He admitted that he and Manown had routed corporate funds to themselves. Some of that money flowed with Glock’s approval into the shadow political contributions, Jannuzzo said. He blamed Manown for devising other stratagems, such as the payments to the fake liability insurance company in the Caymans. Jannuzzo insisted that if it appeared that he, too, had embezzled, that was only because he had followed Manown’s lead. “Take care of this for me,” he quoted Manown as telling him, implying that he had been more of a passive player.
Jannuzzo offered a plausible description of how Gaston Glock, with Charles Ewert’s assistance, had set up the system of shell companies to shelter Glock, Inc., profits from taxation in the United States. He handed us a copy of a whistle-blower filing he had submitted to the Internal Revenue Service. “Gaston Glock owns 100% of Glock Inc., a firearms manufacturer in Smyrna, Georgia, through various subsidiaries,” the filing began. “He has organized an elaborate scheme to both skim money from gross sales and to launder those funds through various foreign entities. The skim is approximately $20.00 per firearm sold.” Multiplied by hundreds of thousands of guns a year, according to Jannuzzo, the amount insulated from US taxes came to $9 million or $10 million annually.
As far as Jannuzzo was concerned, he was being persecuted by his former employer. If Glock wanted to play rough, Jannuzzo planned to fight back. Exposing Glock’s practices in Business Week was part of the fight.
It was a compelling story: the murder attempt in Luxembourg, the shell companies, the salvos of fraud allegations, and, all the while, Glock’s overwhelming commercial success. In September 2009, my editors at the magazine put the feature on Glock on the cover with the headline GLOCK’S SECRET PATH TO PROFITS . A sub-headline elaborated, “It’s the largest supplier of handguns to law enforcement in the US. But behind its success lies a troubling tale of business intrigue.” The IRS was investigating Jannuzzo’s allegations, the article reported, and had interviewed the wayward lawyer.
Glock, Inc., responded with indignation to Jannuzzo’s accusations. Company executives refused to sit for interviews and said that Gaston Glock would not talk. But in response to written questions, Carlos Guevara, Jannuzzo’s successor as in-house counsel, stated the company’s position in a letter. “GLOCK has acted lawfully and properly throughout its history,” Guevara said, noting that he had been authorized to speak on behalf of Glock, Inc., and Gaston Glock personally. On the one hand, Guevara argued, “the GLOCK companies are exceptionally well-run and managed.” On the other hand, he added, Ewert, Jannuzzo, and Manown, three of Gaston Glock’s top lieutenants, were enmeshed in civil and criminal proceedings accusing them of major fraud, deception, and, in Ewert’s case, murderous violence.
If that is “exceptional management,” one shudders to imagine what shoddy management looks like. Guevara did not acknowledge any inconsistency. “GLOCK,” he wrote, using the all-capital-letter style the company favors, “was able to withstand the damage inflicted by a few bad apples years ago.
“GLOCK’s tax filings and reporting are accurate,” he continued. “GLOCK underwent a series of comprehensive governmental audits going back to 1988, the last being in 2005 in Austria and 2006 in the United States.… No audit has ever resulted in findings of tax fraud in any jurisdiction.” I asked about the concerns raised by the company’s own internal investigation about the connection between Reofin International, the Panamanian Glock affiliate, and the Turkish financier Namli. “To the extent your questions imply that GLOCK has, or is, involved with a banking institution in Turkey or Turkish Republic of Northern Cyprus, GLOCK has never had such a relationship.” The question, of course, had been whether Reofin, which was owned by Gaston Glock, had ever had such a relationship.
On the topic of political contributions, Guevara asserted: “GLOCK has never authorized (and would never authorize) any act that would violate United States campaign finance laws. Manown and Jannuzzo stole over $500,000 of GLOCK money for themselves and then labeled it as political contributions to hide their crimes. In any event, we conducted our own due diligence, which revealed that Manown’s … statement that GLOCK money was spread to employees to make political contributions is entirely false (except as to Manown and Jannuzzo).… With respect to the allegation that GLOCK contributed $60,000 to the 2000 presidential political campaign, the evidence shows that Manown stole this money from GLOCK and transferred it to Cayman Island accounts controlled by Manown and Jannuzzo.”
Guevara concluded by questioning the origins and trustworthiness of the facts in my article. “GLOCK believes that you have been provided false information by some unreliable sources, including convicted felons,” he wrote.
Putting it charitably, the company and its counsel appeared to miss the point. On the central events that made life within Glock so colorful, there was little dispute: Someone tried to kill Gaston Glock. His top financial lieutenant, Ewert, was convicted of having hired the hit man. Glock endorsed this theory of the crime, and it was Glock who accused Ewert of trying to take control of his company. In the United States, Glock’s senior executive, Jannuzzo, and a longtime lawyer, Manown, were implicated in stealing from the company—again, with much of the evidence coming from Glock itself. Other evidence came from Manown, who provided prosecutors with a detailed confession.
The important thing is not precisely how much money Jannuzzo and Manown devoted to illegal political donations versus how much they allegedly hid in the Cayman Islands or simply stuffed into their wallets. What is remarkable is that the company operated at all amid such bedlam and that its vital American subsidiary continued to produce healthy profits under such dubious stewardship. That the polymer pistols still managed to flow from the factory and sell throughout the United States and the world—despite the executive chaos—was one of the greatest tributes to the intrinsic quality of Gaston Glock’s creation.
CHAPTER 19
The Impact of the Austrian Pistoclass="underline" Good for America?
The city of Charlotte, North Carolina, is friendly territory for gun owners. When the NRA comes to town, a Second Amendment celebration breaks out. Add Sarah Palin to the mix, and you get a glimpse of Tea Party heaven. “The most famous moose-hunting mom in America,” the master of ceremonies called Palin at the May 2010 annual meeting of the NRA in Charlotte. The keynote speaker, surrounded by enormous video images of her gleaming smile and chestnut hair, brought an audience of ten thousand at the Time Warner Cable Arena to its feet. “It is so great to be here with you bitter clingers ,” Palin declared, making a sly dig at President Obama. During a 2008 campaign fund-raising event, he had foolishly disparaged “bitter” conservatives who “cling” to guns and religion. The NRA would never let him forget it.
Wearing a flattering black dress and a large jade crucifix, Palin reminded even dispassionate listeners how effectively she can deliver a prepared speech. “No need to load up the teleprompter,” she said, reading from a teleprompter. “I’ve got everything I need written on the palm of my hand.” The “lame-stream media,” she continued, “are trying to portray us Tea Party Americans as being violent or racist or rednecks.” She waited a beat before adding: “Well, I don’t really have a problem with the redneck part of it!”