Report web site
and is all copyrighted material:
               ----------------------------------

http://www.usnews.com/usnews/issue/9ARMS.HTM
U.S. News 12/9/96: 

How surplus American arms get into the wrong hands 

WEAPONS BAZAAR

This Cobra attack helicopter was built from surplus parts. The Pentagon 
sells millions of them a year. Many fall into the wrong hands.

To the uninitiated, "military surplus" generally conjures up images of
old web belts, clanky canteens and threadbare fatigues sold in funky 
stores at the edge of fading Army bases. But to a sophisticated few, it 
means something very different: aircraft, weapons and weapons parts 
worth billions of dollars.  Most taxpayers don't know it, but every year 
the Pentagon declares all kinds of equipment--attack helicopters, rocket 
launchers, even Stealth fighter parts--"surplus," or unneeded. Then, 
through a little-known network of sales offices at military bases, the 
stuff is offered for purchase to the highest bidder.

A three-month investigation by U.S. News in collaboration with CBS's 60 
Minutes has documented serious problems with the surplus sales
program.   Relying on internal Pentagon records, Customs Service 
documents and interviews with scores of federal agents and officials, 
the inquiry identified thousands of instances where weapons and parts 
that should have been rendered militarily harmless before sale were not, 
where weapons that should have been designated for destruction were not 
and where key weapons parts that should have been prevented from
reaching foreign buyers were not.   This system "on its best day is 
morally embarrassing to the government,"  says William Portanova, an 
assistant U.S. attorney in California heading a Justice Department task 
force investigating the program.  "And it never has a best day.  It is
absolutely a disaster of the highest magnitude."

No Pentagon officials responsible for this program were willing to be 
interviewed on the record. These are the principal findings of the U.S. 
News--60 Minutes inquiry:

Foreign buyers are purchasing many of the Pentagon's high-tech 
surplus military parts and shipping them overseas, hiding them in
seagoing containers under tons of metal scrap, seizure records show. 
Customs officials say Iran and Iraq are active buyers, but by far the 
biggest customer is China.  Among the items seized from Chinese "scrap 
dealers" were fully operational encryption devices, submarine 
propulsion parts, radar systems, electron tubes for Patriot guided 
missiles, even F-117A Stealth fighter parts.  Many of these parts, sold 
as "surplus," were brand new.

So overloaded is the Pentagon's surplus sales system that some offices 
responsible for disposing of the materiel have suffered significant
breakdowns.  At an Air Force base in Georgia, the Pentagon's surplus 
sales office lost track of $39 million in materiel. Today, no one can 
say where the stuff went.

The sheer volume of surplus materiel generated by the Pentagon's
downsizing is one reason for the system overload, but the modern 
Pentagon's insistence on profitability is another. Last year, the 
surplus sales system generated $302 million, and it is one of the few 
Pentagon programs capable of covering its own costs. A Pentagon E-mail 
message written in April 1994 illustrates clearly the premium placed 
on profits by senior military officials.   Authored by a top-level 
official and addressed to all surplus sales directors on the East 
Coast, the memo is blunt: "The work priorities at your sites as I see
them are: 1.  Profits. 2. Profits.  3. Profits. 4. Profits," the 
official wrote.  Priority No. 6 on his list was "accountability." 
No. 7 was rendering lethal weaponry harmless.

Surplus Pentagon weapons are regularly traded away by Army and Navy 
museums scattered around the country, and some have been responsible 
for questionable if not illegal activities (story, Page 39).  A federal
law allows the museums to trade tanks, jet fighters, and attack 
helicopters to private citizens for other vehicles or "services." Two 
museums are under federal criminal investigations for such activities.

Within the cloistered world of the Pentagon, the problems of properly 
disposing of surplus weapons are nothing new, although the public has
been kept largely in the dark. Surplus weapons sales are overseen by a
Pentagon office called the Defense Logistics Agency, which manages all 
the military's supplies and equipment. The DLA has spent much of the
past two decades trading barbs with the four military services about how 
to fix the surplus sales system.  Progress has been virtually
nonexistent.  Nearly a decade ago, an internal memorandum signed by 
William Taft, then the deputy secretary of defense, leveled a startling 
charge. "A joint U.S. Customs-investigation [has] confirmed," Taft
wrote, "that the defense disposal system is a source of supply for 
arms traffickers."   Since then the number of surplus weapons and 
critical parts has increased, and the problems have only worsened.

Guns and money. How much Pentagon weaponry is getting into the wrong
hands is impossible to know, but it is happening, law enforcement
officials say.   When a Hell's Angels methamphetamine lab was raided 
in California last year, police also found military weaponry: three 
working machine guns and an M-79 grenade launcher. The grenade launcher 
was traced to a Pentagon surplus sales outlet in Crane, Ind. That same 
outlet had sold 70 of the launchers in 1989.   Pentagon documents 
certified that the launchers had been cut into scrap; in fact, only
their firing pins had been filed down.   In 1992, in Illinois, a man 
was sentenced to 41 months in prison for illegal possession of 10
unregistered machine guns; the man had bought the weapons through 
Pentagon surplus sales and welded them up to make them work. The weapons 
should have been mutilated so they could never work.

Smuggling is an even bigger concern. A 16-month Customs Service
investigation that ended earlier this year resulted in the interception
of surplus military parts worth $157 million. Foreign countries can use
these parts to resupply their own armies, to find out how American 
weapons work or to build their own weapons, avoiding years of costly 
development.

Despite a handful of successes prosecuting those who abuse the
Pentagon's surplus sale system, federal officials who have tried to plug 
the holes in it are frustrated and angry. A few Pentagon officials have 
found themselves demoted or reassigned for being too aggressive. Federal 
task forces have been quietly disbanded with few results while
prosecutors who take on inquiries involving illegal surplus-weapons
sales say they find the criminal justice system unable or unwilling to 
cope. "Whenever we tried to do something bold or aggressive, the 
bureaucracy at the Justice Department said `No,' " said Jim Wiggins, a 
former U.S. attorney in Georgia who investigated surplus-weapons sales.

In theory, the system for surplus disposal is simple.   Whether it is a
part from a jet fighter or a pair of socks, once an item is designated 
as surplus, it is trucked to a warehouse-cum-sales lot known as a
Defense Reutilization and Marketing Office, or DRMO. There all surplus 
items are checked in and sorted. Then they are offered free to other 
government agencies and to museums and non-profits.   What's left after 
that is sold to the public at auctions where buyers must submit sealed
bids.

Before that can happen legally, however, weapons and weapons parts must 
be "demilitarized," or rendered militarily harmless. Machine guns, for 
instance, are "demilled"--the Pentagon term of art--by being cut into
six pieces, reducing them to scrap metal. Many electronic parts are 
demilled by crushing or chopping--again, reducing them to scrap. Some 
items--radios with military-channel crystals, for instance--can be 
demilled by removing key parts.   In such instances, buyers get a 
functional piece of equipment but one that has no military application. 
Many items, like desks, require no demilitarization. Other things, like 
parts of military aircraft that have commercial use, can be sold in the 
United States without being demilitarized, but buyers must obtain 
licenses to ship them overseas.

How or whether something should be demilitarized is determined by its 
"demil code," which is normally assigned when a piece of equipment is 
purchased by the Pentagon. In theory, the codes should reflect how
militarily sensitive an item is, and the code for a specific item should 
rarely be changed.  Theory, however, has little to do with practice.
Three years ago, for instance, a team of nine demilitarization experts 
went to Battle Creek, Mich., the home of the Defense Reutilization and 
Marketing Service. That office is the headquarters of the surplus sales 
program, responsible for the operation of the 170 DRMOs around the
country.  In Battle Creek, the team reviewed the demilitarization codes 
on 2.6 million pieces of equipment in the 14 million-item inventory. The 
team found that 45 percent of the demilitarization codes were wrong and 
that about half the items were coded too leniently.  This meant that 
weapons and weapons parts that should have been rendered militarily 
harmless before being offered for sale were not. Some .38-caliber 
revolvers, for instance, were coded demil "A"-the same as tables and
chairs.  Other, far more sensitive equipment was similarly miscoded, the 
team found.  Electronics that guide bombs and aircraft gunnery,
sensitive communication and navigation gear, cryptographic equipment, 
even hardware that allows U.S. fighter jets to jam antiaircraft 
missiles--in those categories, the team found between 80 percent and 90 
percent of coding was wrong.  In nine tenths of the errors discovered in 
this instance, the codes applied were too lenient.

Such mistakes have consequences. When Pentagon investigator Dave
Barrington checked a DRMO outlet at Fort Benning, Ga., for example, he
found three complete TOW antitank missile systems for sale. They were
assigned a code allowing them to be bought by anyone in the United
States.  Says Barrington: "You can build yourself an army out of this 
stuff that's miscoded."

Defense Department officials blame the military services for the
miscoding, since the services assign the codes. The services don't make 
coding a high priority because anything dealing with "surplus" is a far 
cry from their main mission, warfare. 

The profit motive is also a factor. The more fully-operational weapons
the Pentagon sells, the more money it makes. And the Pentagon is 
interested in selling. To encourage sales, in fact, the Defense
Department has set up a Web page on the Internet LINK !> 
[http//:www.drms.dla.mil] listing every piece of equipment that has 
entered the surplus inventory.  Anyone with a computer can call up the 
listings, type in "missiles" or "bombs" or other hardware and see what's 
available.

U.S. News did just that. After browsing the Web site at length, a
reporter gave Defense Department experts a lengthy inventory of items 
listed and asked them to verify that the demilitarization codes for each 
were correct.  The experts found that dozens of items had been wrongly 
coded. "Bomb, gen. purpose," for instance, had been given the same 
demilitarization code as a desk chair--"A."   Similarly miscoded were 
"sight, rocket launcher," "controller, missile," and "missile guidance 
set." All should have been coded "D"--for destruction. "This is the 
computer memory for a Tomahawk [cruise] missile!" one of the Pentagon 
experts exclaimed, pointing to one item on the reporter's shopping list. 
"This should be classified! This is the brains of the missile!" 

Even when the Pentagon codes are correct, there is no guarantee that 
weapons and weapons parts will be demilitarized properly. Curt Murphree, 
a former Pentagon investigator, recalls one visit to a DRMO near
Texarkana, Texas, where he watched a worker trying to cut through the
gun barrel of an M-60 tank. "The poor kid had a cutting torch," 
Murphree recalled, "that couldn't cut hot butter."

System overload. At the Defense Reutilization and Marketing Offices
around the country, workers and managers say they have been so
overloaded with equipment from the massive military drawdown--in recent 
years, the DRMOs have taken in more than $20 billion worth of materiel
annually--that the demilitarization process was bound to have
problems.   Easily the biggest occurred at Robins Air Force Base near 
Macon, Ga. So much property came into the DRMO there three years ago 
that the system collapsed, and workers lost track of $39,784,198 in 
surplus equipment--about one fifth of their inventory. "The DRMO lost 
total accountability of . . .  surplus property," an investigative 
board's report concluded.

Investigators assigned to examine the problems at Robins found that the
Pentagon's DRMOs had developed what they called an "expedited 
processing" program. To speed things up, a Robins DRMO manager told 
investigators, she falsified demilitarization statements, registering
weapons and other equipment as scrap that was later made available for 
sale fully intact.

The problems at Robins raised alarms. One day in 1994, an Air Force
investigator jogging on the base saw a surplus-parts dealer named Hobart
Burton carrying an electronic device from the DRMO to his truck. The
investigator looked into the truck, jotted down the stock number of the
item and checked it later. He found that the device should have been 
demilitarized but had not been. Not long after that, a team of Air Force
and Pentagon agents visited the Burton Electronics warehouse in nearby 
Montezuma, Ga., where they found more electronic weapons parts that had 
not been demilitarized. The agents retrieved a pile of weapons pieces
and aircraft parts that had cost the government $40 million when new. 
Burton said he had bought most of the materiel from other dealers;
investigators believe much of it was sold by the Robins DRMO as
scrap--for 16 cents a pound. It is not illegal to buy surplus materiel 
that was improperly demilled, and Burton was not charged with any crime. 
He is now trying to get his money back.

The episode resulted in some surprising leads.   Investigators
discovered that a Chinese-owned scrap company was legally buying surplus 
materiel from Burton and from the Robins DRMO. Further inquiries
revealed a score of Chinese dealers operating from coast to coast.
Although no proof developed that they acted as agents for China, that
did raise concerns.  In a memo to his Chinese boss in California, the 
buyer in Georgia called Robins "the candy store." The base, he wrote, 
"will fill our needs into the next century," according to an
investigator 
who has seen the note.

The Robins case had all kinds of reverberations. It led investigators to
the discovery of a commercial listing service that offers thousands of
military surplus weapons and weapons parts. The listing, called the 
Inventory Locator Service or ILS, is used worldwide by dealers in 
aircraft parts to advertise their inventories. Surplus dealers also use 
it to advertise weapons and weapons parts, all of which is perfectly 
legal too.

Fallout. The echoes from the Robins case would eventually be felt clear 
across the country, in Montana, of all places. Ron Garlick is a
straight-talking businessman who runs a thriving helicopter-repair 
business about 40 miles south of Missoula. Garlick had modified UH-1 
Huey helicopters for logging and construction use. Since the Cobra was 
a sleek and powerful follow-on to the Huey, he thought it would make a 
good logger. Garlick obtained an FAA license to build one for logging, 
firefighting or movie-making purposes.

When armed, the Cobra is one of the deadliest military attack vehicles
ever invented. Before it is sold as surplus, it must be demilitarized. 
The demilitarization manual states that Cobra bodies must be cut into at
least three parts and that their "airframe [must be] mutilated by 
destroying attaching structure by cutting, chopping, tearing, shredding, 
crushing or smelting to the degree that aircraft will be unfit for
repair or flight."  Garlick and other helicopter builders, however, knew 
that usable parts were plentiful, even at DRMOs. Says Garlick, who has
amassed a huge store of Cobra parts, "If they were built once, I can 
rebuild it, and no one can stop me."

In September 1994, a flatbed truck pulled into the DRMO at Robins
carrying three Cobra bodies that looked as if they had not been properly
demilled. Air Force investigators questioned the truck driver, who said 
the Cobras had been purchased at a DRMO in Groton, Conn., and were
headed for a warehouse in Joshua, Texas, owned by a man named Alan
Sparks.  "I don't know why you are so excited," the man reportedly said. 
"Sparks has 60 or 70 of these things."

Original crates. Sparks actually had 88 Cobra fuselages, which he hoped
to use for logging. He also had the parts to go with them--the rotor
blades, rocket tubes, gun pods, missile launchers, and weapons
controllers, according to Pentagon records. "None of the items were 
demilled correctly," a Pentagon memo states. "Some items [were] in 
original packing crates."

Word of Sparks's covey of Cobras shocked Jim Wiggins, the top federal
prosecutor for the middle district of Georgia, where Robins is located.
A tall, sandy-haired man with a deliberate manner, Wiggins had won a
Silver Star in Vietnam for piloting a Cobra gunship in a hazardous 
rescue mission.  At the time of the Sparks discovery, Wiggins was 
overseeing something called the Middle Georgia Task Force, which
consisted of military investigators and special agents of the Customs 
Service and the FBI. The task force had been set up after the $40 
million retrieval of property from Hobart Burton.

The other person upset by Sparks's Cobras was Ron Garlick, in Montana, 
who telephoned the Pentagon to see what was going on. The call was 
lateraled to investigator Dave Barrington. Garlick was concerned over
the Sparks seizures, he said, because he, too, was building Cobras--and 
he saw no reason to give his up. According to Barrington's notes, 
Garlick said he "had a significant amount of intact weapons and weapons 
systems."  Garlick confirms this. "Mine was fully armed," he says of 
his chopper. "I had rockets on it and machine guns.   I was out there 
shooting coyotes with them."

Garlick didn't want trouble. The government could have his Cobra
weapons, he said, if they "want to buy them." Barrington finished 
scribbling his notes, thanked Garlick and hung up. 

The fate of the Cobras would hang in the balance for months, as a bitter
wrangle ensued inside both the Pentagon and the Justice Department.
Investigators, federal agents, demilitarization officers and prosecutor 
Wiggins pushed for seizure of the Cobras. But the Army, which owns most 
of the choppers, resisted, as did Col. Charles Masters, who was in
charge of surplus disposal. Feelings ran so high that Wiggins hauled 
Masters before a grand jury.  Masters says: "Quite frankly, I thought I 
was close to being charged.  With what, I have no idea." Ultimately, 
Wiggins prevailed, and the government seized the helicopters and parts 
from Sparks. But as agents began to plan raids on Garlick and other
owners of Cobras, the Justice Department brought all such seizures to a 
halt. The law that might authorize them was just too murky. On September 
25 of this year, the FBI sent a letter to the Pentagon advising that 23 
Cobras belonging to private citizens had been "discovered during several 
FBI investigations." (U.S. News has located two more.) Should the 
Pentagon choose to take "corrective action," the FBI letter advised,
that 
would be agreeable to local U.S. attorneys. One senior Pentagon 
investigator calls this the FBI's "Pontius Pilate" letter.  "They're 
washing their hands of the whole thing," he says. 

Security threats. As worrisome as the Cobras may be to law enforcement,
agents say that the greater threat to national security is the shipping
of weaponry overseas. In September 1994, about the time the
flatbed-truck driver with the three Cobras was pulling into Robins, 
Pentagon investigator Curt Murphree got word that a California company 
named Cal Industries was loading 14 seagoing containers at the Pentagon 
DRMO in San Antonio. The contents were listed as 240 tons of electronic 
scrap.  Murphree, who knew that the base processed lots of sensitive 
weapons equipment, got Customs Service agents to stop the containers and 
pry them open. What they found were thousands of top-secret encryption 
devices, hard-cased field computers used for sending coded
communications, as well as classified radio transmitter-receivers. None 
had been properly demilitarized. There was also a pile of banged-up Wang 
computers, but many still had their hard drives, and two had 51/4-inch 
floppy disks in them.  One disk was marked "Classified SCI" (special 
compartmented information).  The other was marked "Top Secret, SCI. 
Contains Special Intelligence."  Murphree checked and found that the 
equipment had come from the most secure sector of Kelly Air Force Base, 
known as "Security Hill."  "None of this material," Murphree said, 
"should have ever left the DRMO." The equipment's intended destination
was Hong Kong, a common transshipment point for goods bound for China. 
Kelly Air Force Base took it all back. No charges were filed against Cal 
Industries, which had bought the stuff legally.   "Candidly," says
former U.S. Attorney Wiggins, "the way we handle this stuff so
recklessly, 
it's hard to pin anyone down or hold them liable."

For 16 months, U.S. Customs ran an investigation that targeted surplus
smugglers, says John Hensley, the special agent in charge of Customs 
Service investigations in Los Angeles. Dubbed "Operation Overrun," the 
investigation resulted in nine seizures of $157 million worth of parts
bound for China, Hong Kong, Vietnam, the Philippines, Taiwan and
elsewhere.   None of the items seized had been licensed for export.  
Included in their overseas-bound shipments were radar systems, 
electronic-warfare black boxes, and some bizarre items--10,000 new 
chemical-warfare-protection suits headed to Ukraine.

In one case, records show, 28 boxes of tank and howitzer parts, valued 
at $800,000, were found buried inside a container beneath automotive
parts.  In another, bound for Shanghai, agents found 37 separate
inertial guidance devices for the F-117A Stealth fighter and F-111 
bomber.  New, the devices had cost the government $21,759,400. The two 
Pentagon employees who were identified as responsible said they could 
not explain how the devices had been sold intact.

Of the many countries pursuing Pentagon surplus weapons, China is
clearly running hardest. "China is the most aggressive country worldwide
in the acquisition of military hardware," says customs agent Hensley.
"Anything that seems to us to be mid-tech, or slightly out of date, is 
high tech to them.  They can leapfrog R&D costs. They either 
reverse-engineer this stuff, or if they get enough, they just use them."

Operations. Customs agents are now convinced that a Chinese
surplus-smuggling operation began as many as 15 years ago, when a flood 
of Chinese men and women entered the United States, established 
themselves as residents and then set up shop. Operating with little more 
than a fax machine and a bank account, they apparently form the lowest
tier of the Chinese espionage network, agents say.

The buyers hunt surplus sales outlets for military electronic parts.
When they find what they want, they bid high enough to be sure they get 
it. Bids of $50,000 or $100,000 for scrap are not unusual. Sometimes
they buy huge piles of scrap knowing that valuable pieces of electronics
equipment are included, or they share purchases with legitimate scrap 
dealers. One dealer with Chinese affiliations, says investigator 
Barrington, "was the high bidder on every piece of scrap electronic 
equipment on the East Coast."

In a year and a half of intense investigation of these buyers, the
Customs Service has never found a smoking gun--a written shopping list
from overseas, or anything that could link particular Chinese scrap 
buyers to Beijing or its defense agencies. "I think the reason for that, 
besides good intelligence tradecraft, is that they don't need to 
communicate directly," says a customs agent. "These people have been 
doing this for 15 years. They know exactly what their country wants."

Last March, after 16 months of dogging leads, the Customs Service 
abandoned Operation Overrun. The agency had run out of time and money; 
the investigation had not been a spectacular success. Besides the $157 
million in seizures, only two criminal cases had been brought. A man
named Richard Li had been intercepted smuggling sensitive electronic
gear to Hong Kong and pleaded guilty to smuggling. A second man is 
currently under arrest, and his partner is on the run. Customs Agent 
Hensley says the investigation clearly put pressure on the network of 
Chinese traffickers.  But he also is certain that once the pressure is 
off, the smugglers will resume their operations. "We definitely think 
they'll spring up again," he says. "The Chinese can get up to speed to 
buy the stuff again, and the U.S. is the biggest warehouse in the
world."

One of the biggest listings of warehoused arms and arms parts can be 
found on a system called the Inventory Locator Service. ILS is a
business located in Memphis. ILS offers a computerized classified
listing to paid subscribers.   About 3,000 aircraft-parts sellers and 
users worldwide subscribe to it, for a fee of several hundred dollars a 
month.  The sellers list their inventories on the system, and buyers can 
scan the inventories as they browse for purchases.  ILS President Bruce
Langsen says the computer system is queried about 26,000 times each day.

Heavy-duty stuff. Pentagon investigator Barrington remembers vividly the 
first time he tapped into the ILS database. A former police officer and
Army Criminal Investigations Division agent who won a Bronze Star in the 
gulf war, Barrington went to work for the Defense Logistics Agency in 
1994.  Back then, he thought he had a pretty good sense of the 
international arms market, but the stuff he saw listed in the ILS
database disabused him of that. "I ran weapons, machine guns,
flamethrowers and components of guided bombs," he says. "And
immediately, I was getting hits!"

A printout Barrington made from his ILS visits is an eye-popper. It runs
26 pages, single spaced, and lists such items as AIM-9 Sidewinder 
missiles, GBU-10 guided bombs, Maverick missiles, machine guns and 
grenade launchers. Virtually everything on the list should have been
demilitarized, and probably destroyed--but it was all available for
sale.

Curious to figure out where the stuff came from, Barrington began to
check those items against sales at DRMOs. Checking more than 100 
weapons parts advertised on ILS, he found that one fifth had been sold 
to surplus dealers in just the past three years. All were available in 
the United States.   With more research, he came to believe that the 
heavy-duty weapons, the bombs and rockets and missiles, had probably
been sold legally by the Pentagon to foreign governments, which then 
sold them as surplus.  Brokers using ILS then offered them for sale.

Langsen, the ILS president, says he has provided law enforcement
agencies access to his company's computer listings, but he did not know 
the details of their investigations. Because there are 30 million items 
listed on the inventory, Langsen contended that searching for weapons is 
not easy.  But when U.S. News gave him the stock number for a grenade 
launcher, Langsen was able to find it pretty quickly. "From what I have 
learned in the past 48 hours," he said, "we are going to need to find a 
better way of combing the database. We are not an armaments database,
and we don't want to become an armaments database."

The U.S. News test of the ILS system shows how easily surplus weapons 
and weapons parts can be purchased by the public. Using a dummy 
letterhead, the magazine sent letters to many of the companies listing 
weapons parts on ILS, requesting price quotes and availability for a
variety of weapons and parts.  The sellers responded with price quotes 
for 35 items, ranging from bomb-arming devices to circuit cards for 
nuclear submarines' targeting systems to the key components of
night-vision scopes. U.S. News even bought some, and, with 60 Minutes, 
went undercover to talk with surplus dealers.   Several dealers said
that in buying aircraft parts at DRMOs they often scooped up a lot of 
other hardware, such as weapons parts. They said they listed it all on 
ILS hoping that someone would spot it and buy it.  

Some dealers said they wouldn't sell weapons or parts to people who
seemed shady. Others admitted that the system had almost no controls. "I 
could sell this to you," one weapons dealer explained, "and you could 
sell it to someone else, and he could sell it to someone else." Another 
dealer wrote that he had the parts we ordered, such as a pilot's
targeting screen, known as a heads-up display,  for an F-16 fighter, 
and had bought them from a DRMO but wanted more information about our 
company before selling to us.   Another offered to ship us a similar
part, with no questions asked.

One company, Aviarms Support Corp. in Westbury, N.Y., had a different
story. A manager there said the items the company advertises on ILS are 
held by Israeli, German and Dutch companies for whom it acts as a
broker.  Many of the U.S. weapons parts came from the surplus stocks of 
the Israeli and German militaries, he said. Had they been demilitarized? 
No, he said, they were all in good working order.

One part that Aviarms was selling was listed as an "F-117A fire control
memory." Asked how Israel could have obtained surplus parts for the U.S.
F-117 Stealth fighter, the manager checked his computer.   Aviarms was
brokering it for an Israeli company, which got it from a German company, 
he said. He could trace it no further.

Barrington was outraged by what he found on ILS. His last year at work
was consumed with tracking DRMO sales of sensitive weapons parts and 
trying to get his superiors at the Defense Logistics Agency to take 
action. He sent E-mail after E-mail message up and down the command
chain.  "Below are a few examples of obviously Demil-required property 
offered" at DRMO sales, he wrote in August 1995: "Payload section, 
nuclear missile.   Warhead components: DRMO San Antonio . . . 
Multipurpose display, F-117A Stealth Fighter:DRMO McClellan Air Force 
Base, California . . . F-111 Navigation and attack computer: McClellan 
Air Force Base DRMO . . . Heads-up display, F-111B fighter-bomber: DRMO 
Davis-Monthan Air Force Base, Arizona."

Barrington had the support of his co-investigators, and even some higher
officials at the logistics agency, but little was done.  There were no
seizures, no attempts to recover the items. On June 5, Barrington sent a 
final E-mail to his bosses. "Nearing the end of the trail here. I know 
all of you are very concerned about the OBVIOUS total lack of control of 
our vital defense technology and hardware, but I can't help but wonder 
after nearly two years of almost DAILY findings such as those above, why 
the government has not seen fit to attempt to recover ANY of the
thousands of sensitive or classified items discovered via ILS."
Barrington then quit to become a Baptist minister.  

While no senior Defense Department official was willing to meet with
U.S. News and 60 Minutes to discuss these problems on the record, a
group of knowledgeable middle-level Pentagon and Defense Logistics 
Agency managers met reporters and confirmed many of their findings. The
officials quibbled with some assertions. For instance, they acknowledged 
that there has been pressure in the past to cut corners to sell surplus 
materiel, as evidenced by the "profits, profits, profits, profits" memo. 
But they also insisted that the new management at the Defense Logistics 
Agency is not profits driven.    The officials blamed the four military 
services, which control most of the demilitarization codes, for writing 
the codes too leniently and for failing to change them when errors are 
pointed out. They said the DRMOs are no longer accepting items with 
demilitarization codes that had been phased out two years ago.

They also said some fixes are in the works. One of their main goals, the 
officials say, is to set up a centralized demilitarization code office,
which will assign and control all the codes, and try to enforce them.
The first step toward that, they say, should occur next year. 
Investigations underway at two Pentagon museums could also result in 
tightening of the current rules allowing bartering of government
aircraft for a variety of services.

If those steps happen as planned, they will clearly result in some 
improvement, but the problem is so great that it is difficult to say
what real effect they might have. "The scope of this program and the 
amount of materiel going out the door is so huge, people normally 
don't believe you," says Portanova, the assistant U.S. attorney in 
Sacramento. "Only the government could have a program where they give 
everything away for free and they screw it up."

BY PETER CARY WITH DOUGLAS PASTERNAK AND PENNY LOEB

(c) Copyright U.S. News & World Report, Inc. All rights reserved.  
============================================= 


[[Notice the Jewish name of "Skinazi", a variant of Ashkenazi".  I don't
know if he is Israeli or not.  The name 'Maurice' strongly suggests that 
he a foreigner.]]

http://www.usnews.com/usnews/issue/9MUSE.HTM 

The wrong stuff?
Top-gun museums face federal criminal inquiries

About a year ago, a California man named Maurice Skinazi thought he had
finalized an aircraft deal. He would buy 11 aging C-130 Lockheed
Hercules fuselages from the National Museum of Naval Aviation in
Pensacola, Fla., for $200,000. Then Skinazi, who runs an aircraft 
restoration and resale business, hoped to use the parts to put together 
two or three intact C-130s and sell them, perhaps for millions of 
dollars. But on June 6 of this year, Skinazi learned that the aircraft 
had been seized during a federal criminal investigation.

The genesis of the inquiry was a little-known federal law that allows
military museums to trade airplanes or parts to the public in exchange 
for many kinds of "services." Museum officials say the tradeoffs make 
sense: The military gets to build museum collections at no cost to the 
taxpayer, and interested buyers get old planes that would otherwise be 
junked.

But the so-called barter act has touched off a bitter wrangle inside the
Pentagon. Investigators contend that these exchanges are structured so
loosely that there is a real possibility of the government being 
defrauded.  Competitive bidding is often absent, and items traded may be 
valued subjectively.

"A good price." Such problems are highlighted in a recent Department of
Defense inspector general's report. The U.S. Army Center of Military
History in Washington, D.C., which oversees Army museums, contracted
with a big helicopter sales and repair company called Southeastern 
Equipment Co., or SECO, to move and store 80 surplus Army helicopters 
in a SECO building in Augusta, Ga., for one year and to do some 
restoration work. The bill was $390,000. Army curator Terry Daugherty 
and SECO President John Byrum say that figure was arrived at by
comparing other storage rates. For payment, the history center gave SECO 
six UH-1 Huey helicopters that it valued at $65,000 each. "In light of 
their condition, $65,000 was a good price," the Army stated. The
Pentagon inspector general doesn't think so.  The choppers traded to 
SECO were probably worth twice that amount, he says.

More eye-catching was a deal for nine Cobra helicopter trainers the
Center of Military History traded to other aircraft rebuilders. None 
was demilitarized, and several were capable of having weapons installed. 
Judson Bennett, Chief Curator at the Center of Military History, defends 
the trades: "The Army's position is, if it has the weapons removed it's 
just a fast, skinny helicopter."  Nonetheless, criminal investigations 
are underway at both museums.

Records show that the naval aviation museum took title to 344 aircraft
from 1990 to 1994, including scores of jet fighters. How many of these 
were exchanged with the public is not clear, but one former Navy
official believes that most were. John Dickhute, then the Navy's 
demilitarization program manager, says he warned museum officials that 
their warplane barters were a potential problem. "We're not talking
about a little innuendo, here," he said.  "We're talking about possible 
arms dealing."

Making calls. Eventually, a ban was imposed on such trades. When
officials at the Defense Logistics Agency discovered in 1992 that the 
Navy museum alone had obtained $300 million worth of aircraft and parts 
(at original prices) to barter, they stopped giving aircraft and parts
to museums. The museums started getting aircraft to barter directly 
from the Army and the Navy, so, in 1995, an assistant deputy under 
secretary of defense directed that the practice cease immediately.

Airplanes like C-130s, which have commercial use, may still be traded if
they have sensitive equipment removed. Nonetheless, the current
investigation at the naval aviation museum appears to focus once again
on how the museum sells or trades the aircraft. According to an
affidavit filed by Skinazi, the deal in which Skinazi bought the 11
C-130 hulks for $200,000 was not formally advertised.  Museum officials
say they got in touch with a handful of possible buyers, but none could
beat Skinazi's offer. When the deal stalled, Skinazi enlisted the help
of retired Chief of Naval Operations Adm. Thomas Moorer. Moorer, who is
also chairman emeritus of the museum foundation, said he tried to break
the deal free, charging Skinazi $20,000 for his services. "I made a lot
of phone calls; I can't do those for free," he said. Navy officials
refused to discuss either the Skinazi deal or the barter system with
U.S. News, but Moorer offered this opinion: "It's ridiculous to think
that senior officers in the Navy would be involved in some kind of fraud
to bilk the government."

BY PETER CARY AND DOUGLAS PASTERNAK

======================================== 
http://www.usnews.com/usnews/issue/9ARMSB.HTM      
12/9/96 

DOLLAR DAYS  
Missiles by mail

Buy a high-tech weapon or weapon part through the mail? It seemed crazy,
but we thought we'd try. We first obtained a printout from a former 
Pentagon investigator of the weapons and weapons parts listed on the 
Inventory Locator Service, a subscriber-only computer database of 
equipment that aircraft parts dealers have for sale. While most of the 
30 million things on ILS are airplane parts, it is possible to search
the listings for weapons.   Our search found more than 1,100 
weapons-related items. 

Using a non-U.S. News letterhead and a rented post office box, we wrote
to 32 companies asking for price quotes on such things as Maverick
antitank missiles, Sidewinder air-to-air missiles, GBU-10 guided bombs, 
40-mm grenade launchers, and flamethrowers. We also asked for quotes on
high-tech parts, such as cruise-missile antennas, Hawk missile-launcher 
parts, night-vision scopes and cryptographic equipment.  

Some of the items we asked for had been sold at Pentagon surplus sales.
Some were listed as classified. All should have been demilitarized and 
most destroyed.

Eighteen of the companies responded with price quotes. We received no
quotes on bombs and rockets--investigators told us that arms sellers 
typically prefer dealing with foreign governments or arms dealers. One 
company said it had bomb arming devices and a control box from an A-4 
fighter. The company said it had bought the weapons at surplus sales but 
wanted to know more about us before selling. The company offering
grenade launchers asked how many we wanted. When we said only one or 
two, they said, "Sorry, no price quote." A flamethrower we sought was 
for sale for $5,000, but it was World War II era. We wanted something
newer.

Our luck was better on the high-tech weapons parts. We got price quotes
for 35 items. An antenna for a Harpoon cruise missile was $9,625. A bomb
arming device could be had for $375. A Cobra attack helicopter weapons
controller was $2,500 new, $1,500 used. Tomahawk cruise missile parts
were also available. The key part for a night-vision weapons scope, the 
image intensifier, was $1,100. An electronic countermeasures test set, 
classified "confidential," could be had for $9,780. 

In the end, we ordered the night-vision image intensifier, the bomb
arming device, an A-4 Fighter navigation circuit card and a missile 
navigation part that the Pentagon says should definitely be destroyed, 
not sold. Most arrived courtesy of UPS within a week. We bought the Hawk 
missile voltage controller over the counter in Texas for $325 in cash, 
while we chatted with the clerk about that night's high school football 
championship game. As we left, the woman wished us a pleasant day.

BY PETER CARY

=====================================================

US News's Update report to "Weapons Bazaar," (Dec. 9, 1996) called 
"Weapons sell-off: Déjà vu at the Pentagon" dated 7/21/97 tells us that 
little has improved in terms in terms of stopping the military's
sell-off of surplus weapons. 
http://www.usnews.com/usnews/issue/970721/21UPDA.HTM

==================================================================== 

http://www.usnews.com/usnews/issue/26SCAN.HTM 

U.S. News 2/26/96
SCANDALS:

BRITAIN'S IRAQGATE. A mountain or a molehill? After the most exhaustive 
inquiry in modern times into the workings of the British bureaucracy, 
the jury is still out. At issue is whether Margaret Thatcher's
government secretly relaxed United Nations guidelines banning arms sales 
to Iraq in 1988, repeatedly lied to Parliament about the controversy and
subsequently colluded in the criminal prosecution of three British 
businessmen charged with breaking the embargo.

On the face of it, a three-year investigation led by a judge, Richard 
Scott, found the Tories guilty last week. Policy, he concluded, was
altered despite the guidelines; Parliament was "deliberately" kept in 
the dark, and a key official, Attorney General Nicholas Lyell, was 
"personally" at fault over events preceding the court case. One
consequence of London's "tilt" to Iraq revealed by the 2,000-page
report: American-made fuses for artillery shells fired by Iraqi forces 
against U.S. and British troops in the 1991 gulf war were supplied to 
Iraq via Jordan in 1990 by a British company with the full knowledge 
of British intelligence.

Despite the damaging findings, this is a very British scandal.
Government ministers, Scott concluded, did not act with "duplicitous" 
intent even if they were incompetent and negligent. On this slender
thread hangs Prime Minister John Major's future. Things may have gone 
wrong, say his spin doctors, but it was a mix-up, not a conspiracy. No 
one is responsible and no one will resign. Short term, Major, who now 
nurses a slim three-seat majority in Parliament, will probably survive. 
Longer term, his shaky administration's reputation for probity can
hardly sink lower.

BY ROBIN KNIGHT IN LONDON
============================================================