Glock: The Rise of America’s Gun (30 page)

Glock had suffered a total of seven hammer blows to the head, along with other cuts and abrasions, and he lost a liter of blood. At the hospital, though, he was strikingly composed. He posed for a police photographer with a placid expression on his face. Before doctors finished patching him up, he summoned his personal bankers from UBS and Banque Ferrier Lullin. Those two institutions held $70 million of his cash in accounts to which Ewert had access. Within three hours of the attack, Glock had moved $40 million to a secret Swiss account.

Ewert was busy too. He blocked the other $30 million from being transferred, Glock would later learn. Clearly, all was not well between the two men.

Ewert had established Glock affiliates in Switzerland, France, Hong Kong, and Uruguay, among other locations. Gaston Glock had approved of the proliferating corporate structure and told his family and Austrian executives that if anything ever happened to him, they should rely on Ewert in deciding what to do with the company. “I was considered the eldest son,” Ewert bragged.

Earlier that spring, Glock had received a telephone call from a former employee of his company’s Geneva office. The former employee said Ewert had been stealing from Glock. The Luxembourg financial adviser had siphoned funds from the company to buy a house in Switzerland, according to the informant.

Gaston Glock didn’t believe the accusation at first. He was concerned enough, though, to ask Ewert to meet in Luxembourg, leading to the fateful attack in the underground parking lot.

Police investigators found Ewert’s business card in Pecheur’s car, a strange mistake for a putative hit man to commit. The investigators discovered that the two had become acquainted at a gun range in Paris in 1998. The detectives concluded that Ewert, realizing Glock had discovered his embezzlement in Switzerland, had hired Pecheur to kill the old man. The use of the rubber hammer, as opposed to a gun or a knife, suggested that Ewert and Pecheur planned to make the killing look like an innocent accident: that Glock had fallen and hit his head.

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.

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.

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.”