Free to Trade

by Michael Ridpath

  ‘Thank you very much, Mr Hakata. I will send you some information if I can. Goodbye.’

  This didn’t make any sense. How could Honshu Bank be unaware of a guarantee they had given? Hakata had clearly checked his files quite carefully. Still, Honshu Bank was a very big bank. Perhaps the guarantee had somehow got lost. Unlikely, but just about possible, I supposed.

  If Honshu Bank hadn’t heard of the issue, then Bloomfield Weiss certainly should have. I decided to call them. I didn’t call Cash. If Debbie was right and there really was something wrong with this issue, I didn’t want to alert Cash to it at this stage. So I rang the Bloomfield Weiss library, which would have complete information on every bond issue they had ever managed.

  A young woman’s voice answered the phone, ‘Library.’

  ‘Good-morning. It’s Paul Murray from De Jong here. Can you please send me all the details you have on a private placement you led for Tremont Capital NV. It was about a year ago.’

  ‘I’m afraid we have no details on that issue,’ the librarian replied immediately. No pause to check files or cards.

  ‘But you must have. Can’t you check?’

  ‘I have checked. Your colleague Miss Chater rang last week. We have no details on the issue. And the reason is that the issue does not exist.’

  ‘You must have made a mistake. You can’t be so sure. Please check again.’

  ‘Mr Murray, I have checked very thoroughly.’ The librarian’s voice rose. She was obviously not a woman who liked her professional pride to be questioned. ‘Miss Chater was just as insistent as yourself. The issue just does not exist. Either our records are wrong, or yours are. And we have spent hundreds of thousands of pounds on modern relational database retrieval systems. No mention of Tremont Capital anywhere. When you have found the correct name of the bond you own, please call. We will be delighted to help.’ With that the librarian hung up, sounding anything but delighted to help.

  I leaned back in my chair, stunned. How could the lead manager and guarantor have no knowledge of this bond? Did it really exist? I thought for a moment. Because it was a private placement, it didn’t have to be listed on any stock exchange. But there were always lawyers involved in these sort of transactions. I grabbed the prospectus and leafed through, looking for the name of the law firm who had put the transaction together. I quickly found it. ‘Van Kreef, Heerlen, Curaçao.’ Odd. I would have expected a London or New York firm. A few more minutes’ examination of the prospectus showed me what I was looking for. ‘This agreement shall be interpreted under the laws of the Netherlands Antilles.’ None of the customary mention of English or New York law.

  Why hadn’t this been picked up before? I supposed that if everyone was busy, the documentation might not have been read as thoroughly as it should have been. After all, the Honshu Bank guarantee had probably made it seem unnecessary to check the fine print.

  But there was no Honshu Bank guarantee. De Jong & Co. had lent $20 million to a shell company we knew nothing about. We didn’t know who owned it. We didn’t know what had been done with our money. We certainly didn’t know whether we would ever get it back. The legal documentation was probably full of holes.

  I made a quick phone call to administration to check to see whether we had received our first interest coupon payment. We had. At least we hadn’t lost any money yet. Whoever had set up the company would probably pay at least some interest in order not to arouse suspicion. It looked very much as though we were victims of an elaborate fraud.

  I couldn’t ask Cash about it directly. If he were implicated in some way, it might tip him off, and I couldn’t risk that. But I somehow needed to find out more about Bloomfield Weiss’s involvement. I had an idea. I picked up the phone and punched out a number.

  ‘’Allo. Banque de Lausanne et Genève.’

  ‘Claire, it’s Paul. Are you free for lunch today?’

  ‘Oh, what a nice surprise. Of course, I should love to have lunch with you.’

  ‘Great. I’ll see you at Luc’s at quarter past twelve.’

  Claire had worked at Bloomfield Weiss until six months ago. She ought to be able to tell me something about Tremont Capital, and Cash’s involvement with it. Besides which, it was nice to have an excuse to take her to lunch.

  I got to Luc’s Brasserie early and was shown to a table by the window. The restaurant was on the second floor of a building in the midst of Leadenhall Market. The sun streamed in through the open window, bringing with it the noise of the shoppers below. The restaurant was only half full; it tended to fill up around one o’clock with underwriters from nearby Lloyd’s.

  I had been waiting only a couple of minutes when Claire arrived. The loud clack of her high heels on the black and white floor, the tight short skirt hugging her thighs and the trace of expensive but subtle perfume following her captured the attention of every man in the room. As she came to my table, held out her hand in greeting, smiled, and sat down opposite me, I could not help feeling a touch of pride at the envious glances in my direction. Claire was not classically beautiful, but she was desperately sexy.

  We ordered, and shared complaints about how quiet the market was. After a few minutes, I came to the point. ‘Claire, I did actually have something specific to talk to you about. But it’s very delicate, and I would be very grateful if you wouldn’t mention it to anyone.’

  Claire laughed. ‘Oh Paul! How exciting! A secret! Don’t worry, I won’t tell a soul.’

  ‘It’s about Cash.’

  All trace of laughter disappeared from her face. ‘Oh, Cash. That bastard!’

  ‘Why do you call him that? What has he done?’ I asked.

  ‘Perhaps I shall tell you a secret first.’ She looked down at the table, picked up a knife and began to fiddle with it. ‘As you know, I worked for Bloomfield Weiss for two years before I moved to BLG,’ she began. ‘Well, after a year or so I built up a good group of clients. I was doing lots of business. I was happy, the clients were happy, Bloomfield Weiss was happy. Then Cash Callaghan arrived from New York. He had a big reputation and a big salary to live up to, and he didn’t have any existing clients in Europe. So he stole them.’

  ‘How did he manage that?’ I asked.

  ‘Subtly at first. He would work out which of the big accounts salesmen did not have enough time to cover properly. He would “help them out”. Eventually, the client would end up wanting to talk to Cash rather than his original salesman. I suppose in a way that was not too bad, the client got better coverage and the firm did more business. But then Cash began to use more drastic methods.

  ‘In my case he had his eye on my two or three largest customers. If ever I was out of the office, he would call them. But they were loyal, they wanted to stay with me. So then he began a rumour about myself and a client. I am afraid I cannot tell you his name.’

  ‘What was the rumour?’

  ‘He said that I was sleeping with this client, and that the client was giving me all his business because of it,’ she said, her voice burning with anger. ‘It was ridiculous. Completely untrue. The reason my client did most of his business with me was that I gave him good ideas and he made money out of them. I would never have an affair with a client. Never. It would be completely unprofessional.’

  She looked up at me, her eyes alight with fury. Then she laughed. ‘Oh Paul, don’t look so disappointed.’

  I could feel my face redden with embarrassment. Her declaration of professional conduct with clients had shattered some half-hope at the back of my mind. I had no idea that my disappointment had shown.

  She went back to her story. ‘I didn’t know anything about this. Nor did my client. But everyone else was talking about it, or so I am told. It became one of those stories that circles around and around, so that after a month or two you have heard it from several different sources and it has to be true. I am sure my boss must have heard about it, but probably only whispers. Of course I could not deny it. I didn’t know there was anything to deny.


  ‘One day Cash went to my boss. He said that my “affair” was making Bloomfield Weiss the laughing stock of the City. He had some numbers, which he claimed came from a source inside my client’s company, that showed that my client was doing 95 per cent of his business through me. Cash must have fabricated those numbers. I know my client did a lot of business with other brokers.

  ‘So I was called into my boss’s office and told I could either resign, or my boss would have to suspend me pending the launch of a formal investigation. He said this would probably damage my client as much as or more than me. I was shocked. Then I am afraid I lost my temper. I shouted and screamed at him, called him every foul name I could think of, and told him what he could do with my job. BLG had being trying to hire me for months, so I started a new job with them within a week.’

  ‘But wouldn’t it have been better to be a bit calmer? You could have cleared your name. Cash wouldn’t have been able to prove anything.’

  ‘The damage was already done. I wasn’t prepared to have my integrity questioned in public, and my personal life examined under a microscope, just for the privilege of continuing to work with scum like that.’

  ‘I see,’ I said, feeling anger rise myself. ‘You’re right. What a bastard. This business is rotten. So many people running around making so much money. They think they are geniuses, but half the time they might just as well have stolen it. If they all just got on with doing their job in a straightforward, principled way, there would still be plenty for all of us.’ I could not keep the anger from my voice, and I could feel the words coming faster and louder.

  Claire laughed. ‘Oh Paul! You are so sweet. So concerned. So idealistic. But the world doesn’t work the way you want it to. You have to be tough to do well. The biggest bastards earn the biggest bucks. I’m OK. I am doing the same job for better people at a higher salary.’ Her big, liquid eyes smiled at me beneath long lashes. ‘But you were going to tell me your secret.’

  I calmed myself down. ‘I’m afraid I can’t tell you the exact details yet, partly because I don’t know them myself. It is important, though, that nobody finds out what I have been asking about.’ I lowered my voice. ‘Last year De Jong bought a private placement from Bloomfield Weiss, issued by Tremont Capital. It was Cash who sold it to us. Do you know anything about it?’

  ‘Tremont. Tremont Capital,’ Claire murmured, her forehead knitted in concentration. ‘The name sounds familiar but I don’t… One moment! I know! Wasn’t the deal guaranteed by the Industrial Bank of Japan?’

  ‘Not quite, it was Honshu Bank. But you are close enough,’ I replied.

  ‘Yes, I do remember it vaguely. It was only a small deal, wasn’t it?’

  ‘Forty million dollars,’ I nodded. ‘Did you sell any?’

  ‘No. It was one of Cash’s “special deals”. I think he cooked it up himself. None of the rest of us got a look in at selling it. All the commission went to him.’

  Special deals. Special customers. Cash did a lot of special business. ‘Do you know anything at all about the company?’

  ‘Tremont Capital? Nothing at all. I have never heard of it before or since.’

  ‘Would anyone else?’

  ‘No. When Cash put together deals, he kept them to himself until they were finished and he could proclaim them from the mountain-tops.’

  ‘He must have had some help from someone in the firm, to do the documentation, or structure the deal,’ I suggested. ‘Was there anyone in Corporate Finance he used to deal with?’

  ‘Not in London, I don’t think. But he did talk to someone in New York on some of his special deals. I met him once when he was over in London. A short fat guy. Waigel. Dick Waigel, I think his name was.’

  ‘Can you remember who bought the rest of the issue?’

  ‘Yes, I think I can. I remember hearing Cash selling it to De Jong. It didn’t take him very long. And then he just made one other call and sold the deal straight away. I remember thinking how amazing it was to be able to sell a whole deal in just two phone calls. I detest Cash. But I have to admit he is a good salesman.’

  ‘Who was the other buyer?’

  ‘I knew you would ask me that,’ she said. ‘Let me think … I know! It was Harzweiger Bank.’

  ‘Harzweiger Bank? That’s a small Swiss bank, isn’t it?’

  ‘Not necessarily small. Certainly low profile. But they manage a great deal of money very confidentially. Cash deals with them a lot.’

  ‘Who did he talk to there?’ I asked.

  ‘A man named Hans Dietweiler. Not a very nice man. I spoke to him a couple of times.’

  I had found out all I was going to find out from Claire. At least about Tremont Capital.

  ‘One more question,’ I said.

  ‘Yes?’

  ‘Who is Gaston?’

  ‘Gaston? I don’t know any Gaston.’ Then she chuckled. ‘Oh, you mean Gaston my boyfriend in Paris? I am afraid that was just a story for Rob.’

  ‘That was cruel. He was very upset.’

  ‘He was very persistent. I had to put him out of his misery somehow. This seemed like the best way. And he is strange that one.’

  ‘Strange?’

  ‘Yes. There is something about him. He is so intense, he seems unstable. You don’t know what he will do next.’

  ‘Oh, that’s just Rob,’ I said. ‘He’s harmless.’

  ‘I don’t know about that,’ said Claire. ‘I am glad I got rid of him.’ She shuddered. ‘Besides, I told you. I never sleep with my clients.’

  As she said this she sipped her wine and looked over the rim of the glass at me. She seemed to smoulder, her lips very red, her eyes very dark. My throat was dry.

  ‘Never?’ I said.

  She held my eyes for several seconds, sending messages whose precise meaning I could not decode.

  ‘Almost never,’ she said.

  After that lunch it was difficult to focus on work. With an effort I managed to put to one side thoughts of what sex with Claire would be like, although they kept on trying to re-emerge. I had to make a phone call to Herr Dietweiler.

  I looked up Harzweiger Bank in the Association of International Bond Dealers Handbook, and found the number. It had a Zurich code.

  A woman answered.

  ‘Can I speak to Herr Dietweiler?’ I asked.

  ‘I am sorry, he is not in now. Can I help you?’ The reply was in excellent English.

  ‘Yes, perhaps you can,’ I said. ‘My name is Paul Murray, and I work for De Jong & Co. in London. We hold a private placement which I believe you also bought. Tremont Capital eights of 2001. We would like to buy some more, and wondered whether you were interested in selling.’

  ‘Oh, Tremont Capital! Finally we find someone who will trade in it. I don’t know why we bought it. The Honshu Bank guarantee is very good, and the yield was nice, but nobody trades it. We are supposed to have a liquid portfolio here, not this garbage. What is your bid?’

  This was tricky. The last thing I wanted to do was end up buying more of the bloody bond. This woman sounded as though she would sell it at any price!

  ‘It’s not for me, it’s for one of our clients,’ I lied. ‘He was interested in buying our bonds, but they are not for sale. Before I can go to him to see at what price he would buy them, I need to be sure that you are a seller.’

  ‘I see. Well, we had better wait for Herr Dietweiler. He bought the bonds originally. He should be back in an hour or so. Why don’t you call back then?’

  ‘That sounds like a good idea. Tell him to expect my call.’

  Good. It was Dietweiler I wanted to speak to.

  Exactly an hour later I rang the Zurich number again.

  A gruff voice answered the phone, ‘Dietweiler.’

  ‘Good-afternoon, Herr Dietweiler. It’s Paul Murray from De Jong & Co. here. I rang your colleague earlier about a bid for the Tremont Capital eights of 2001 that you own. I wonder if you would be interested in selling?’

  ‘I am afraid you a
re mistaken, Mr Murray.’ The heavy Swiss accent sounded less than friendly. ‘I do not know where you obtained your information. We do not own that bond, nor have we ever done so.’

  ‘But I spoke to your colleague about that very bond,’ I said. ‘She said you had it in your portfolio.’

  ‘She must have been mistaken. She probably confused it with another Tremont Capital bond. In any event, we view the contents of our portfolio as highly confidential information which we never disclose. I have just reminded my colleague of that. Now goodbye, Mr Murray.’

  As I put down the phone I felt sorry for the friendly Swiss girl. I was sure she had not enjoyed being reminded of her duties by Herr Dietweiler. A nasty piece of work. And not a good liar. There were no other Tremont Capital bonds. Harzweiger Bank owned the same bonds we did.

  But why didn’t they admit it?

  This was serious. There was a good chance that De Jong had lost $20 million. Unless we found the money, it could cripple the firm. I supposed that we would not be legally bound to recompense our clients whose money we had lost, but I was sure they would not remain our clients for much longer. I had to tell Hamilton what I had discovered. He wasn’t at his desk. Karen said he was out all afternoon and wouldn’t be in until late the next morning.

  He came into work at lunchtime the next day. I watched him go over to his desk, take off his jacket and turn on his screens. He sat down in front of them and stared.

  I strode over to his desk. ‘Excuse me, Hamilton,’ I said, ‘have you got a minute?’

  ‘It’s now one twenty-seven. The unemployment figures come out at one thirty. I have three minutes. Will that be enough?’ he asked.

  I hesitated. What I had to tell him was important. But I didn’t want to rush it. If Hamilton said he only had three minutes, he only had three minutes. ‘No, I’m afraid it will take a little longer,’ I said.

  ‘In that case, sit down. You might learn something.’

  Stifling my impatience, I did as he said.

  ‘Now tell me what’s been happening to the treasury market.’ Hamilton meant the market for US government bonds, the biggest, most liquid bond market in the world, and the one that most investors use to express a view on long-term interest rates.