That the plotters thought repeated mallet blows would be mistaken for a tumble down a stairwell was one of several odd aspects of the plot. Another was Ewert’s presence at the scene of the attack. Someone who goes to the trouble of hiring a retired French Foreign Legionnaire to kill a prominent businessman would ostensibly want to fabricate an alibi. Any experienced police detective will tell you that many criminals are surprisingly dumb, but this had to be one of the least competent high-profile contract murders ever attempted.
After he recovered, Gaston Glock told the authorities that he had discovered that Ewert had set up numerous additional offshore companies without his permission. Glock’s lawyers alleged that Ewert had stolen not just money to buy a Swiss chalet, but some $100 million of Glock funds. The embezzled cash had been channeled into the secret shell companies. The Glock lawyers claimed that Ewert had attempted to take control of Unipatent, the main Glock holding company in Luxembourg, and its chief asset: a 50 percent stake in Glock, Inc., the American operating subsidiary that generated the vast majority of Glock revenue. In due course, the Luxembourg prosecutor, Frising, charged Ewert and Pecheur with attempted murder.
Ewert’s attorneys claimed he had nothing to do with the attack. Ewert insisted he was framed and that he did not know Pecheur. But he could not explain how his business card ended up in the attacker’s car. The defense team insisted on behalf of their client that Glock had approved of all of Ewert’s corporate activities, including Ewert’s takeover of Unipatent. There had been no secrets between the two men, Ewert maintained. Glock had retained Ewert specifically to set up the network of paper corporate entities around the world as a tax dodge. In return, Ewert was to receive certain ownership interests in the Glock affiliates he created.
In an interview years later, Ewert contended: “Glock says I have less than five percent of Unipatent? Glock is a nut!” As for the murder attempt, he blamed unnamed Glock associates who he alleged wanted to gain control of the gun-manufacturing empire. His presence in the underground parking garage was part of a diabolical conspiracy, he said: “They needed me out of the way so they could grab everything.”
Pecheur, faced with the sticky problem of having been arrested at the scene of the attack, had no coherent explanation of his actions beyond a vague contention that it was he who was the victim of an unexplained assault by Glock. Unlike Ewert, Pecheur seemed resigned to a prison term.
In March 2003, Ewert and Pecheur were found guilty after a three-week nonjury trial in Luxembourg. Ewert was sentenced to twenty years, the maximum penalty for attempted murder. Pecheur received seventeen years as the would-be hit man. In the courtroom, Ewert didn’t react to the verdict, sitting motionless. Pecheur sighed but said nothing.
“It is a good day,” Glock said afterward. He added ambiguously, “It is one step in a war.” In 2003, in a rare interview, with Forbes , he explained: “The attack is the best thing that happened to me. Otherwise I would have gone on trusting Ewert.”
Pecheur served seven years of his seventeen-year sentence and was released on good behavior. Ewert remains behind bars at a maximum-security prison in rural Luxembourg, continuing to insist on his innocence.
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The investigation and prosecution of Charles Ewert resulted in more than his conviction. It also brought to light a trove of documents describing the intricate financial structure of the Glock companies. This information received little attention outside of certain legal circles in Luxembourg—until two colleagues and I reviewed it while researching an article about internal intrigue at Glock, which was published in Business Week in September 2009.
Gaston Glock’s attorneys aided the Luxembourg investigation with the explicit goal of demonstrating that Ewert had created an international daisy chain of fraudulent Glock affiliates. The Glock legal team argued that Gaston Glock retained ownership of the interrelated companies—or at least those that had any real economic value. While trying to establish that Ewert had made false claims to owning parts of the gun-making kingdom, the Glock attorneys were not shy about conceding that one original purpose of establishing a complicated corporate structure was to shelter portions of the profits from taxation in the United States and Austria.
For example, the Glock lawyers submitted documents to the court in Luxembourg showing that in 1987, Ewert, acting on Glock’s behalf, transferred ownership of the valuable 50 percent stake in the American unit of Glock to Unipatent, the Luxembourg holding company. “The purpose of this holding company was to appear externally as a partner of Glock and hold approximately 50 percent of the shares of its subsidiaries,” according to an April 3, 2000, document entitled “Establishment of the Glock Group,” which the Glock attorneys filed with the court. In other words, Ewert helped Gaston Glock create an essentially fictional co-owner, making it more difficult to trace company earnings generated in the United States.
Other shells established in Ireland, Liberia, and Curaçao were fabricated to issue bills for various “services” to Glock headquarters in Austria and to operating units in Latin America and Hong Kong, the documents show. But these service firms “had no economic substance and were motivated by tax reasons,” according to a confidential ninety-two-page analysis of the Glock companies conducted by Pricewaterhouse-Coopers. The Luxembourg court had appointed a provisional administrator to sort out who owned Unipatent, and that administrator hired the giant auditing firm to do the arduous forensic accounting. Pricewaterhouse found that the Glock service companies’ role appeared to be the shielding of company profits from potential taxation in Austria, Latin America, and Hong Kong. The Latin American and Asian operating units, in turn, appeared to be used to extract profits from the US subsidiary, Pricewaterhouse alleged.
The point of the paper shuffle, as noted, was to reduce Glock’s tax liabilities. This was accomplished by having pistols manufactured in Austria sold first to the Latin American and Hong Kong units and then resold for higher prices to Glock, Inc., in Smyrna. By inflating costs to the American subsidiary, this practice decreased the profits the subsidiary was required to report to the US Internal Revenue Service.
The court in Luxembourg did not show any interest in enforcing the tax laws of other countries—hardly surprising, given that Luxembourg’s economy rests on its reputation as a tax haven. The court was trying to sort out whether Ewert had a legitimate claim to Unipatent and half of Glock’s lucrative US unit. Once the Luxembourg judiciary concluded that, on the contrary, Ewert was an embezzler and failed murderer, it left the propriety of Glock’s tax-minimization strategies to others.
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As part of his effort to clarify ownership of his companies, Glock hired a team of American investigators based in Atlanta. The lead private eye, James R. Harper III, had served as a federal prosecutor and was active politically in Republican circles in Georgia. Harper retained a quartet of former cops and US government agents to help with his work for Glock. Their locked workspace on the Glock grounds in Smyrna was off-limits to regular company employees. Before long, the Harper group was traveling around the world, looking for evidence of Ewert’s wrongdoing. Referring to themselves as the “A-Team,” the secretive private detectives reported only to Paul Jannuzzo and, sometimes, directly to Gaston Glock.
Jannuzzo, who had risen to chief operating officer of Glock, Inc., and was the company’s most senior executive in the United States, seemed a little baffled by the mysterious Harper group. “A lot of the time,” he told me, “no one knew what these guys, the so-called A-Team, were even up to.”
Harper, a captain in the Marine reserves with a bulldog head and demeanor to match, traced the peripatetic Ewert to far-flung locations and connected him to unsavory characters. Harper amassed enormous files of corporate documents, witness interview transcripts, and PowerPoint flowcharts. The A-Team discovered that Unipatent was once owned by Hakki Yaman Namli, a controversial Turkish financier with a reputation for doing business in North Cyprus, a well-known center for money laundering
and other financial fraud. The Glock-affiliated Panamanian company Reofin also had a tie to Namli, Harper determined. In 1995, Reofin and Namli co-founded Unibank Offshore, a bank in North Cyprus.
Harper warned Glock and Jannuzzo that by associating Glock with Unipatent, Reofin, and Unibank Offshore, Ewert had created a seeming link between the Glock companies and Namli. In a memo dated November 1, 2000, Harper wrote that Gaston Glock was “in danger of being flagged as an international money launderer because by all appearances … Ewert was working at [Gaston] Glock’s direction up until the time of the assault” on Glock. “Even a rumor in the press about the Glock connection to Cypriot money laundering,” Harper added, “could have significant if not devastating effects on Glock sales, especially to law enforcement.” The private investigator concluded: “Mr. Glock doesn’t understand the breadth of the problems or the potential disaster that could befall him.”
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Nonetheless, Gaston Glock seemed unfazed. A mere five months after fending off the retired French Foreign Legionnaire, he issued his “Annual Message from the President” in a glossy promotional magazine called Glock Autopistols , which the company gave away at trade shows and in gun shops. “Another year has come and gone,” Glock observed, “and I am proud to say that our successes have far outweighed our shortcomings, and the company is continuing to grow and aggressively take on all challenges with which it is faced.” The January 2000 message continued in a triumphal vein, without reference to the bloody attack in Luxembourg. The company carried on outwardly as if all were normal.
In commercial terms, Glock’s assessment was accurate. The pistols kept selling. The FBI concluded its long search for a replacement for the Smith & Wesson revolver, bypassing American manufacturers to choose the .40-caliber Glock. The DEA piggybacked on the FBI’s procurement contract. Thousands of agents for the agencies—like their brethren in Customs, the Marshals Service, the Border Patrol, and state and local police forces—were issued Austrian pistols as duty weapons. Glock, Inc.’s, annual revenue hit $100 million in the late 1990s, according to former executives.
Success in the marketplace did not, however, cause Gaston Glock to forget or forgive betrayal. His clash with Ewert spawned suspicion that Panama Charly was not the only subordinate attempting to rob the gun maker. Glock was determined to identify and punish the others, as well.
CHAPTER 18
“Monopoly Money”
Gun manufacturers thrive on turmoil. For Glock, the American military response to 9/11 proved a bonanza. At the Pentagon, Beretta retained the main contract to provide handguns to the army, but elite US military units with the authority to choose their own small arms gravitated to the Glock.
Jim Smith, a veteran of Delta Force, the army’s premier special-operations unit, explained that highly trained commandos considered the Austrian-made gun more dependable. Most commandos carry handguns as well as rifles; conventional infantry fighters usually are issued only rifles. Smith spoke of the Glock with clipped reverence. “We put it in the sand, in water, extreme heat, fired thousands of rounds,” he said. “Pull the trigger, it fires. Reliable.”
I met Smith at a small arms trade show in Germany. After retiring from Delta Force, he started a consulting business in Texas where he tutored corporate executives, police SWAT officers, and even some Army Rangers. The Rangers were frustrated that their unit, though elite, was still issued Berettas, he said. They wanted what the secretive Delta Force carried.
After the invasions of Afghanistan and Iraq, US authorities outfitting local security forces turned primarily to the Glock. The American government bought more than 200,000 of the Austrian pistols for distribution to Afghan and Iraqi police, national guardsmen, and soldiers. Spread over several years, those sales came on top of the company’s routine cash flow from police and commercial business.
The rush to award contracts and ship pistols caught American manufacturers unprepared. When they learned that Glock had cornered the post-9/11 market in the Middle East, some objected angrily. “As a US taxpayer and a US manufacturer, I am greatly offended that my tax dollars are being used to buy foreign weapons for the Iraqis when there were US companies that could have supplied that product,” Robert Scott, Smith & Wesson’s president, protested. Three members of Congress announced investigations of Glock’s procurement coup. The indignation drew media attention but had no substantive effect.
On the ground in Iraq, US military officers praised the Glock. “My personal opinion is that the Iraqi people respect power, and power is an AK-47 or a Glock nine-millimeter gun,” Captain Kevin Hanrahan of the Eighty-ninth Military Police Brigade told the Los Angeles Times . Hanrahan oversaw Baghdad police stations west of the Tigris River. Some Iraqi officers had abandoned their posts, he added, because they “were outgunned and outmanned” by insurgents. He sounded like an American police chief in the late 1980s.
Whether or not they instilled confidence in the Iraqi authorities, US-supplied Glocks definitely became hot items on the Baghdad black market. “The Americans gave us Glocks without registering the serial numbers and without receipts,” a former policeman named Yasser told Agence France-Presse. When Yasser quit his unit, he sold the Glock he had been given to “a friend” for $800. The American military eventually lost track of some 190,000 small arms in Iraq, including 80,000 pistols—mostly Glocks, according to US congressional investigators. Insurgents appreciated a reliable weapon as much as anyone else, and the Glock became standard among Sunni militants who attacked Americans.
The story was much the same in Afghanistan. Large numbers of Glocks furnished to local army units simply vanished. Whoever ended up with its pistols, Glock prospered from the Bush administration’s global war on terror, just as it had from the earlier domestic war on drugs.
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But Glock’s impressive sales figures were accompanied by intensifying disarray within its corporate ranks. It was almost as if selling pistols no longer required the close attention of the company’s top executives. The Glock sold itself.
In February 2003, Paul Jannuzzo once again collided with the NRA, this time as a result of an appearance on 60 Minutes . The CBS newsmagazine broadcast a segment on “ballistic fingerprinting,” a digital technology that allows investigators to link bullet casings from shootings to suspected crime guns. NRA leader Wayne LaPierre told 60 Minutes that the method, which matches the unique marks guns make on spent casings, was unreliable and would facilitate confiscation of weapons from law-abiding owners.
Less hasty to dismiss ballistic fingerprinting, Jannuzzo said in a separate interview that Glock had a pilot program under way with the government. “It has been expensive,” he said. “It slows production. To make certain that we’re getting the right cases to the right serial number, at this point, we now go through test-firing the guns twice.” Still, Glock would consider contributing information to a national database to aid police, if one were put together. “The people who right now are saying there is no use for it,” Jannuzzo said, “that it’s an intrusion upon our freedom, have arbitrarily drawn a line too soon.”
Characteristically, Jannuzzo positioned Glock as an independent-minded friend of law enforcement—but without making any concrete concessions to new regulation. His ambiguity did not mollify activist gun owners. Glock was inundated with demands for Jannuzzo’s head. Perceived apostasy against NRA gospel required excommunication. And sure enough, within the space of a few weeks, Jannuzzo announced that, after twelve years at Glock, Inc., he would step down as chief operating officer, general counsel, and, for all practical purposes, the US gun industry’s best-known executive.
Second Amendment websites lit up in celebration. “Glock Exec Resigns Because of Us!!!” proclaimed one contributor to a gun discussion group on TheHighRoad.org. “We got pissed, we made calls and wrote letters, the guy resigned,” agreed a colleague. “A message was sent here. And someone heard it loud and clear. Sell us out, and sell your last handgun.”
In fact,
Jannuzzo’s departure involved even more drama than the online rabble-rousers assumed. Since the July 1999 attack on Gaston Glock, executives throughout the company had been looking over their shoulder—and with good reason. Private eyes hired by Glock combed company documents, scanned e-mail, and even conducted physical surveillance, ferreting out evidence of financial misbehavior.
As if this did not create sufficient tension, romantic jealousy heightened apprehension in the American subsidiary. Jannuzzo had split with his second wife and become involved with Monika Bereczky, Glock’s human resources manager. Bereczky, the former hotel concierge, had remained an object of the owner’s affection. Unaware of Jannuzzo’s relationship with her, or, more likely, indifferent to it, Glock continued to flirt with the much younger Bereczky. He routinely put his arm around her waist in public, she said, or suggestively grabbed her thigh while she was chauffeuring him to appointments. Jannuzzo, who had a temper to start with, took offense when his employer treated Bereczky as a plaything and, in Jannuzzo’s view, implicitly encouraged others to gossip about her sex life. On one occasion, when an Austrian-based Glock executive referred to Bereczky as a loose woman in Jannuzzo’s presence, the combustible American jammed a lit cigar into the visitor’s forehead. A bigger blowup seemed inevitable.
In the wake of the 60 Minutes episode, and with personal antagonism mounting, the explosion finally came. One morning, Jannuzzo drove to Gaston Glock’s residence in Atlanta. He had decided to get out. With no preliminaries, Jannuzzo announced to his employer that he was quitting. Bereczky was leaving with him, Jannuzzo added. At that moment, she was cleaning out her office in Smyrna.
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