A spy tale from the Wall Street Journal - read the bold parts. Makes you wonder, considering the dealer paid about $63 per pistol...

Secret Police Past
Doesn't Cramp
Style of Stasi Agent
His Resort Outside Berlin
Plays Host to G8 Ministers;
The Files on Axel Hilpert
By MARCUS WALKER
May 17, 2007; Page A1

BERLIN -- Gordon Brown, the next prime minister of Britain, a deputy secretary of the U.S. Treasury and other grandees of global finance will convene here tomorrow at a lakeside luxury resort featuring American-style clapboard villas, rose-petal baths and tai chi classes.

Their unusual host: a longtime agent of the former East Germany's feared secret police, the Stasi.

Axel Hilpert, the resort's co-owner, rented it to the German government for the meeting of ministers from the Group of Eight leading industrialized economies. Long before the 59-year-old became a successful and well-connected property developer, Mr. Hilpert was an undercover agent, code name "Monika," decorated by both the German Democratic Republic and Fidel Castro's Cuba.

Germany has struggled with some success to honestly confront its dark past and publicize the crimes of the Nazi and Communist dictatorships of the past century. The movie "The Lives of Others" won an Oscar this year for its portrayal of how the Stasi blackmailed East Germans into spying on and betraying one another.
[Axel Hilpert]

But although former Stasi agents are often barred from public-service jobs, Mr. Hilpert's coup in putting up the G8 meeting at the Lake Schwielow resort shows they are increasingly accepted as normal business partners for the new Germany. Indeed, numerous former Stasi agents are thriving in business thanks to the experience and connections they acquired during the Cold War.

Among others who have adapted well to change, former Stasi recruiter Matthias Warnig went to work for Dresdner Bank, a firm he used to spy on. He now heads a Russian-German venture building a natural-gas pipeline under the Baltic Sea. Martin Schlaff, an Austrian who helped the Stasi get around trade embargoes to acquire Western computer technology is a successful private-equity financier.

Mr. Hilpert did not respond to fax and telephone requests for comment. The German finance ministry, which picked Lake Schielow for the G8 meeting, says it sees nothing wrong with hiring Mr. Hilpert's property for the occasion. "If there's no criminal case against him, I don't see that there is a concern," says a spokesman for the ministry. A spokesman for Mr. Brown, currently the United Kingdom's finance chief, declined to comment. A spokeswoman for the U.S. Treasury declined to comment.

In 2004, Mr. Hilpert teamed up with a former political adviser to German Chancellor Helmut Kohl, and won government subsidies to build the Lake Schwielow resort.

Until now, little has been publicly known about Mr. Hilpert's espionage career, other than that he was a Stasi informant for 18 years. But reporters at German public broadcaster RBB have reassembled parts of Mr. Hilpert's record by sifting though duplicate copies of documents in official Stasi archives long thought destroyed. The Wall Street Journal has seen the documents.

The paper trail shows Mr. Hilpert was no ordinary informant passing on gossip about neighbors or office colleagues.

In the 1970s and 1980s, East Germany needed hard currency to pay for imports that propped up its ailing planned economy. Regular foreign exports weren't enough, so the regime set up a secret business empire known as "KoKo," for commercial coordination, to bring in foreign money by legal or illegal means, including the international sale of arms and art.

Mr. Hilpert worked at a front company for KoKo's art and antiques unit, Stasi files show. As a regional head, he oversaw the acquisition of valuable antiques from East German citizens for sale abroad.

The firm tracked down people who collected antique furniture or art objects and paid them below-market prices in East Germany's near-worthless currency, says Ulf Bischof, author of a book on KoKo's trade in art and antiques. KoKo then sold the items in the West for hard currency and a big profit.

If owners didn't sell their antiques willingly, KoKo often enlisted the Stasi -- with which it had close connections -- and tax inspectors. They would confiscate the objets d'art as fines to cover trumped-up tax violations. "If push came to shove, they had ways to get their hands on whole collections," Mr. Bischof says.

In the 1980s, revenue from such antique dealing was declining and KoKo experimented with other ways of raising money. Mr. Hilpert traveled to Cuba, where his deals with the Castro government included arranging the delivery of U.S.-made firearms, sold to Cuba before the 1959 revolution, to Canada via East Germany.

Reports to the Stasi by a KoKo colleague in late 1987 describe the trip. The Cubans were so happy with Mr. Hilpert's help they made him an honorary colonel, and gave him a Cuban uniform with a colonel's insignia. They also paid for his return flight, first class. Back in East Germany, a Los Angeles arms dealer agreed to pay $140,000 for 2,200 Colt .45-caliber pistols -- the bulk of the Cubans' merchandise.

But Mr. Hilpert's work for KoKo was also a cover for his double role as a valued Stasi informant. Mr. Hilpert's business and travels brought him into contact with many people who were traitors or enemies in the Stasi's eyes. His information helped the Stasi apprehend them, the Stasi archives show.

In 1986, Mr. Hilpert delivered a former East German army doctor and his wife into the Stasi's hands, according to an affidavit by a Stasi officer on the case. The couple wanted to escape to the West via Hungary. Mr. Hilpert -- who befriended them over several months -- offered the couple the use of a vacation apartment owned by KoKo on Lake Balaton in Hungary. In the apartment, which was bugged, the Stasi gathered the evidence it needed about the couple's escape plans. And it then arrested them. The doctor got a four-year prison sentence, his wife six months.

The couple never even suspected Mr. Hilpert: The wife apologized to him later for the trouble caused, according to the affidavit.

But the Stasi's anticorruption division suspected Mr. Hilpert of skimming from his antiques deals. Investigators opened a probe, which was eventually quashed by the deputy minister for state security, according to an internal report from November 1985.

The Stasi officer involved in the arrests in Hungary says Mr. Hilpert was an unusually helpful operative enjoying high-level protection. "Herr Hilpert often contacted us and offered his services. We didn't have to ask," he says in the affidavit. Shortly before the Berlin Wall came down in 1989, the Stasi awarded him a prestigious silver medal for "Loyal Services," documents show.

After Germany was unified in 1990, Mr. Hilpert went into the real-estate business. He soon made headlines. He boasted to reporters that his KoKo activities left him with useful contacts in business and politics in the new Germany.

Parlaying those contacts, he helped German authorities recover art works that were being sold on the black market. Among them: part of Peter the Great's long-lost Amber Room, a lavishly decorated chamber belonging to the Russian czars. It had been plundered by the Nazis and was thought to have been destroyed in World War II.

Mr. Hilpert's business efforts haven't always gone smoothly. A former partner in a failed venture, for instance, was stabbed to death by a bodyguard. But joining forces with Mr. Kohl's former adviser, Hans-Hermann Tiedje -- his partner in the Lake Schwielow resort -- has won Mr. Hilpert a degree of respectability.

"He runs a normal resort," says the spokesman for the German finance ministry. "I don't see what's wrong with that."