VZCZCXYZ0001
RR RUEHWEB

DE RUEHVI #1372/01 2941407
ZNR UUUUU ZZH
R 211407Z OCT 09
FM AMEMBASSY VIENNA
TO SECSTATE WASHDC 3466

UNCLAS VIENNA 001372 
 
SIPDIS, SENSITIVE 
 
STATE FOR PM/DTCC (Ballard, Peartree) and EUR/CE 
 
E.O. 12958: N/A 
TAGS: ETTC AU
SUBJECT: (SBU) GoA Alleges Diversion of Glock Pistols to Philippines 
and Inappropriate Re-Exports from US Market 
 
REF:  Embassy-DTCC emails 
 
Sensitive But Unclassified / Law Enforcement Sensitive 
 
¶1. (SBU) SUMMARY: Austria's Economic Ministry has contacted Post and 
the Department's Officeof Defense Trade Controls Compliance (DTCC) 
withinformation on possible mis-direction of Glock hanguns 
(produced in Austria and assembled in a U.S facility), including 
-- large-scale diversion of pistols nominally intended for the 
police marketin the Philippines, and 
-- inappropriate re-expot of pistols assembled in the United States 
withut prior approval of Austrian authorities (the GoAsays it 
authorized assembly of Glock firearms in he U.S. on the condition 
that they would be for omestic sale and not re-export to third 
countrie). 
Post understands that DHS/IE is actively pursuing the case through 
law enforcement channels.  END SUMMARY. 
 
BACKGROUND 
- - - - - - 
 
¶2. (U) Glock GmbH is an Austria-based firearms manufacturer with an 
assembly plant in Smyrna, Georgia which sells to U.S. law 
enforcement and domestic retail customers (the company is reputed to 
have a two-thirds share of the U.S. police market).  The Austrian 
government considers that Glock pistols assembled in Georgia remain 
"Austrian" products, and re-export from the U.S. is not authorized. 
 
 
GoA Raises Issues with Glock Re-Exports from U.S. 
- - - - - - - - - - - - - - - - - - - - - - - - - 
 
¶3. (SBU) On September 15, Austrian Ministry of Economic Affairs 
Director of Export Control Dr. Helmut Krehlik contacted Post 
regarding exports of Glock pistols from the U.S.  GoA representative 
raised two serious issues: 
 
--  According to GoA information from a reliable insider, Glock's 
longtime distributor in the Philippines ("Trust Trade") has 
routinely falsified police certificates as the basis for importing 
large numbers of Glock handguns -- which it then diverts to the 
private market.  The certificates appear authentic (i.e. they are 
obtained via collusion from police officials), but the stated 
end-users - Philippine police officers -- are not the real end 
market for the guns.  The GoA now considers all export transactions 
to Trust Trade to be bogus. 
 
--  The GoA objects to any re-export of pistols assembled in the 
U.S. without prior approval of Austrian authorities.  Based on a 
review of the Department's export licenses, in at least several 
recent cases, re-exports to the Philippines and other destinations 
have occurred.  Though assembled in the U.S., Austria views these 
pistols as Austrian products; the GoA says it authorized U.S. 
assembly of Glock firearms on the condition that the company make 
its distributors agree to keep these products within the United 
States. 
 
¶4. (SBU) GoA summarized this information in a September 15 letter 
(passed to DTCC; reproduced below in para 15).  Krehlik proposed a 
bilateral meeting on the margins of the October 14-15 Wassenaar 
General Working Group in Vienna; after consulting with DTCC, Post 
and GoA agreed on a videoconference October 9. 
 
Readout of Oct. 9 Videoconference on Glock Issues 
- - - - - - - - - - - - - - - - - - - - - - - - - 
 
¶5. (SBU) At an Oct. 9 Vienna-Washington videoconference with DTCC 
and DHS/ICE representatives, Krehlik reviewed the Glock case and 
statistics on Glock exports to the US, asserting that Glock appears 
to have intentionally circumvented GoA export controls.  Krehlik 
recognized that small numbers of pistols would be resold on the 
private market without proper licensing;  these were not his 
concern. 
 
¶6. (SBU) In order to prevent systematic diversion of U.S.-assembled 
pistols, GoA export licenses for pistol components shipped to the 
U.S. impose two conditions: 
a)  the GoA license specifies that exports are for use in the U.S. 
only. 
b)  Glock U.S. sales contracts must include a provision requiring 
GoA authorization for any further distribution or re-export of the 
pistols. 
 
Wholesale Diversion from Philippines Police Market? 
- - - - - - - - - - - - - - - - - - - - - - - - - - 
 
¶7. (SBU) The GoA suspended weapons exports from Austria to private 
persons in the Philippines years ago, but continued to approve 
exports for police/public security forces.  Glock sought and 
received permission to export pistols to individual members of 
Philippine police forces (against copies of police IDs), and under 
 
that program has shipped thousands of pistols to "police" users in 
the Philippines. 
 
¶8. (SBU) The Austrian government has the cooperation of at least one 
former Glock employee and a former representative of Trust Trade 
(Glock's principal distributor for the Philippines) who assert that 
Trust Trade routinely supplied faked police credentials  while 
diverting the weapons into the private retail market.  The GoA's 
principal source reported that a 2008 license for 1700 pistols 
designated for the Philippine National Police (via Trust Trade) was 
immediately re-routed into the retail market when, on arrival, the 
National Police advised Trust Trade that it could no longer pay for 
the pistols; the pistols also had their police marking removed.  The 
source also told the GoA that Glock had obtained licenses for the 
export from the U.S. of about 2000 pistols to the Philippines, in 
violation of the GoA's no-reexport stipulation for U.S.-assembled 
Glock firearms.  The sources say that other Philippine firearms 
importers (Urban and Twin Pines) are also diverting handguns to the 
retail markets (NOTE: it was unclear whether Urban and Twin Pines 
are distributors for Glock or other U.S./European gunmakers -END 
NOTE).  Based on this information and a derogatory report from the 
Austrian Embassy in Manila on corruption in the Philippine 
government and police force, the GoA has stopped issuing any 
licenses for firearms exports to the Philippines. 
 
¶9. (SBU) The Department's Office of Defense Trade Controls 
Compliance (DTCC) confirmed that Glock USA applied for and was 
granted several licenses to ship pistols to the Philippines.  DTCC 
has since suspended all pending Trust Trade licenses pending the 
outcome of various investigations.  DTCC also has ordered a series 
of "Blue Lantern" checks to ascertain the end-use of firearms 
exported by Glock USA to Trust Trade and several other recipients in 
the Philippines. 
 
Broader Implications 
- - - - - - - - - - - 
 
¶10. (SBU) In approving  prior Glock export licenses, DTCC said it 
was unaware of GOA conditions on re-export of U.S.- assembled Glock 
firearms.  It considers the re-export of Glock USA firearms in 
violation of Austrian law a serious issue.  Krehlik suggested that 
Glock knows some U.S. distributors sell overseas and uses them to 
plausibly deny knowledge that distributors are violating GoA 
restrictions on re-export. 
 
¶11. (SBU) Krehlik opined that systematic diversion of Glock pistols 
may not be limited to the Philippines, citing the diversion of Glock 
pistols sold in the Middle East during the past several years.  The 
GoA has heard that Glock is considering establishing full production 
facilities in the U.S. and/or Canada; the GoA does not object to 
Glock shifting its production, but would like to reestablish 
confidence that current production is not being diverted. 
 
¶12. (SBU) Krehlik said the GoA had refused to issue licenses for 
Glock exports to Israel or Venezuela (the latter is a market where 
Glock appears very eager to sell, he said), and was restrictive 
about exports to Central America.  Asked by DTCC's  DHS/ ICE liaison 
officer, Krehlik provided information on Glocks exported from 
Austria to Mexico (45,000 pistols from 2004-09). 
 
Investigation and Possible Prosecution 
- - - - - - - - - - - - - - - - - - - - 
 
¶13. (SBU) DTCC affirmed that it takes seriously allegations against 
Glock USA and would make the above referenced end-use checks on the 
pistols.  DHS/ICE officer indicated that U.S. authorities are 
actively investigating possible criminal conduct by Glock 
distributors and Glock USA (but with no findings so far).  U.S. 
investigators would be interested if the GoA has relevant 
correspondence in the case indicating intention to circumvent 
controls.  DHS/ICE can check whether efforts to circumvent Austrian 
laws are prosecutable in the United States. 
 
¶14. (SBU) Krehlik reported that the GOA's tools to prosecute the 
case are more limited: 
-- Austria's criminal code does not provide for action against 
companies(only against persons); 
-- the GoA cannot prosecute Glock Austria for actions by Glock USA 
(unless there is a clear evidentiary chain connecting the two 
organizations); 
-- punishment for export control violations is weak in Austria.  For 
example, a dealer convicted of illegally exporting 1300 pistols was 
fined EUR960 and given 3 months probation. 
The GoA will hold off prosecuting the case, to allow U.S. 
authorities time to pursue it, and will continue to provide the USG 
any available information to help U.S. investigations.  The GoA 
would prefer to keep the case low-key to avoid tipping off any 
lawbreakers; Krehlik asked that U.S. investigators keep the GoA 
apprised, and GoA authorities may ask for U.S. assistance in a 
future Austrian prosecution of the case. 
 
WRITTEN SUBMISSION BY AUSTRIAN GOVERNMENT 
- - - - - - - - - - - - - - - - - - - - - 
 
¶15. (SBU) On September 15 (prior to the videoconference), Post 
received the following letter from the GoA (NOTE: provided 
electronically to DTCC): 
 
BEGIN TEXT OF LETTER FROM GoA EXPORT CONTROL HEAD: 
 
 TO: Daniel Froats, Economic Unit Chief, 
 U.S. Embassy Vienna, Boltzmanngasse 16, 1090 Wien 
 
 FROM: Helmut Krehlik / tel 71100-8345 
 Business Number:  BMWFJ-23.530/0138-C2/2/2009 
 
 TOPIC:  Export Control; Weapon re-exports to the  Philippines 
 
Dear Mr. Froats, 
 
Glock Austria is, as you may know, one of the largest producers of 
pistols in the world. The US market is by far the biggest export 
market for this company.  There are two production facilities in 
Austria and an assembly (plant) in Smyrna, GA, USA. 
 
For the purpose of assembling pistols in the USA large amounts of 
pistol parts are being exported.  Since the assembling does not 
change the origin of the pistols all pistols distributed in the US 
are "made in Austria". 
 
Let me now turn to a specific issue with regards to our export 
control on pistols to the Philippines: 
 
In the past years Austria granted export licenses to the Philippine 
Government and policemen only.  No licenses where granted for the 
civil market due to the critical situation in the Philippines.  For 
this purpose we asked for copies of the ID books of the policemen to 
which the pistols were sold. 
 
About a year ago we noted, however, that the general representative 
of Glock in the Philippines, the company TRUST TRADE, Manila, faked 
thousands of police IDs and sold the pistols on the private market. 
Due to this fact, and an extremely negative report of the Austrian 
Embassy, Manila on the corruption situation in the Philippines 
Austria completely stopped weapon shipments to the country and in 
particular to TRUST TRADE. 
 
In the recent past however, we got evidence of Glock-pistol export 
from the US to the Philippines.  The exports were not performed by 
Glock Inc; Smyrna, US and were not shipped to Trust Trade.  We know 
however, that the US Company, GT Trading, Half Moon Bay, CA and the 
Philippine company Caliber Trading, Manila have close contacts to 
both. 
 
These re-exports are currently subject to an investigation by the 
public prosecutor.  In this respect I enclose the shipping documents 
as well as our Statement of Facts to the public prosecutor. 
 
Recently we got reliable information by a former employee of Glock 
that another 2000 pistols are on the way from the US to the 
Philippines.  Allegedly an export application has been place in the 
State Department.  We have no evidence on these allegations nor do 
we know who the US exporter is. 
 
Dear Mr. Froats, we want to inform you that all exports of pistol 
parts to the US are covered by an end use statement issued by Glock 
Inc. Smyrna, stating that the assembled pistols are for the US 
market only and that a re-export is definitely excluded. 
 
In addition, all export licenses of pistol parts to the US have been 
granted under the condition that Glock Inc. Smyrna incorporates a 
clause in its contracts with the US wholesalers that they do not 
re-export the pistols outside the US. 
 
Any direct or indirect involvement of Glock in the circumvention of 
our export control legislation would be a criminal offence and could 
be charged by up to 2 years imprisonment. 
 
Finally we want to inform you that Glock seems to intend to open a 
full scale production line in the US, since we recently received an 
application for the export or machines and tools to manufacture 
pistols as well as a technology transfer and technical assistance. 
 
We appreciate the good cooperation with your authorities and would 
be willing to share more information if desired.   Such an I 
information exchange could take place in the margin of the Wassenaar 
General Working Group taking place 14 and 15 October 2009 in 
Vienna. 
 
 Best regards, 
 
 Vienna, 15.09.2009 
 
 For the Federal Minister: 
 Ing.Mag.Dr.rer.soc.oec.  Helmut Krehlik 
 
END TEXT OF LETTER FROM GoA EXPORT CONTROL HEAD. 
 
¶16. (U) This cable was coordinated with PM/DTCC. 
 
HOH