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Russian authorities also determined the logbooks the companies provided for the Mi-17s “were not authentic,” the audit said. The Russian government considered the breach to be a serious matter and brought the illegal shipments to the attention of U.S. defense officials in late 2010.

A few months later, U.S. government management and oversight of the AviaBaltika and SPARC’s overhaul work shifted to an Army acquisition office in Huntsville headed by Vergez.

At about that same time, March 2011, Vergez’s name became connected to a house owned by Pavel Borisov in Huntsville’s exclusive Ledges neighborhood. Borisov sold the four-bedroom home at 3 Chittamwood Drive in June 2013 for $725,000, according to the Madison County, Ala., tax assessor’s office. It’s unclear whether Vergez ever lived there or why his name was registered at the address. Pavel Borisov did not respond to emails from AP.

The connection should have set off alarms inside the Army, said Neil Gordon of the Project on Government Oversight, an independent watchdog group in Washington. Military officers are supposed to avoid even the appearance of a conflict of interest.

“By allowing his name to be linked to property owned by an executive of a company with which the Army does business, Col. Vergez showed either a brazen disregard for contracting regulations or a serious lack of judgment,” Gordon said.

In his new post, Vergez supported AviaBaltika and SPARC’s bid for $11 million in additional compensation even though the auditors found no evidence a required cost analysis had ever been completed.

The companies argued that the delays in overhauling the helicopters were not their fault, but caused by another contractor’s failure to supply replacement parts. As a result, AviaBaltika and SPARC said they incurred expenses they should not have had to absorb, the records show.

They cited the costs of preparing for and attending meetings and writing letters to resolve the problems, noting labor rates between $250 and $650 an hour, which translated into annual salaries as high as $1.3 million a year. The inspector general’s audit called the rates unreasonable.

Ultimately, AviaBaltika and SPARC would receive just $1.2 million after Pentagon officials in Washington intervened and instructed Vergez’s office to make no further payments, according to a person familiar with the transaction but not authorized to be identified as the source of the information.

Despite that performance, in April 2011, AviaBaltika and SPARC won a contract to overhaul five more Mi-17s, the records show. The new work flowed to Borisov’s companies through a larger contract Vergez’s office had with Science and Engineering Services, Inc., a government contractor in Huntsville.

Nearly $14 million has been spent on the subcontract even though the helicopter overhauls have not been completed, according to an Army budget document.

Just before Vergez retired from the Army, he laid out a plan through which Science and Engineering Services would acquire new Ukranian-built engines for Mi-17s the U.S. was buying for Afghanistan. AviaBaltika was the licensed distributor for the Motor Sich engines in the U.S. and stood to earn millions of dollars.

“I trust that your team (AviaBaltika Ltd., JSC Motor Sich) is up to the challenge to bring this much needed engine capability” to Afghanistan, Vergez wrote in an August 2012 memo to Ralph Pallotta, chief operating officer at Science and Engineering Services.

But the plan stalled after Vergez retired. Only two engines have been acquired so far.

Science and Engineering Services has not been contacted by federal investigators and has no reason to believe it is the subject of any inquiry, Pallotta said.

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