Was the State Department involved in a shoddy and potentially illegal ammo shipment that led to the arrest of a 22-year-old Miami arms dealer last week?

That's what Rep. Henry Waxman (D-CA) now says. The House oversight committee says it has evidence that the U.S. embassy in Albania helped Albanian officials keep the allegedly illegal shipment of Chinese-made ammunition to Afghanistan under wraps and then failed to disclose that information when Waxman's committee asked about it.

Last week we updated you about the arrest of Efraim Diveroli and three of his business partners with AEY Inc. Federal prosecutors say he violated the U.S. Arms Export Control Act, which prohibits buying and selling weapons from certain countries, including China. The ammunition in question was obtained by AEY from an Albanian arms dealer.

Waxman's new-- and potentially explosive -- evidence stems from an interview by the oversight committee of Army Maj. Larry Harrison, the Chief of the Office of Defense Cooperation at the U.S. Embassy in Albania. Harrison told the committee about a previously undisclosed November meeting that included Albanian officials and U.S. Ambassador John Withers and others from the U.S. embassy in Tirana.

Waxman describes Harrison's account of the meeting in a letter today to Secretary of State Condoleezza Rice:

According to Major Harrison, the Albanian Defense Minister, Fatmir Mediu, called him on November 19, 2007, to request an urgent meeting with the U.S. Ambassador to Albania, John L. Withers, II. Major Harrison stated during his interview that the Albanian Defense Minister was concerned that a New York Times reporter planned to inspect the facility at Rinas Airport in Tirana where AEY was conducting its operation to repackage Chinese ammunition before shipping it to Afghanistan, a process that included removing some ammunition from its original Chinese packaging. ...

As a result of discussions that went late into the night, the Albanian Defense Minister ordered one of his top generals to remove all evidence of Chinese packaging before the site was inspected the following day. Major Harrison told the Committee: "the Ambassador agreed that this would alleviate the suspicion of wrongdoing."

Back in April, after a front-page story about the 20-something arms dealers in the New York Times, Waxman asked the State Department for any information they had about the case. State officials responded with a memo noting only a few perfunctory meetings about the case.

But Waxman later obtained a draft of that State Department memo on which Harrison used the " track changes " function in Microsoft Word to suggest that reference to the November 2007 meeting be included. Harrison's draft included the following language:

"Do we mention the meeting at Steve's house on 19 November (present was Amb Withers, DCM Christina, RSO Patrick and ODC Chief Harrison) where the Amb recommended to the Minister to prevent the reporters form seeing the munitions at the airport on the following day and the Minister called MG Spahiu at approximately 23:00 to have all the ammunition removed from the airport by 0800 the next morning"

"Steve" is a reference to Stephen Cristina, the deputy chief of mission at the U.S. embassy in Albania. The changes suggested by Harrison were not included in the final draft of the memo that the State Department forwarded to Waxman's committee on April 9.

Waxman wrote in his letter to Rice:

The information obtained by the Committee raises serious issues. If the information is accurate, it appears that senior U. S. Embassy officials in Albania approved of the efforts of the Albanian Defense Minister to conceal evidence of illegal shipments of Chinese ammunition that are now the subject of a criminal indictment. It also appears that information about the incident was withheld from the Committee. It is hard to understand what rationale would justify these actions.

Waxman asked Rice to send several officials from the State Department to appear before the committee for "transcribed interviews."