CEO of N.H. Gun Maker Facing Five Years in German Prison for Alleged Arms Deal

Jan 10, 2019
Originally published on January 10, 2019 5:50 pm

High ranking members of the Colombian National Police found themselves in Exeter, N.H., in the spring of 2009. They were there to visit arms maker Sig Sauer, which had just secured a contract worth up to $306 million to provide Colombian law enforcement with nearly 100,000 pistols. 

After a tour, the delegation posed for photographs, holding up an SP2022 nine-millimeter pistol for the camera.

A decade later, that arms deal is at the center of a court case in Germany, where Sig Sauer’s New Hampshire-based CEO faces charges that he conspired to mislead German officials about the nature of the sale.

Ron Cohen, Sig Sauer’s chief executive, is accused by German prosecutors of colluding with Sig Sauer’s sister-company in Germany to violate that country's export rules. Under German law, companies are prohibited from exporting firearms or other weapons to countries in conflict. That includes Colombia, which is slowly emerging from a half-century of armed conflict.

German officials allege Sig Sauer manufactured at least 38,000 pistols in the company’s facility in the town of Eckernförde, before shipping the weapons to the New Hampshire plant, which then completed the transaction with Colombia. Sig Sauer is alleged to have covered up the shipment’s final destination by submitting false paperwork--so-called end-use certificates--to German export officials, stating that the weapons were bound solely for the United States.

The stakes for Cohen are serious: if convicted, he faces up to five years in prison and millions of dollars in fines.

Many details of the case are murky, in part because German prosecutors have kept documents related to the charges against Cohen under seal.  

The corporate relationship between the German and U.S.-based Sig Sauer companies is also not completely clear. L&O Holding, a conglomerate based in Germany, owns both the German and U.S.-based Sig Sauer companies, as well as a third firm, Swiss Arms. The companies appear to operate as independent entities, though it isn’t clear how closely they may collaborate.

But prosecutors allege that officials at the two companies worked closely to hide the nature of the Colombia arms sale. Emails leaked to the German media show employees at the German and New Hampshire entities discussing the “USA/Kolumbien” transaction, and images of Sig Sauer weapons bearing a “Made in Germany” imprint have surfaced in Colombia.

In addition to Cohen, two German executives have also been charged in the alleged plot: Michael Luke, who co-owns L&O Holding, and a man identified by the courts as “Robert L.” The company, separately, is also facing substantial fines. A trial is scheduled to begin in Kiel, Germany, in late February.

Sig Sauer’s New Hampshire operations didn’t respond to multiple requests for comment, but the company did release a statement to a firearms blog in October saying that its actions were in “compliance with U.S. law.” The company doesn’t deny that it may have violated German law, however.

The Sig Sauer transaction involving Colombia first made headlines in Germany in 2014, in part because of information released by multiple whistleblowers, including an employee based in New Hampshire. That person, who hasn’t been publicly named but is expected to testify in the German trial, contacted an anti-weapons group named Action Outcry--Stop Arms Trade, providing it with documents and emails showing that the final destination of the pistols was not the United States, as stated in the export documents, but Colombia, according to Action Outcry’s attorney Holger Rothbauer.

“Sig Sauer just retagged the big boxes and without opening them just delivered them to Colombia,” Rothbauer said. “I would call them dirty deals.”

Rothbauer says the U.S.-based company lacked production capacity in New Hampshire to complete the contract for Colombia, and turned to its sister company for help.

After receiving documents referencing the Colombia-bound weapons from inside Sig Sauer, Rothbauer says he contacted prosecutors in the northern city of Kiel. That, in part, prompted a four-year investigation into the arms deal and whether the companies illegally transferred German-made weapons without permission from export officials.

The scandal involving one of the country’s oldest and most storied weapons-makers generated headlines throughout the German newsmedia. The press reported on raids of Sig Sauer’s offices, and the theft of a laptop from a German prosecutor’s office that was never recovered.

In April, 2018, the prosecutor’s office in Kiel brought charges against a number of Sig Sauer executives, including Cohen, for violating the “Außenwirtschaftsverordnung”, or Foreign Trade Act.

Under German law, the indictments won’t be released until the opening day of the trial.

Gerald Goeke, Sig Sauer’s attorney in Germany, released a statement at the time describing the transaction as approved by the Obama Administration and that “there remains the strong conviction” that the sale was done in accordance with the law.

In October, 2018, Cohen was arrested on a warrant upon arriving at the Frankfurt Airport. According to Kiel authorities, he was detained and questioned for approximately 10 days before being released on bail. German media put the bail amount at $5.7 million, but the court wouldn’t confirm that figure. Officials did say Cohen would forfeit his bail if he fails to appear at trial.

This isn’t the first time Sig Sauer’s exports -- and whether the company attempts to conceal its true end-purchasers -- have come under scrutiny. In 2017, a former employee filed a wrongful termination case in federal court in New Hampshire, claiming she was retaliated against for questioning missing paperwork for an arms deal involving Indonesia.

Patricia Hall-Cloutier of Dover was hired by Sig Sauer in 2015 as Director of Import/Export Compliance. According to court paperwork, in 2017, she discovered that an employee removed an automatically generated invoice and substituted a manually created one with a different recipient of a firearms shipment. Hall-Cloutier approached management with her concerns that the actions violated ATF and State Department regulations.

Hall-Cloutier was subsequently terminated by Sig Sauer and told that the dismissal was the result of a company reorganization. She’s seeking damages under the state’s Whistleblowers’ Protection Act. The case has been sent to arbitration, but no decision has been issued.

Ron Cohen, who served in the Israeli military and took over as Sig Sauer CEO in 2005, is credited with saving the gun maker's American division from financial ruin.

“We were down to about 75 employees, and it was on shaky ground,” said Bud Fini, executive vice president of Sig Sauer, in a promotional video honoring Cohen’s induction into the NRA’s Ring of Freedom. “Ron had a vision.”

That vision has helped grow Sig Sauer into one of the nation’s leading firearms manufacturers, with its weapons generating fierce loyalty among enthusiasts. The company, which moved its headquarters from Exeter to Newington, N.H., in 2014, now employs approximately 1,600 workers.

Perhaps its most significant achievement to date was winning a $580 million contract to provide the new standard issue sidearm for all U.S. Army soldiers, the first such change since 1985.  

The slogan “Born in Europe, Perfected in America” is prominent on the company’s website.

But as Sig Sauer continues its rise in New Hampshire, the German sister-entity faces challenges. After the investigation into its role in the Colombia deal made news, all Sig Sauer exports from Germany were temporarily halted. In 2015, the company laid off 73 employees, according to media reports, leaving fewer than 100 employees left in Eckernforde. At its peak, the company reportedly employed more than 500 people.

“At the same time they are stopping it [in Germany], they are increasing it vastly in New Hampshire,” says Rothbauer, the anti-arms activist.

Sig Sauer isn’t the only gun maker facing scrutiny under Germany’s weapons export rules. Heckler & Koch, based in Oberndorf, Germany, is facing similar charges over an arms deal to Mexico that is alleged to have violated German export law. Executives from Heckler & Koch are currently on trial in Stuttgart.

Heckler & Koch operated a manufacturing facility just down the road from Sig Sauer’s plant in New Hampshire until recently. The company now bases its U.S. operations in Virginia, something Rothbauer says is in response to Germany’s increasingly strict approach to foreign arms sales.

“They are all trying to push up their entities in the U.S., especially along the east coast,” he says, “and do the export business from there.”

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