“Shares will normally be registered, and the names of the shareholders also, but there is the provision for the issue of bearer shares, in which case no registration of the identity of the majority holder is necessary. The snag to that is that the bearer shares are exactly what they mean, and the bearer of the majority controls the company. Should one man lose them, or have them stolen, the new owner would automatically become the controller without needing a vestige of proof as to how he acquired them. Do you follow me, Mr. Brown?”
Shannon nodded. This was the arrangement he hoped to establish, in order to have Semmler buy the boat behind the cover of an uncheckable company.
“A holding company,” said Mr. Stein, “as the name implies, may not trade in any form. It may only hold stock in other companies. Does your group of associates hold shares in other companies which it would like to have taken over and held in Luxembourg?”
“No, not yet,” said Shannon. “We hope to acquire existing companies in the area of chosen operations, or found other limited-liability companies and transfer the majority shareholdings to Luxembourg for safekeeping.”
By the end of an hour the agreement had been reached. Shannon had shown Mr. Stein his £4000 banker’s check to prove his solvency, and had paid a deposit of £500 in cash.
Mr. Stein had agreed to proceed at once with the foundation and registration of a holding company to be called Tyrone Holdings SA, after searching through the bulky lists of already registered companies to ensure that no such name existed on the register. The total share capital would be £40,000 of which only £1000 would be issued immediately, and this would be issued in 1000 bearer shares of £1 each. Mr. Stein would accept one share and the chairmanship of the board. One share each would go to his partner, Mr. Lang, and a junior partner in the firm. These three men would form the board. Three other staff members of the firm—they turned out later to be secretaries—would be issued with one bearer share each, and the remaining 994 shares would be held by Mr. Brown, who would thus control the company and whose wishes the board would have to implement.
A general meeting to float the company was fixed for twelve days thence, or any time after that, if Mr. Brown would let them know in writing when he could be in Luxembourg to attend it. On that note Shannon left.
Before closing time he was back at the bank, returned the check, and had the £4000 transferred to the account at Brugge. He checked into the Excelsior and spent the night in Luxembourg. He already had his reservation for Hamburg the next morning, and he had the hotel call to confirm it. It was to Hamburg that he flew the following morning. This time, he was looking for arms.
The trade in lethal weapons is the world’s most lucrative, after narcotics, and, not surprisingly, the governments of the world are deeply involved in it. Since 1945 it has become almost a point of national prestige to have one’s own native arms industry, and these industries have flourished and multiplied to the point where by the early 1970s it was estimated there existed one military firearm for every man, woman, and child on the face of the planet. Arms manufacture simply cannot be kept down to arms consumption except in case of war, and the logical response has to be either to export the surplus or encourage war, or both. As few governments want to be involved in a war themselves but also do not want to run down their arms industries just in case, the accent has for years been on the exporting of arms. To this end, all the major powers operate highly paid teams of salesmen to trot the globe persuading any potentate with whom they can secure an interview that he does not have enough weapons, or that what he does possess are not modern enough and should be replaced.
It is of no concern to the sellers that 95 percent of all the hardware on the face of, for example, Africa is used not to protect the owner country from external aggression but to keep the populace in subjection to the dictator. Arms sales having logically started as a product of the profits rivalry between competing Western nations, the entry of Russia and China into the arms-manufacturing and -exporting business has equally logically transferred the salesmanship into an extension of the power rivalry.
The interaction of profit desirability and political desirability has produced a tangled web of calculations that continues daily in the capitals of the major world powers. One power will sell arms to republic A, but not to B. At which a rival power will rush to sell weapons to B but not to A. This is called establishing a power balance and therefore keeping the peace. The profit desirability of selling arms is permanent; it is always profitable. The only constraints are imposed by the political desirability of this or that country having certain arms in its possession at all, and from this shifting quicksand of expediency versus profit has evolved the intimate link between Foreign Affairs Departments and Defense Departments all over the world.
To establish an indigenous arms industry is not difficult, providing it is kept basic. It is relatively simple to manufacture rifles and submachine guns and ammunition for both, along with hand grenades and handguns. The required level of technology is not high industrial development, and the variety of needed raw materials is not large. But the smaller countries usually buy their weaponry ready-made from the larger ones, because their internal requirements are too small to justify the necessary industrialization, and they know their technical level would not put them into the export market with a chance.
Nevertheless, a very large and growing number of medium-sized countries have in the past two decades gone ahead and established their own native, if basic, arms factories. The difficulties increase, and therefore the number of participating nations decreases, with the complexity of the weapon to be made. It is easy to make small arms, harder to make artillery, armored cars and tanks, very difficult to create an entire shipbuilding industry to build modern warships, and hardest of all to turn out modern jet fighters and bombers. The level of development of a local arms industry can be judged by the point at which local weaponry reaches its technical limits, and imports have to be made for anything above those limits.
The main world arms-makers and -exporters are the United States, Canada, Britain, France, Italy, West Germany (with certain banned manufactures under the 1954 Paris treaty), Sweden, Switzerland, Spain, Belgium, Israel, and South Africa in the Western world. Sweden and Switzerland are neutral but still make and export very fine weaponry, while Israel and South Africa built up their arms industries in light of their peculiar situations, because they did not wish to be dependent on anyone in the event of a crisis, and both export very little indeed. The others are all NATO countries and linked by a common defense policy. They also share an ill-defined degree of cooperation on foreign policy as it relates to arms sales, and an application for an arms purchase made to any of them habitually undergoes a close scrutiny before it is granted and the arms are sold. In the same vein, the small buyer country always has to sign a written undertaking not to pass weaponry sold to itself to another party without express written permission from the supplier. In other words, a lot of questions are asked, before a sale is agreed to, by the Foreign Affairs Office rather than the Weapons Sales Office, and sales are almost inevitably deals made government-to-government.
Communist arms are largely standardized and come mainly from Russia and Czechoslovakia. The newcomer, China, now also produces weaponry up to a sufficiently high level of sophistication for Mao’s guerrilla-war theory’s requirements. For Communists the sales policy is different. Political influence, not money, is the overriding factor, and many Soviet arms shipments are made as gifts to curry favor, not as commercial deals. Being committed to the adage that power grows out of the barrel of a gun, and obsessed with power, the Communist nations will not merely sell weapons to other sovereign governments, but also to “liberation” organizations that they politically favor. In most cases these are not sales, but gifts. Thus a Communist, Marxist, extreme left-wing, or revolutionary movement almost anywhere in the world can be reasonably assured of not running short of the necessary hardware for guerrilla war.
In the middle, the neutral Swiss and Swedes have their own self-imposed inhibitions on whom they will sell to and thus curtail their arms exports by their own volition on moral grounds. No one else does.
With the Russians selling or giving their hardware from governmental source to nongovernmental recipients, and the West being too shy to do so, the private arms dealer enters into the picture. The Russians have no private arms dealers, so this creature fills the gap for the West. He is a businessman who may be used as a source of weaponry by someone seeking to buy, but in order to stay in business he must liaise closely with the defense department of his own country, or the department will see that he goes out of business. It is in his interest to abide by his native country’s wishes anyway; that country may be the source of his own purchases, which could be cut off if he causes displeasure, apart from his fear of being put out of business by other, less pleasant means.
Thus the licensed arms dealer, a national and resident usually of his native country, sells arms to buyers after consulting his own government to be sure that the sale is acceptable to them. Such dealers are usually large companies and hold stocks.
This is at the highest level of the private-enterprise arms business. Lower in the pond are more dubious fish. Next down the scale is the licensed dealer who does not hold a stock of weapons in a warehouse but is licensed to hold a franchise by one of the large, often government-owned or -controlled arms-manufacturing companies. He will negotiate a deal on behalf of a client and take his cut. His license depends on his toeing the line with the government whose franchise to operate he holds. This does not prevent some licensed arms dealers from occasionally pulling a fast one, though two well-established arms dealers have been put out of business by their governments when discovered doing it.
Down in the mud at the bottom sit the black-market arms dealers. These are self-styled, since they hold no license. They may not therefore legally hold any stocks of weapons at all. They remain in business by being of value to the secret buyer, a man or organization who, not being a government or representing one, cannot clinch an intergovernmental deal; who would not be tacitly approved of by a Western government as desirable to receive arms; who cannot persuade a Communist government to support his cause on the ground of political ideology; but who needs arms.
The vital document in an arms deal is called the End User Certificate. This certifies that the weapons purchase is being made by, or on behalf of, the End User, who almost without exception in the Western world has to be a sovereign government. Only in the case of a flat gift by a secret-service organization to an irregular army, or of a pure black-market deal, does the question of an End User Certificate not apply. Examples of the former were the arming, without payment, by the CIA of the anti-Castro forces of the Bay of Pigs, and the arming of the Congo mercenaries, also by the CIA. An example of the latter is the shipment to Ireland from various European and United States private sources of arms for the Provisional IRA.
The End User Certificate, being an international document, has no specific form, shape, or size, or specific wording. It is a written affirmation from a certified representative of a national government that either he, the bearer, or Mr. X, the dealer, is authorized to apply to the supplier government for permission to purchase and export a quantity of arms.
The vital point about the End User Certificate is that some countries carry out the most rigorous checks to ensure the authenticity of this document, while others come under the heading of “no questions asked” suppliers. Needless to say, End User Certificates, like anything else, can be forged. It was into this world that Shannon carefully entered when he flew to Hamburg.
He was aware that he could certainly not make a direct application for permission to buy arms to any European government with a chance of success. Nor would any Communist government be kind enough to donate the weapons; indeed, it would be totally opposed to the toppling of Kimba. By the same token, any direct application would surely blow the entire operation.
He was also not in a position, for the same reason, to approach one of the leading government-owned arms-makers, such as Fabrique Nationale of Belgium, for any request put to a government-owned combine in the arms-making and selling business would be passed on to the government; similarly, he could not approach a large private arms dealer, such as Cogswell and Harrison of London or Parker Hale of Birmingham. In the same category, Bofors of Sweden, Oerlikon of Switzerland, CETME of Spain, Werner and others in Germany, Omnipol of Czechoslovakia, and Fiat of Italy were ruled out.
He also had his own peculiar buying circumstances to consider. The amount he had to spend was too small to interest the big legitimate licensed dealers who habitually dealt in millions. He could not have interested the erstwhile king of the private arms dealers, Sam Cummings of Interarmco, who for two decades after the war ran a private arms empire from his penthouse suite in Monaco and had retired to enjoy his wealth; nor Dr. Strakaty of Vienna, the licensee franchise holder for Omnipol across the border at Washington Street 11, Prague; nor Dr. Langenstein in Munich; nor Dr. Peretti in Rome; nor M. Cammermundt in Brussels; nor Herr Otto Schlueter in Hamburg.
He had to go farther down the scale, to the men who dealt in smaller sums and quantities. He knew the names of Günther Leinhauser, the German, former associate of Cummings; in Paris, of Pierre Lorez, Maurice Herscu, and Paul Favier. But on consideration he had decided to go and see two men in Hamburg.
The trouble with the packet of arms he sought was that it looked like what it was: a single packet of arms for a single job, and it would not need a keen military mind to realize that job had to be the taking of one building within a short period. There was not enough leeway in the quantities to kid any professional soldier that a Defense Ministry, even a small one, was behind the order.
Shannon had therefore decided to split the packet even smaller, so that at least the items sought from each dealer were consistent. A mixed package would be a giveaway.
From one of the men he was going to see he wanted 400,000 rounds of standard 9mm. ammunition, the kind that fits into automatic pistols and also submachine carbines. Such a consignment was too large and too heavy to be bought on the black market and shipped without a large amount of complicated smuggling to get it on board. But it could well be the kind of consignment needed by the police force of any small country, and was not suspicious in that there were no matching guns in the same packet and it could therefore pass under scrutiny as an order designed simply to replenish stock.
To get it, he needed a licensed arms dealer who could slip such a small order through the procedures among a batch of bigger orders. Although licensed to trade in arms, the dealer must nevertheless be prepared to do a bent deal with a forged End User Certificate. This was where an intimate knowledge of the no-questions-asked countries came in useful.
Ten years earlier there had been vast quantities of superfluous weaponry lying about Europe in private hands, “black,” i.e. illegally held, arms, leftovers from colonial wars such as those of the French in Algeria and the Belgians in the Congo.
But a series of small irregular operations and wars throughout the 1960s, notably Yemen and Nigeria, had used them up. So he would have to find a man who would use a bent End User Certificate and present it to a supplier government that asked no or few questions. Only four years earlier the most noted of these was the Czech government, which, although Communist, had continued the old Czech tradition of selling arms to all comers. Four years earlier one could have walked into Prague with a suitcase full of dollars, gone to the Omnipol headquarters, selected one’s hardware, and a few hours later have taken off from the airport in one’s chartered plane with the stuff on board. It was that simple. But since the Soviet takeover in 1968 the KGB had taken to vetting all such applications, and far too many questions were being asked.
Two other countries had earned a reputation of asking few questions about where the presented End User Certificate really came from. One was Spain, traditionally int
erested in earning foreign currency, and whose CETME factories produced a wide range of weapons, which were then sold by the Spanish Army Ministry to almost all comers. The other, a newcomer, was Yugoslavia.
Yugoslavia had begun manufacturing her own arms only a few years earlier and inevitably had reached a point where her own armed forces were equipped with domestic arms. The next step was overproduction (because factories cannot be abandoned a few years after they have been most expensively started), and hence the desire to export. Being a newcomer to the arms market, with weapons of unknown quality, and eager for foreign currency, Yugoslavia had adopted the “ask me no questions and I’ll tell you no lies” attitude to applicants for weaponry. She produced a good light company mortar and a useful bazooka, the latter based heavily on the Czech RPG-7.
Because the goods were new, Shannon estimated a dealer could persuade Belgrade to sell a tiny quantity of these arms, consisting of two 60mm. mortar tubes and a hundred bombs, plus two bazooka tubes and forty rockets. The excuse could well be that the customer was a new one, wishing to make some tests with the new weaponry and then come back with a far larger order.
For the first of his orders (the 400,000 rounds of 9mm. ammunition), Shannon intended to go to a dealer licensed to trade with CETME in Madrid but known also not to be above putting through a phony End User Certificate. For the second, Shannon had heard the name of another man in Hamburg who had skillfully cultivated the baby Yugoslav arms-makers at an early stage and had established good relationships with them, although he was unlicensed.
Normally there is no point in going to an unlicensed dealer. Unless he can fulfill the order out of illegally held stocks of his own, which means no export license, his only use can be in securing a bent but plausible End User Certificate for those who cannot find their own, and then persuading a licensed dealer to accept this piece of paper. The licensed dealer can then fulfill it, with government approval, from his own legally held stocks and secure an export license—or put the phony certificate to a government, with his name and guarantee backing it up. But occasionally he has one other use which makes him employable: his intimate knowledge of the state of the market and where to go at any given moment with any given requirement to have the best chance of success. It was for this quality that Shannon was visiting the second man on his Hamburg list.
The Dogs of War Page 23