Kelly called AviaBaltika "infamous" in a cable published by the Wikileaks website. The Lithuanian government, Kelly wrote, understood the license request "is likely to set off alarms in Washington, and wants to make sure we have a chance to affect" the decision. The U.S. recommended the request be denied. It was.
But warnings about Borisov's companies appear to have slipped through the cracks. By 2008, AviaBaltika and SPARC were part of an umbrella contract to support U.S. counterterrorism activities held by defense industry giant Northrop Grumman and managed by a Navy office in Dahlgren, Va.
AviaBaltika and SPARC were tasked with overhauling 10 Mi-17 helicopters, part of the U.S. strategy to defeat al-Qaida and other extremist groups. The Pentagon acquired dozens of new and used Mi-17s to give to Iraq, Afghanistan, Pakistan and other countries in its fight against terrorism.
But Avia Baltika and SPARC ran into trouble.
A $38 million job to refurbish the 10 Mi-17s ballooned to more than $64 million and delivery dates were badly missed, according to the Pentagon inspector general's audit of the work done by Borisov's companies.
Jonas Bazaras, AviaBaltika's commercial director, said in an email that the audit's findings "are not consistent with the reality," but declined to comment further.
Two of the choppers were 20 months behind schedule, the audit said. Eight others for Pakistan's air force missed their deadline by a year.
Yet U.S. government contracting officers kept paying the bills for what auditors described as unquestioned and unnecessary costs. AviaBaltika and SPARC charged exorbitant rates for helicopter replacement parts. For example, a storage battery cost just over $13,000, 500 percent more than the going rate from other companies. AviaBaltika wanted $20,000 for a landing light, nearly double the market cost.
It was virtually impossible to assure the overhauls were being done properly because quality control inspectors from the U.S. government and Northrop Grumman were repeatedly refused access to SPARC's facilities in Russia.