There was a story on EurasiaNet's main page last week about the ongoing issue of U.S. arms sales to Georgia. One intriguing subplot to that story is the ongoing investigation into U.S. arms dealers bribing the government of Georgia.
In January, the U.S. Justice Department announced the largest indictment ever for the Foreign Corrupt Practices Act (the U.S. law that makes it illegal to bribe foreign government officials). In total, 22 executives and employees of various military and law enforcement equipment companies were indicted. And the only country named thus far as being the target for the bribery is Georgia.
The story hasn't gotten much play, other than a couple of wire stories, and some discussion on law blogs and gun enthusiast websites. The Department of Justice indictment and other documents on the case spell out some of the detail: the suspects were allegedly part of a ring of arms dealers who conspired with Georgian Ministry of Defense officials to cook the books so that their deals were marked up 20 percent over the real cost, with the Georgian official getting 10 percent and the U.S.-based dealers the other 10 percent. The deals involved NATO-standard 5.56 mm ammunition and military food.
There are unfortunately few details from the Georgian side of this, and the Georgian press doesn't seem to have picked up the story. But below is what the DOJ has to say (pdf).
Because of the secrecy of most weapons sales, corruption is of course commonplace in the arms trade, so I don't know how unusual Georgia might be in this respect. But this doesn't help their case for getting more weapons from the U.S.
Object of the Conspiracy
14. The object of the conspiracy was for DANIEL ALVIREZ and his conspirators to unlawfully enrich themselves by making corrupt payments and attempting to make corrupt payments to foreign officials for the purpose of obtaining and retaining lucrative business opportunities.
Manner and Means of the Conspiracy
15. The manner and means by which DANIEL ALVIREZ and his conspirators accomplished the object of the conspiracy included, but were not limited to, the following:
a. ALVIREZ would participate in conversations and meetings with sales agents who ALVIREZ knew were making corrupt payments to Ministry of Defense officials of the Republic of Georgia ("Georgia") in order to assist in obtaining business from the government of Georgia.
b. ALVIREZ would facilitate the sale of military and law enforcement equipment to the government of Georgia, with the assistance of corrupt sales agents, knowing that the sales agents would make corrupt payments to Georgian government officials to assist in obtaining and retaining business from the government of Georgia.
c. ALVIREZ would accept commission payments from the corrupt sales agents for facilitating the corrupt deals with the government of Georgia.
16. In furtherance of the above described conspiracy and in order to carry out the object thereof, DANIEL ALVIREZ and others known and unknown to the United States, committed the following over acts, among others:
Corrupt Ammunition Deals with the Government of Georgia
a. In or about February 2008, Company A's sales representative in Israel (the "Israeli sales agent") contacted ALVIREZ to discuss purchasing 14 million rounds of M855 ammunition on behalf of the government of Georgia.
b. In or about March 2008, ALVIREZ learned that a corrupt Miami-based sales agent (the "Miami sales agent") was also participating in the deal to help facilitate the sale of ammunition to the government of Georgia.
c. In or about March 2008, ALVIREZ contacted an executive of a company that supplied ammunition ("Co-Conspirator 1") to facilitate the Israeli sales agent's purchase of the ammunition, knowing that the Israeli sales agent was paying bribes to government officials in Georgia to assist in obtaining the ammunition contract.
d. In or about July 2008, the Israeli sales agent purchased approximately 14 million rounds of M855 ammunition from Co-Conspirator 1's company for $278 per 1000 rounds, which amounted to approximately $3,892,000, for the purpose of selling that ammunition to the government of Georgia.
3. On or about July 10, 2008, the Israeli sales agent sold the ammunition to the government of Georgia for approximately $334 per 1000 rounds, which amounted to approximately $4,676,000. Approximately $8 per 1000 rounds of ammunition sold to the government of Georgia, or approximately $112,000, was paid as a commission to ALVIREZ for facilitating the deal.
f. On or about July 15, 2008, the Israeli sales agent and the Miami sales agent sold to the government of Georgia an additional 7.2 million rounds of ammunition, which the Israeli sales agent had purchased from Co-Conspirator 1's company for $278 per 1000 rounds, for approximately $334 per 1000 rounds. ALVIREZ received a commission of $8 per 1000 rounds on the additional sales, which amounted to approximately $57,600.
Corrupt MRE Deal with the Government of Georgia
g. In or about October 2008, the Miami sales agent contacted ALVIREZ to assist him in finding a supplier for a deal to sell Meals, Ready to Eat ("MREs") to the government of Georgia.
h. In or about October 2008, ALVIREZ contacted a manufacturer of MREs to facilitate the Miami sales agent's sale of MREs to the government of Georgia, knowing that the Miami sales agent was making corrupt payments in order to assist in obtaining the MRE contract from the government of Georgia.
i. On or about December 24, 2008, ALVIREZ received approximately $15,000 from the Miami sales agent, which represented a partial payment of ALVIREZ's commission on the sale of the MREs to the government of Georgia.