Say what you will about the man or the pistol. But you can't deny just how though Gastone Glock is and his survival mindset.
Article - page 1
Article - page 2
Article - page 3
Companies & Strategies
Dyan Machan, 03.31.03
Inside the secret and violent world of Gaston Glock, maker of the most popular firearm in U.S. law enforcement.
He is the man behind the gun. You don't mess with Gaston Glock. His most trusted associate tried. Lured into a dimly lit garage in Luxembourg by his colleague Charles Ewert, the Austrian Glock stopped to look at a sports car at Ewert's suggestion. Suddenly, a massive masked man leaped from behind and smashed a rubber mallet into Glock's skull. Ewert fled to the stairwell. "I am a coward," he later told . With Glock off balance, the attacker landed another crushing blow. "I was fighting for my life," recalls Glock, 73, during a rare interview with the press.
Springing up on legs toned by miles of daily swimming, Glock thrust his enormous fist into his assailant's eye socket. As the would-be assassin staggered, Glock pounded again, knocking out a few of the man's teeth. The bloodied attacker staggered, then collapsed on top of Glock "with his arms outstretched like Jesus," according to John Paul Frising, Luxembourg's deputy attorney general, who brought attempted murder charges against the attacker, the French-born Jacques (Spartacus) PÍcheur, 67. This was how the police found the two men at 9:30 a.m. on July 27, 1999.
Glock says he lost a liter of blood from cuts and abrasions and that he suffered seven head wounds. Yet as soon as he reached the hospital he summoned his personal bankers at UBS and Banque Ferrier Lullin. The banks held $70 million in cash, and Ewert had access to it all. By 12:30 p.m. Glock managed to move $40 million to a Swiss account. But by then Ewert had blocked the other $30 million with a court order. As he nursed his injuries, Glock wondered how he could have trusted the wrong man.
On Mar. 12 Ewert and PÍcheur were both found guilty of attempted murder following a three-week, nonjury trial in Luxembourg. Ewert received 20 years--the maximum punishment currently available. PÍcheur received 17 years for his role as the would-be assassin. The normally gregarious Ewert barely reacted at all, sitting motionless when the verdict was read. PÍcheur sighed and lowered his head. "It is a good day," said a pleased Glock who himself is constitutionally disinclined toward emotional displays. Yet Glock added ominously, "It is one step in a war," referring to future charges that may be brought against his former colleague and friend. Both PÍcheur and Ewert plan to appeal.
To appreciate the magnitude of this betrayal, consider that the relationship between the two men had been close and was a factor in the success of Glock GmbH. Ewert, a business consultant who once worked for the Luxembourg stock exchange, worked with Glock for 15 years as Glock's little-known gun became the sidearm of choice for U.S. law enforcement.
The U.S. police business was once dominated by Smith & Wesson and Beretta. Then in 1985 along came Glock with a gun made from a nylon resin that was tough enough to be made into most parts of a pistol (except the carbon steel barrel). The Glock was also revolutionary for its simple design--34 parts, compared with 60 or so for the Smith & Wesson .45 caliber semiautomatic--and its 24-ounce weight, to 25.4 ounces for the Smith & Wesson. A Glock shooter experiences a softer recoil because the gun's polymer frame flexes slightly when it's fired. Glock fans include the New York City police, U.S. Special Forces, the FBI and many international antiterrorist units.
These days Glock GmbH has an estimated $100 million in sales, two-thirds of it from the trigger-happy United States. A gun that retails for $500 can be manufactured for $75, and the company has a pretax margin nearing 60%, estimates John Farnam of Defense Training International, a LaPorte, Colorado, small arms instructor.
Success hasn't made Glock, a highly secretive man, any more trusting of the people around him. He has a few high-profile friends. Among them: Pope John Paul II and JŲrg Haider, former leader of Austria's ultraright Freedom Party and a Hitler admirer. At his lakefront mansion in Velden, Austria, Glock's favorite room is in the basement, where he can control his home's inner workings, including the temperature of the tiles in his upstairs bathroom. He flies his own Cessna Citation jet wherever he travels. "There are fewer crazy people in the air," he says.
From his headquarters in Deutsch-Wagram, near Vienna, Glock has run through seven U.S. sales managers in 11 years. Last month his top lieutenant in the U.S., Paul Jannuzzo, a tightly wound former New Jersey prosecutor and 12-year veteran of the company, resigned as general counsel and chief operating officer. "Jannuzzo went crazy," says Glock, without further explanation. (A source close to the company says Jannuzzo was frustrated and had tried to quit before.) Jannuzzo, 46, and Glock clashed and agreed to part ways after the annual Shot Show gun convention in Orlando, Florida, last month. Glock had hoped to retain Jannuzzo as his general counsel while assigning the operational duties to another employee. Jannuzzo will remain Glock's outside counsel and declines to comment on the situation, though he earlier told FORBES GLOBAL, "Mr. Glock does not shy away from a fight."
He should know. Jannuzzo spearheaded Glock's efforts to kill the Clinton Administration's voluntary gun-control effort in 2000--it was that or face a multitude of tobacco-like government-sponsored lawsuits. "Extortionist," is how Glock refers to the measures that would have introduced an oversight committee, as well as restrict how guns are sold. (The company's obstinacy resulted in 28 liability suits filed by municipalities claiming that Glock is responsible for murders committed with its weapons; 11 suits remain.) Jannuzzo also led a successful patent infringement suit against Smith & Wesson, which created a gun that looked a lot like a Glock--"I felt like my wallet was stolen," Glock hisses--and resulted in an undisclosed multimillion-dollar settlement. And Jannuzzo acted as pit bull in notifying 12 record labels that the company objects to artists using the word "Glock" in rap songs such as Dr. Dre's "Bitches Ain't Shit," mainly out of fear that Glock's name will become a generic term for handgun.
Glock is now more than ever a one-man show. His two sons, Robert and Gaston Jr., and his daughter, Brigitte, have company jobs but limited authority. When asked what her role is, Brigitte cracks in German, "Being my father's personal slave." Who has input into product development? Showing rare humor, Glock smiles: "You might call it Ďa very small committee.'"
And so it has been since the beginning. Back in 1981 Glock was producing plastic grenade shells for the Austrian army, in addition to plastic curtain-rod rings. One day he overheard two colonels complain that no gun existed that could meet their specifications. When Glock offered to make one, they laughed at him.
"You do not laugh at Mr. Glock," says Christopher Edwards, the burly former deputy sheriff of Jefferson County, Kentucky, who now runs Glock's training program in Smyrna, Georgia. "He takes that personally."
Glock never doubted he could make a superior gun. "That I knew nothing was my advantage," he says. He worked on his weapon nightly in his basement. He test-fired it with his left hand so if it blew up, he could still draw a blueprint with his right. "I learned to stay out of his way," smiles his wife, Helga. The firearm surpassed all competition, and he received the army's order for 25,000 guns in 1983.
But Glock was eager to grow. Two years later he traveled to Luxembourg, a country where holding companies are not subject to income or capital gains taxation. During a chance encounter on a street in the city of Luxembourg, Glock asked a businessman if he knew someone who could help him expand his fledgling enterprise. "I am your man," said Charles Ewert, who claimed he had internationalconnections.
He also had a reputation that Glock had not been aware of. Ewert had a habit of forming offshore companies to hold business interests for people who requested that sort of thing, earning him the sobriquet "Panama Charly." The two agreed that Glock would employ Unipatent, a shell company Ewert owned, to hold the shares of subsidiaries Glock set up to sell his guns. Unipatent, it turns out, had a dubious history. Ewert had bought the shell, which was once owned by Hakki Yaman Namli, a Turkish financier. Namli controlled the First Merchants Bank in Cyprus, and was convicted, along with the bank, of laundering $450 million in 2000. (The conviction was overturned a year later.) During the trial Namli insisted the bank was owned by Ewert.
Whatever his connections, Ewert became a public face of Glock outside Austria. Glock himself concentrated on manufacturing. In 1985 the company opened a U.S. subsidiary in Smyrna to promote sales to policemen. Good move. With the rise of drug-related crime, cops did not want to be outgunned by criminals and were trading in their six-shot revolvers for semiautomatic pistols. The Glock 17 held 18 rounds and, because it was cheap to make, few competitors could beat it on price. Its relatively few parts also made it simple to service.
Ewert opened offices in Hong Kong, France, Switzerland and Uruguay. Glock was pleased and told his family and executives that if anything ever happened to him, they should go to Ewert. "I was considered the eldest son," says Ewert, now 49.
All that changed in the spring of 1999. Glock received a call from a Geneva employee Ewert had fired. He claimed that Ewert had siphoned off corporate funds to buy a house in Switzerland, and hinted at other misdeeds. Glock brushed off the allegations as sour grapes. But to put his mind at rest, he asked Ewert for a meeting. That's when he got the rubber hammer in the head.
After his recovery from the attack, Glock says he discovered that Ewert had created dozens of offshore companies that appeared affiliated with the gunmaker, all with slightly different names and addresses. As much as $100 million, Glock's lawyers allege, had been stolen and shifted into companies Ewert controlled. Beginning in 1989, says Deputy AG Frising, Ewert was progressively taking control of Unipatent and its chief asset, U.S.-based Glock Inc. Glock's lawyers allege that Ewert awarded himself new shares in Unipatent in return for $600,000. Ewert maintains through his attorney that he did nothing without Glock's consent.
Both Ewert and Glock claim ownership of Unipatent. Each accuses the other of owning a phony set of unregistered bearer shares. "Glock says I have less than 5% of Unipatent? Glock is a nut!" says Ewert. "Ewert was never a partner!" insists Glock attorney Johann Quendler, of BKQ, Klagenfurt, Austria.
While Ewert plans his appeal on the attempted murder charges, a police investigation continues in Luxembourg on possible charges for embezzling and fraud, according to Frising. A conviction on those charges could result in monetary compensation to Glock. It's unlikely that Ewert will be a further irritant to Glock, as Luxembourg law mandates that convicts serve at least half of their sentence before being eligible for parole. And should Ewert be free on appeal, he could face extradition to the U.S., where he was indicted on three federal counts of wire fraud in Georgia.
Glock looks forward to getting back to business--making guns and fighting what Jannuzzo calls "dumb-ass lawsuits." He's also aiming at new markets. "Saudi Arabia, Taiwan, South Africa and Hungary all have forces carrying 40-year-old guns," says Glock's marketing director, Herbert Weikinger. But before he can elaborate, Glock sends him out of the room for talking out of turn.
"The attack was the best thing that happened to me," says Glock. "Otherwise, I would have gone on trusting Ewert."