It raises some questions about the business structure and profits of Glock, but I’m not sure what they are describing is illegal.
I very well may have missed something or misunderstood, but it seems to me the Business Week article is rife with allegations of not only intrigue and the usual dirty shenanigans that go on in business, but plenty of illegal activity as well.
Among the Glock-related material the IRS allegedly is examining: boxes of invoices and memos provided by the company's former senior executive in the U.S., Paul F. Jannuzzo. Once one of the most prominent gun industry executives in America, Jannuzzo said in a federal complaint he filed last year that Gaston Glock used his companies' complicated structure to conceal profits from American tax authorities. "[Glock] has organized an elaborate scheme to both skim money from gross sales and to launder those funds through various foreign entities," Jannuzzo alleged in the sealed May 12, 2008, IRS filing, which BusinessWeek has reviewed. "The skim is approximately $20.00 per firearm sold," according to the complaint. Glock's U.S. unit, which generates the bulk of the company's sales, has sold about 5 million pistols since the late 1980s, Jannuzzo estimates in an interview.
Jannuzzo is currently being prosecuted by the Cobb County District Attorney's Office for siphoning corporate money into a Cayman Islands account. Jannuzzo, who left the company in 2003, claims he's the victim of a vendetta.
In the U.S., Jannuzzo and another former Glock executive, Peter S. Manown, have claimed that for years they distributed company funds to their wives and Glock employees with the understanding that the money would be donated to congressional candidates—an apparent violation of U.S. election law.
The Glock company seems to have more than its share of intrigue and internal turmoil. Beginning in 1987, the Austrian industrialist had employed Charles Ewert to head up the sales end of the business.
Ewert, a mustachioed Luxembourg resident now in his late 50s, it turns out was a purveyor of shell companies: paper corporations that can be used to shield income from taxation—sometimes legitimately and sometimes in questionable ways. Ewert designed a network of shells to lessen the gun empire's exposure to product liability and potential taxation, according to documents filed with the Luxembourg court.
Perhaps those questionable ways were within the letter of the law, but one wonders about the integrity of Mr. Ewart when it turns out he tried to have Mr. Glock killed.
Over time, Ewert transferred ownership of some of the Glock-affiliated shells to himself, according to Luxembourg court judgments. Suspicious of Ewert, Gaston Glock sought an explanation in July 1999. On the afternoon of a meeting scheduled at Ewert's office near the tony Rue Royale in central Luxembourg, Glock was attacked in an underground garage. The hit man, a former professional wrestler and French Legionnaire named Jacques Pecheur, bashed the businessman on the head with a rubber mallet, a technique apparently aimed at making it look like the victim had fallen down and fatally injured himself. Glock, physically fit from daily swimming—often in the frigid lake abutting his home near Klagenfurt, Austria—fought back. When police arrived, they found Glock bleeding from gashes to his skull. Pecheur, 67, was unconscious.
Luxembourg investigators found Ewert's business card in Pecheur's car and determined that the two had met at a gun range in Paris in 1998. Both were convicted of participating in a conspiracy to kill Glock. Pecheur received a sentence of 17 years, Ewert 20.
My overall reaction to this story is to have admiration for Gaston Glock. His rise to prominence in the international gun manufacturing business is impressive as is his personally beating off a would-be assassin. But to say "I’m not sure what they are describing is illegal," as Sebastian did, I just don't understand.
The Business Week article is a chronicle of illegal activity, granted it's the kind that many big businesses engage in, but it's certainly illegal.
What's your opinion? Is there a problem with American law enforcement doing business with a shady company like Glock? Or is that beside the point, the point being their product is superior and that's all the clients need be interested in?
I'm sure Sebastian can explain what he meant, but why do you think he would defend the Glock company like that? Is the pro-gun position to give the benefit of the doubt to gun manufacturers even in the face of all those allegations? Do you think the dirty dealings which may go on within the manufacturer's company somehow taint the consumers of the product, the gun buying public in this case?
What's your opinion? Please leave a comment.