The Peripheral Sur

by Bart Key

  After we returned from Singapore, I suggested to my father that we begin doing some investment in the Asian securities markets based upon advice from Daniel. He begrudgingly relented and, overall, the investments I made per Daniel’s advice were quite successful. My father was impressed. As he reflected back on the sale of our Macau assets to Li, he wondered whether the purchase might have been part of some larger strategy connected with Macau’s gambling industry. And of course, as it turned out, it did. But my father could never have envisioned that Li’s end game would result in something as grand as the Jade Palace project.

  So far as I know, Li had no knowledge of my father’s using his considerable influence in convincing some of the syndicate owners to grant Li a gambling concession for the Jade Palace casino. I was peripherally involved in that process myself and more than once had greased some palms to move things along. Although Li was acutely aware of the Chinese way of getting things done, I knew him well enough to know that he would find it distasteful, if not objectionable, to engage in such practices himself. I didn’t tell him until years later about how my father and I had pitched in to assist.

  Once actual construction of the Jade Palace began, Li was not easily distracted and our party weekends were to be fewer for a while. Every now and then though, I would force him to kick back and relax for a bit. On one occasion, we took my father’s jet to Sydney for a soccer game and afterwards we took in the Aussie nightclub scene. Let’s just say we came home hungover with big smiles.

  •

  Chen clearly was being groomed by his father to become the patriarch of the family in the future. He was taller than his dad by several inches and a superb athlete. It seemed like it took for forever before I could compete with him on the handball court but I finally succeeded. While playing, each of us loved to tease and laugh at the other. On dates, I would crack up watching him smooth-talk his date into spending the night with him at his condo. He, of course, was equally entertained when watching me try to do the same.

  I knew Chen was disappointed and perhaps a little confused when I told him I did not favor joint ventures. He didn’t know, of course, that Sur avoided partnerships of any kind. So when Chen asked if I would introduce him to Daniel, I jumped at the opportunity to do so and quickly cleared it with Sur and David. According to Chen, his family profited handsomely from following Daniel’s advice. They had no idea, of course, that such advice was backed up by the analyses and recommendations of David’s investment house which I knew to be one of the best in the world.

  Chapter 15

  Austria

  After disposing of my oil company, I became quite comfortable working out of my Ventura office. The short coastal drive from Santa Barbara to Ventura was beautiful and I loved driving it in my now ancient Vet which I had kept in mint condition. No longer having to fly that often to Oklahoma City, I was able to relax and enjoy the good life for a spell. Twice the four of us got away to backpack the wilderness trails of the High Sierras and for the first time I was able to spend a week by myself at Wild Beach. Now, whenever the surf was up around Ventura, Jeremy and I would bump into each other trying to be the first out the door. Eventually, however, it became necessary to turn my attention back to business especially my ongoing projects in Costa Rica and Macau. I was also contemplating a new project and when I was ready launch it, I flew to Europe in my newly acquired longer-range jet to discuss it with David.

  Upon arriving at Luxembourg Airport, Gustav was there to meet me. He had never been inside a private jet before so I took him on the cook’s tour inside my new bird. He was wide-eyed and fascinated. After arriving at my chateau and showering, I walked to the library where Gustav made me a stiff scotch and soda. Remembering a small French restaurant nearby, I had him drive me there and invited him to join me for dinner. I could tell he was a little uncomfortable with that but once we sat down he began to relax some. His English was coming along nicely and we were able to converse fairly well which was good because I spoke no German and only fractured French at best. After our waiter had poured me a glass of wine, I asked him to tell me all about himself.

  He was very open and honest. His parents had disowned him when he was fifteen resulting in his having to leave home and live on the streets. With little money, he began hustling to survive. While walking in the City one day, Ward happened upon him and took him under his wing after learning that Gustav’s parents had moved back to Germany without even telling him. Ward hired Gustav to be his assistant during the final months of the chateau’s renovation after which Ward asked him if he were interested in becoming the chateau’s caretaker. He jumped at the chance and, after attending a special course in Germany for the caretaking of large estates, he settled into the position which he still held. After retiring to my quarters for the evening, I reflected that Ward had been correct in his assessment of Gustav. He was a trustworthy and talented young man. Knowing Ward, I knew he would continue to look after Gustav and be his friend.

  When I arrived at David’s office the next morning, breakfast was waiting in his conference room as usual. As always, we began our meeting with a general review of my securities portfolio. Every so often I would ask David to explain something in greater detail which he was always prepared to do in whatever degree of specificity I wanted. When our review was concluded, David casually mentioned that the current value of my portfolio would almost certainly place me in the world’s very wealthy class. I kind of figured that but really didn’t consider it any kind of notable achievement.

  Our discussion then moved on to a new project I was toying with, one in which David would play a key role. Before getting into the details, I asked David whether Jacques, his second-in-command, was qualified to take over management of day-to-day operations should David become temporarily involved in a new project I had in mind. David assured me that he was and would be able to do so without having to know that I was the portfolio’s indirect and sole owner. The members of David’s staff knew me only as a long-time business acquaintance from California.

  At that point, David looked over at me and asked what new project was on the front burner this time? I laughed and began by telling him about my having recently engaged a consultant to undertake research on larger companies which manufactured gaming devices and whether any might be potential takeover candidates. The research indicated that one company in particular seemed to fit the bill. It was a privately owned Austrian company which made high quality gaming devices principally for European casinos. There had been rumors floating around within the European business community that the family which owned the company was contemplating its sale. Thus, the timing seemed appropriate for me to make a stab at acquiring the company.

  I explained to David that the manufacturing of gaming devices generally was a highly profitable business and one in which there were only a small number of participants. The market for modern electronic gaming devices, particularly slot machines, was growing and anticipated to continue in that direction over the next decade. The Austrian company’s technological expertise in developing these electronic devices was ahead of its competitors. I wanted David to act as my point man in making an offer to purchase the company and, if he were successful, I would want him to manage the company for perhaps as long as a year.

  David, of course, knew all about my ongoing casino projects in Costa Rica and Macau. He queried whether my owning of this company might raise bothersome conflict issues. I had considered that myself and concluded that there was nothing to worry about. For one thing, I had confidence in the tight confidentiality protections we had implemented over the years. My planned indirect ownership of the gaming company should be as virtually untraceable as my current indirect ownership of the Hong Kong and Costa Rican casino projects. If a connection were to come to light for any reason, we still would have a solid defensible position if our pricing policies were non-discriminatory which I fully intended for them to be. But just to be safe, I sugg
ested that David double check with his lawyers.

  After returning to my chateau in mid-afternoon, I worked out with a vengeance as I was so excited about the proposed new project. Gustav had worked out with me and, after we had showered, he asked if I always worked out with such intensity. I chuckled and assured him that I didn’t. I was just pumped about a new business opportunity. Later, I met David at his club for dinner. He had already consulted with his attorneys and received confirmation that the potential conflict issues were not of any material significance. After our first glass of wine had been poured, David raised his glass to mine toasting to the success of the proposed new venture. I could tell he was just as excited as I was.

  •

  After Sur returned to California, I called the managing director of the targeted Austrian company and asked for a meeting to discuss the possible purchase of his family’s company. He was most cordial and said he would call me back within a couple of days. I knew of course that he wanted to check out my credentials. The following afternoon he called and suggested we meet at his offices later in the week. In the meantime he would courier to me a package of information and financial data about the company. I had a sneaking suspicion that there would be little in the package which Sur and I didn’t already know. I was right.

  After we sat down in his office, I gave him a thumbnail sketch of my investment house and told him of the rumors which had been circulating that his company might be put up for sale. He sort of chuckled about how rumors seem to develop a life of their own but admitted it was true. In order to stay competitive, the company would need to modernize its production facilities. This would be an expensive undertaking and require that the family seek outside financing. As he and the other members of his family were now getting on in years, they had little interest in running up long-term debt.

  I told him I quite understood. I quoted a figure which I was prepared to offer in cash for his family’s company, the figure purposely being on the high side which I had no doubt he would realize. After discussing potential timing issues, he tentatively accepted my offer and we agreed to commence negotiations of the terms starting on Monday of the following week. After several days of fairly intensive negotiations across the table, we reached agreement on final terms which would include the acquiring of the company’s name, patents and trademarks. Closing would take place on the first day of the following month at which time I would become the managing director of the company and the new boss of its hundreds of employees.

  During our negotiations, Ward and attorneys from my company’s German law firm were at my side. Having Ward beside me gave me great comfort. He said little during our meetings but his eyes always told me when he had an issue with something. Whenever we took a break, he would describe his concerns which I then would usually bring up when we returned to the negotiating table. Each evening our team would dine together and discuss at length our positions for the next day.

  When the deal was inked, Sur flew to Luxembourg where he, Ward and I worked long hours in putting together a detailed development plan to be implemented fairly quickly after closing. Some changes would be made almost immediately. There was a lot of fat to be trimmed off the payroll as it was clear the company had become bloated with too many employees. It would be necessary to review all job descriptions and revise them as appropriate. Those employees found to be productive and competent in their specialties would be retained and in some cases promoted. The remainder would be offered early retirement or given notices of termination.

  Sur knew that my education had been directed toward investing and not management. Admittedly, a number of my MBA courses were related to management techniques and practices but my experience in the arena was limited to say the least. Sur told me that he had no doubt but that I would be an excellent manager during those first formative months and that I should not worry about my lack of hands-on experience. Knowing that my comfort level had increased when he assigned Ward to be at my side during the difficult negotiations, he assigned him also to be my trusted ally in making the crucial and difficult decisions during those first months after the takeover.

  And so suddenly I was the big boss of the new company. Ward would be at my side in the more important operational meetings and also in my interviews with current management personnel. He had a knack of being able to quickly and accurately ascertain the honesty and trustworthiness of interviewees. I’m guessing that he acquired this talent during his time in the military. Whenever he thought someone was being less than candid, he would always let me know with some silent gesture or look.

  We felt extremely fortunate when we found that the company’s manager of the electronic products division was extremely intelligent and adept at his job. I immediately promoted him to become my manager of operations and included him in the decision making process. Within about two months, our employee count had been reduced by nearly fifteen percent with no significant reduction in production efficiency. After having right-sized our employee pool, I began instituting tougher quality control measures. Though unpopular at first, they eventually became accepted and qualify control became more deeply integrated into the company’s culture. Then about six months after taking over, I commenced a program to replace our antiquated production facilities. This process would take a couple of years to complete after which our physical plant would be the most modern in the world for manufacturing sophisticated electronic gaming devices. About that same time, I increased our marketing budget which allowed for the hiring of sales professionals knowledgeable of the potential markets for our products outside of Europe. Within a relatively short time, our sales to casinos in the Americas and Asia increased substantially.

  After a year at the job, I promoted my manager of operations to managing director. I would continue as board chairman and stay heavily involved in the business but now was in a position to return full time to my office in Luxembourg. While our new company was barely profitable that first year, I had no doubt but that the changes we had implemented would result in its being considerably more profitable in the years ahead. I was so happy when I returned to the office and took over full management again. It wasn’t lost on me though that Sur no doubt would have new business strategies and investments waiting in the wings. Bring them on. In the meantime, I would strive to forge even closer relationships with the international banks, brokerage houses and law firms my investment house worked with. I had learned a long time ago that addressing Sur’s business needs often requires a whole team of experts.

  •

  I was so enthusiastic when Sur asked me to join David during the negotiations to purchase the gaming company and then again to assist him during its reorganization. This would be my first time in working with David on a major assignment. During the difficult reorganization period, we shared an apartment located close to the company’s headquarters. We worked long hours most every day and had little free time to do anything else. David was a fast mover and had no qualms about changing the status quo in order to improve efficiency and morale. Since we both spoke German, we had few difficulties in communicating with the company’s staff. David, who now spoke without an accent, would kid me when someone had problems understanding me because of my heavy American accent. Late every evening we would dine together and discuss the day’s activities. David always listened carefully and took into consideration any recommendations I might make. He often took actions based upon them but occasionally he didn’t. I never let that bother me as he was a business genius much like Sur and sometimes just moved to the beat of his own drummer.

  Early on a decision was made that it would be appropriate to undertake a safety and security evaluation of the company’s facilities and that I should conduct it. I asked David if I could have Gustav assist me with the project which he had no problem supporting. During Gustav’s temporary absence from the chateau, his good friend Hans could take over his caretaker duties. Not long after Gustav become caretaker, he had
asked me if Hans could move in with him. I had no objection as I remembered Hans as being Gustav’s best friend when they were both struggling street kids.

  After completing our evaluation, I spoke to David about the possibility of revising Gustav’s work status. Perhaps he could take on responsibility for the security of David’s offices including the hangar where its recently acquired small jet was housed. These duties would require only a portion of his time and he could continue as the chateau’s caretaker. To prepare him, I would enroll him in a special safety and security course in Germany and Hans could handle his caretaker duties while he was gone. Upon his return, I planned to enroll Hans in a two-month course in Germany for the training of domestic servant skills. When he returned, I would hire him to become the chateau’s butler and also personal valet to Sur when he was in residence. Both young men would undertake extensive tutoring in both English and French language skills. These arrangements were all made in anticipation that Sur would be spending much more time in the future at his chateau following the success of his Austrian acquisition.

  After I finished up in Austria, Sur insisted that I take some time off perhaps relaxing for a week or two at his chateau. Perhaps I might want to invite my parents to visit me there and he would be pleased to arrange flying them both ways on his jet. I thought that a great idea and called them. They happily accepted. Not only had they not seen me in months but neither of them had ever been to Europe before.

  When they landed, Gustav and I were there to meet them. Upon arriving at the chateau, they were struck by its beauty and majesty. After freshening up, they joined me in the library where Hans served up cocktails. For the next five days, the three of us toured a number of Luxembourg’s famous and beautiful spots. The three of us also enjoyed just lounging around at the chateau. Mom and Dad were all ears when I told them about my experiences in Austria. Dad was particularly impressed with my role in assisting David during the restructuring of the gaming company. Neither of them could believe how much my life had changed in recent years. Though they had met Sur a couple of times, they really didn’t know very much about him except that I worked for him and had served with him in the army. When they boarded his jet to fly back to the States, I felt really good that they were much happier now with my situation in life. They had never really understood why I gave up my military career and chose to be a carpenter on a remodeling crew. Thinking back though, I occasionally miss those days when our team of four worked together. In a way, the team is still intact though not in a way any of us would ever have imagined.