‘Wooah!’ said Kate. ‘That wouldn’t be feasible, would it?’
‘Aidan, that’s brilliant!’ exclaimed Rafi. ‘All we need to do is pre-empt most of the attacks and make certain that interest rates and gilts remain stable for – how long – a month?’
‘No; far less than that. If interest rates remained stable, in a week to ten days the terrorists’ positions in the futures markets would become exposed and they would either have to close them and crystallise large losses, or pay large margin calls. However, if interest rates were to fall, 24 – 48 hours would be enough to crucify them financially. In both cases their investments in the traded options markets would be wiped out.’
‘That’s all very well and good,’ observed Kate, but the if is a massively big if.’
‘Yes, I grant you that,’ said Rafi, ‘but isn’t it great to know that the terrorists might not have everything going their way?’
Kate looked at him with that same look she’d given him when she had asked him to work with her. ‘You know what I like about you?’ her eyes sparkled as she held his gaze. ‘It’s your unbridled optimism.’
‘Hold on a moment!’ said Aidan. ‘If we go back to when would be the best time to carry out the attacks? In terms of maximum impact – first thing in the morning as the markets are opening, but not late morning or in the afternoon… The London Stock Exchange opens at 8 a.m. and dawn tomorrow is?
‘7.25 a.m., give or take a bit,’ answered Emma.
‘What are you getting at?’ asked Kate.
‘We are led to believe the departure time of the trawler in Peterhead is tomorrow early afternoon, aren’t we?’ said Aidan.
‘Yes.’
‘If we are right and the trawlers are to be used as part of the terrorists’ exit plan, I reckon that all three will leave tomorrow.’
‘OK,’ said Kate sensing what he was getting at.
‘So, thinking about it, I’d be willing to bet that the attacks are planned for tomorrow as that’s when the trawlers are leaving, and that they will come between dawn and the markets opening at 8 a.m.!’ said Aidan.
‘Bloody hell! That gives us less than twenty hours!’ said John, quite taken aback.
‘We’ve got too many holes in our hypothesis,’ said Kate. ‘We’ve got to fill in more of these gaps! To put it bluntly, we have to find the missing targets, the missile launchers and the foot soldiers. In the meantime I’ll warn the commissioner of our line of thinking. And remember, not a word of this to anyone, please.’
Greg popped his head around the door at that moment. ‘Did I miss something interesting?’
‘Yes,’ replied Kate, ‘Have you been there long?’
‘No chance! You are running me ragged. I dropped by to tell Aidan that I’ve arranged every computer access he should need… Strange or what?’ said Greg. ‘There I was working in my office, drawing up a list of all the databases we would need to get into, when the commissioner walked in and asked me – yes me – what he could do to help. I explained what I needed. He left as quickly as he’d arrived and not twenty minutes later he came back saying that he’d pulled a few strings. I’ve had the head of IT from Euronext. liffe, the CME in Chicago and Eurex in Frankfurt on the phone volunteering their services and wanting to know which secure IP addresses we would be using. They’ve sent me encrypted user names and passwords and authorised me to access all their databases. Their cooperation is one hundred per cent. Simply marvellous if you ask me! Aidan, if I could use your PC for a moment I’ll get it set up to access databases you’ve only dreamed of getting into.’
Aidan smiled, like a young boy being told he was getting the keys to the local sweet shop and got up to let Greg take his seat.
In less than five minutes Greg had Aidan’s computer set up.
‘Thanks,’ said Aidan cheerfully. ‘By the way would there be any chance of a better printer? There’s going to be a lot of paper.’ Looking in the direction of Emma and the elderly printer, he said, ‘The old lady over there is getting too slow for me.’
Emma screwed up her face and then smiled at him.
Greg looked at Aidan. ‘How big a machine did you have in mind?’
‘Anything that prints quickly and has a big memory buffer would be great.’
‘I’ll see what I can find,’ said Greg. Less than fifteen minutes later he was back pushing a printer-photocopier half the size of a desk. ‘This little beauty is from accounts downstairs; please look after it.’
John, who had been sitting, contemplating, stirred. ‘Why can’t we just close down the markets involved and stop the terrorists that way?’
Aidan looked at him. ‘In theory yes one could, but the turnover in these markets every hour of the trading day is squillions of pounds. To close the markets for anything other than a short period would be catastrophic for London’s reputation. We could close them for a day. The problem is that there are many ways of covering one’s tracks and the positions would still be there when the markets reopen. I’ve identified a number of suspicious contract notes, but it would take ages to look for them all. And this is offshore money, which can be moved electronically via intermediary banks quickly and secretively. It would be nigh on impossible to trace. What makes it really difficult is that we’re only focusing on two parts of the market. The terrorists’ positions are likely to be spread across a range of products. The two we have highlighted are the most obvious, but Sterling, the FTSE and gold would be good bets as well.’
Kate scratched her head thoughtfully. ‘Let us suppose that Sheikh Tufayl is good for?2 billion; his cousin Maryam and Jameel, via their client’s moneys, could be good for another?1 billion each and murky third parties put in another?1 billion. If this?5 billion is placed in the futures and traded options markets, and the terrorists get their way, what would their profit roughly be?’ She looked at Aidan and Rafi.
Aidan spoke first. ‘Conservatively they could make eight times their initial outlay; at the top end maybe fifteen times. Do you agree, Rafi?’
‘Yes,’ he replied.
‘So in round terms the financial markets could be hit with losses of?50 billion,’ calculated Kate and after a brief pause continued, ‘at which point several banks and insurance companies would get into trouble and the Government would have to step in again!’
‘Yes, it would be very seriously,’ added Aidan.
‘Thank you – I just wanted to be clear,’ said Kate.
Jeremy hurried back into the office and updated the team on MI5’s progress. ‘Neil Gunton’s team is working at full throttle. And on the charity front, things are looking promising. It seems that they use just one travel agency – Fly Skywards Travel. I’m shortly off to pay them a visit.’ He looked thoughtful. ‘And we’ve identified who Khalid and Yousif were.’
Kate looked at him blankly.
‘Sorry – the people to whom the PhD dissertations were dedicated: Khalid and Yousif were the sheikh’s older brothers -cousins of Basel and Maryam. They worked for the family oil company. To cut a long story short, it seems that they were in Iraq discussing oil deals in mid-January 1991, just as Operation Granby got into full swing.’
Rafi looked puzzled. ‘Operation Granby?’
‘It was the code name for the British bombing missions. Anyway, it seems an unguided 1000 lb bomb went astray…’ He paused, ‘A large house was demolished. Khalid and Yousif were inside and were killed,’ added Jeremy.
‘Why didn’t we hear more about it?’ asked Rafi.
‘According to MI6, as collaborators helping the Iraqi regime with black market oil sales, their family probably feared what the Americans might do, if they made a real fuss,’ added Jeremy.
Kate looked serious. ‘So our terrorists have a strong motive for revenge!’
The buzz of Jeremy’s brief visit had gone. Rafi was sitting at his desk. He was tense, his wrist throbbed and his lower back ached. He felt awful. The lack of sleep had suddenly crept up and overwhelmed him.
John finish
ed his phone call, walked over and pulled up a chair next to Rafi. ‘Are you alright?’
Rafi gave a small nod.
‘I’m sorry to be the bearer of bad news, but I’ve had a call about Callum’s funeral. It’s at 2.30 p.m. tomorrow in Clifton, outside Bristol. Kate has suggested that we send some flowers via the undertaker. We obviously can’t say that they’re from you. How about a card with something like: Thank you for your friendship and help. Is that alright with you?’
Rafi sat there feeling miserable and nodded slowly.
‘We have his parents’ names and address should you wish to write or visit them when this is all over.’
He wasn’t one for tears, but in his tiredness they welled up. There was nothing he could do to stop them. John briefly placed his arm across Rafi’s shoulder as a gesture of comfort.
Rafi drew a long breath and looked up to the heavens as if to seek divine inspiration. How can we sort out this horrendous mess? he wondered.
But then a sudden tranquillity came over him. It was as if Callum was in the room alongside him. Rafi’s mind cleared – they needed a game plan to stop the adverse effects of the attacks on the financial system. And for that they would need three things: a huge pot of money, a group of people to whom the Treasury and the Bank of England would listen, and a… Kate called over interrupting his train of thought.
‘If you have a spare moment, could you see if you can find another property? We’re still a couple of targets adrift.’
As if from nowhere, a possible solution flashed through his mind. His tiredness evaporated. Rafi felt calm, collected and strangely on top of things. He called out. ‘Everyone! Do you have a moment? Can we go somewhere quiet to get away from the phones, please? I need to run through an idea.’
‘Let me finish this call and I’m there,’ said Emma.
John nodded, indicating he would be there as soon as he, too, had finished his call.
Kate put down her phone. ‘We can use the meeting room down the corridor.’
John walked into the meeting room just as Kate had started to quiz Rafi. ‘Why the meeting?’
Rafi started explaining, hesitantly. ‘We’re piecing together some of the locations of the terrorist attacks and hopefully we’ll soon have a good enough picture to stop much of what they are planning. What’s been worrying me is their assault on the financial markets. Their two sets of plans are intertwined. What scares me are the consequences of one or two missiles getting through and hitting a nuclear facility. The loss of life and the long term radioactive pollution would not only be tragic, but would also dent public confidence. The clean-up costs alone could run to billions, plus there would be huge decommissioning costs… Aidan, how big a pot of money do you think that the Government might need to sort out their financial problems if things get really bad? And how much could they take on without spooking the markets?’
‘Answering your first question: how long is a piece of string? It could be anywhere between…’ Aidan hesitated and the room fell totally silent. ‘Let’s say in excess of?75 billion as a ballpark figure. It could easily be more. Answering the second part of your question, in the present environment, I reckon?25 billion.’
John looked perplexed. ‘But hasn’t the Government recently borrowed hundreds of billions of pounds without any difficulty.
So why can’t it do it again?’
‘There comes a point when investors will simply take fright and walk away,’ replied Aidan. ‘The Government’s annual borrowing requirement is currently running at around?200 billion. And they have been using quantitative easing to sort out their short-term funding needs…’
John still looked perplexed.
‘We are talking in terms of the straw that breaks the camel’s back,’ added Rafi. ‘It’s all about market sentiment.’
John shrugged his shoulders.
‘OK, look at it this way,’ said Aidan. ‘The terrorists have set up a three pronged attack. They want to hit our economy where it hurts – by creating major energy shortages and electricity blackouts… Crashing the stock market… And forcing the Government to borrow lots more money.’
John cast a serious look at Aidan. ‘So, unless we stop them… things will go pear shaped?’
‘Yes, and once things start to go wrong for the country’s finances, things will rapidly get worse. The Government’s credit rating and investor sentiment will plummet. And in no time at all there will be many more sellers than buyers of Government debt.’
‘Could the country go bankrupt?’
‘Probably not, but if the big investors stopped funding the UK’s vast borrowing requirement, then it would get really messy…’
‘Could I interrupt?’ asked Rafi. ‘There may be a way…’
‘Pardon?’ enquired Kate quietly, as though suspecting Rafi had flipped under the strain. Her eyes still had a sparkle to them and looked at him caringly.
‘Well,’ said Rafi, ‘it’s all about finding another source of money. A few minutes ago you mentioned property – as I was thinking about Callum. He’d been visiting a specialist property investor before he was killed. So who’s the biggest owner of property and tangible assets in the UK?’
‘The Government, the public sector and its various agencies,’ replied Aidan. ‘I recall from a recent article in the financial press that they have assets worth over?500 billion.’
‘Precisely!’ said Rafi. ‘So why couldn’t the Government put together a contingency fund, such that it did not have to go to the debt markets? Instead it could package up these assets into one or more of the new real estate investment trust vehicles – rather like the Swedish Government has done. Our Government could then issue shares in these REITs to those who require payment, compensation, etc., which would be straightforward as they would be listed on the London Stock Exchange.’
‘Yes, but I thought that the commercial property market and real estate investment trusts were in the doldrums at the moment.’ Aidan paused. ‘Sorry, I don’t mean to be a wet blanket.’
Rafi looked crestfallen. He thought for a moment. ‘OK, how about pepping up the market?’
Aidan looked at Rafi; a smile slowly stretching across his tired face. ‘What do you have in mind?’
Rafi’s mind was racing. ‘You could improve the demand for the REIT shares. What if the pension industry and those retiring could use these investments as an alternative to annuities? The REITs would have better yields than Government bonds and would appeal to many pension fund trustees and those with private pensions.’
‘That’s brilliant! No, better than that, it’s the nuts!’ enthused Aidan. ‘Real estate investment trusts would take off. Your sleight of hand would easily produce?150 billion for the Government to use, at a manageable cost. And, if they raised a bit extra they could use it to buy back gilts and keep prices firm.’
Aidan paused for a moment. ‘Your suggestion would need to be packaged properly and explained to the Treasury in terms that they understood. If it went hand in hand with a small drop in long interest rates and the markets remained stable for a couple of days, then the terrorists’ derivative positions would become untenable and they’d be wiped out financially.’
‘Hold on a moment,’ interrupted John. ‘Could you explain what a REIT is please?’
‘It is just like shares. A real estate investment trust is the property investment vehicle of choice for major investors. All it does is group a number of property investments under one umbrella. Investors can buy shares via the stock market, and they receive dividends instead of rents.’
Kate looked at Aidan and asked, ‘Realistically is this a possible solution to the impending financial problems?’
‘Yes, yes it is!’
‘Excellent! Rafi and Aidan, you work on your REITs idea and matters financial, while the rest of us get back to finding the terrorists and the missile launchers,’ said Kate.
The meeting had finished. In her relief, Kate stepped over and gave Rafi a hug.
He flinched and jumped back.
‘I’ve done it again… Apologies,’ she said, looking worriedly at him. It was as if she had invaded his personal space.
Kate turned to go. Rafi reached out and touched her shoulder; she turned and their eyes met.
‘I’m sorry,’ he said. I ran out of painkillers at lunchtime… My shoulder and back are rather sensitive, not to mention my wrist.’
‘I’m glad. No, that didn’t come out right – what I meant…’
‘Don’t worry,’ Rafi cut in.
Chapter 4
Kate sat at her desk hoping beyond all hope that crucial missing pieces of the jigsaw puzzle would start falling into place. Her instincts as a detective told her that her investigation was perilously poised. Rafi and Aidan’s reading of the position could all be a horrendous miscalculation and if their scenario was wrong, she would not only look a real idiot, but…
Jeremy’s phone rang, interrupting Kate’s thoughts. John picked up the call and put it on speakerphone. It was a call from Gareth, in Iceland. ‘How’s tricks? Sorry, Jeremy’s out at the moment.’
‘It’s brass monkeys here! And there’s no daylight!’ came the reply. ‘Got a nice hotel, though I’m not certain if I go a bundle on the cod liver oil or the roast puffin. What the heck! At least the locals are hospitable. I’ve hooked up with the Vikingasveitin, their Viking Squad, who seem to be a cross between our MI5 and the SAS. We’ve been inspecting all the shipyards and boatyards around Reykjavik – said it was a health and safety check. We just hit the bullseye at the last boatyard. There was a large yellowhulled motorboat on a slipway, inside the big boat shed. Didn’t look anything like the picture I got of Flying Goddess; they have altered her superstructure and given her a new colour to go with her new name: Golden Sundancer. I spotted Talal inspecting the boat with a geezer wearing a captain’s hat. We didn’t want to tip Talal off, so I’ve backed off.’
‘Good news that you’ve found Talal,’ said John.
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