The Helsinki Pact

by Alex Cugia

  “Damn it!” he said, moving back hurriedly, and staring at the waiter who was now dabbing casually at the beer on the table cloth after a perfunctory apology.

  “The bugger was smirking at me!” he said as the man left. “He did that deliberately.”

  “Perhaps he resents Wessies turning up, looking stylish in well-cut suits!” Thomas said, laughing. “We’ll have to watch out that we don’t get served rat instead of pork.”

  Stephan took a long draught of his beer. “Mmm, good. Wish I hadn’t lost so much on my trousers, though.” He glanced round the restaurant, taking in the mixing of flat colour on the walls with the Art Deco influenced lighting and the rather staid oil paintings scattered around in display. He turned back to Thomas.

  “So, the latest on unification and money … Well, it’s all pretty incredible, isn't it, even though there's still a lot of uncertainty? The market exchange rate is now down to five to one and that’s probably broadly correct from a purchasing parity point of view. But I hear some people talking about a unification rate of two to one, maybe even parity. That would be pretty incredible if it happened. The Bundesbank doesn't like that talk one bit but of course it's under a lot of political pressure and so can't move as much as it would like. But tThe real problem is that there's really no reliable hard data around on which to base decisions. Even the Bundesbank hasn't aNo clue about what cash in circulation plus deposits amounts to, monetary mass, as you know.." He laughed. "If you hurry and finish your thesis you'll be able to give them the answers! We need to wait for the elections in March but if Kohl wins - and even now a landslide looks pretty likely - it'll be parity and the Bundesbank will just have to lump it."

  The waiter arrived with their dishes. Stephan eyed him warily, moving his chair well back from the table, but this time there was no incident. He served them carefully, commented briefly on the dishes and asked them courteously if they needed anything. They glanced at each other and began eating.

  “Damned good rat.” said Stephan. “I expect the ones by the river wharves are the biggest and juiciest so maybe I should take a few back to Camille, ask for the recipe and get her to cook them for us.”

  “Damn it, Stephan, I’m eating!” Thomas grabbed his water glass and drank, tears streaming down his face as he coughed repeatedly and tried to banish the image of the notoriously elegant and fastidious Camille skinning and cooking rats for supper.

  “Anyway, BuBa has been sending staff over in order to do its own estimates. Apparently the East German central bank keeps on printing money at full tilt. BuBa wants to impose some controls on that, of course, given the possibility of unification, but they're not having much luck. Basically they're probably being fooled."

  “What about the financial metrics, though, you know, things like cash, M1, the wider definitions. Wouldn’t that give the information that the bank needs?”

  “Ordinarily yes, but that's not how East Germany works. It's a command economy, remember, and so it doesn't see the relevance of distinguishing such metrics as you'd need to in a market one. I can see their point."

  "And when West German banks began moving east" Stephan continued "the first thing BuBa did was to take regulatory action to ensure that when Ost Marks were converted to DM any inflationary effect would be minimised. That's good for the country, of course, but it limits hugely what banks can do and so basically they're just sitting there waiting for people to open accounts and deposit money. Bo-ring!"

  “Yes, I can see that. Fascinating.” said Thomas slowly. He was beginning to get a glimmer of what Phoenix might be up to.

  “Now, here’s the other snag. The Bundesbank wants to impose an upper limit on the amount that each individual can exchange into Deutsche Marks at the preferential exchange rate. That’s another way, although a crude one, to try to control monetary mass. They can’t tell how much money is really out there in the East so they’re using a proxy which is based on a calculation of the only figure they can be certain of, the East German population.”

  “But maybe the population figures all wrong now, given so many have come over the West!”

  “You’re probably right but even if they’re in the West most will still want to change their money and get the benefit of the good exchange rate. Remember that everyone counts, children and even babies as well, so that’s around sixteen million people. Let’s say they put the ceiling at 3,000 Ost Marks. If the exchange rate is set at one to one then that means 48 million billion Ost Marks could turn into the same number of Deutsche Marks. But what they’re counting on is imperfect wealth distribution. Many people, particularly families with kids, won’t have anything like 3,000 Ost Marks a head available while those who are wealthier are going to get hit by the 3,000 ceiling. That’s why BuBa expects the total Ost Mark exchange at the preferential exchange rate to be much lower than the theoretical maximum, maybe only 320 million instead of 48 million. Any other conversions will be at less favourable rates, maybe two or three to one. That limits the inflation impact and possible damage considerably.”

  “So those with more than three thousand Ost Marks will come out of it badly, having to make do with a poor exchange rate for anything over the ceiling?”

  “Yes and no. There may be some differential terms allowed. Older people might be given a higher ceiling, for instance. And what a lot of wealthier people are already doing is investing their money, buying land and houses for instance. And although BuBa won’t admit it I’m certain a lot of wealthy individuals will get their poorer relatives to exchange the money for them, probably paying them a commission to do that.”

  Thomas sat staring into space, thinking about what Stephan had just said. You could do this on a national scale through a network of local agents, paying them small commissions for everyone they got to exchange money up to the limits. And if you'd already bought up Ost Marks at good rates you'd make a killing. So that's what Phoenix was up to. That's why they wanted to know family numbers. That's why they didn't care about credit worthiness. It all made sense now. It wasn’t a loan service at all. It was a money laundering scheme.

  “What's up? Everything all right?” Stephan asked, looking at Thomas curiously.

  “Uh, sure.” he said, as he picked up his fork and again began eating. “But can’t the Bundesbank do anything to stop this illicit lending?”

  “BuBa has regulatory power over banks but no control over individuals. Any person can lend money to someone else. There’s nothing illegal about that so unless they draft a specific law against lending it to convert there’s nothing can be done.”

  “What if someone was doing it on a large scale? A financial services company, maybe.”

  “Most of them are regulated by BuBa and so the main risk there is losing their licence. Also I don’t know that BuBa could regulate activity occurring abroad and right now the DDR is a foreign country. They might, might, be able to impose sanctions but they're going to be pretty minimal. It would be pretty low risk."

  They sat in silence for some minutes.

  “The people at Phoenix have planned this very, very well.” thought Thomas. “They’re set to make millions and there’s nothing anyone can do about it. It’s the West German public that’s going to pick up the bill because of all that extra money in circulation and hence the higher inflation and reduced value of the Deutsche Mark.”

  “Have you heard of a company called Phoenix, Phoenix Securities?” he asked.

  There was a moment's silence and Thomas thought he caught a fleeting wariness in Stephan's expression before he resumed his usually impassivity.

  “Phoenix What Securities? Phoenix, did you say? Like the bird, or maybe the US city? ... no, I don’t think so. Who are they? East Germans from Arizona?" He laughed but seemed to be watching Thomas intently. "How did you come across them? And what do they do?”

  “I forget. Just something I read about, I think. Or maybe Bettina mentioned them - she was talking about new financial service companies springing up. Could Would
they companies have ways of exchanging more money at the preferential rate, shareholders or something like that?”

  "Well, yes, that’s another big issue. Of course the big issue we've been discussing is wWhat to do about the money held by corporations and organisations throughout the country, things like government departments, the SED, whatever it's called now, state-held corporations and, I suspect, others like the secret services. That's pretty important given the sums involved. The East German politicians argue that there can't be limits imposed on these amounts. BuBa insists there have to be limits. That's the more important issue and where the where the biggest surprises could come from in terms of overall numbers.”

  Yet another piece of the jigsaw fitted, Thomas thought. And he could see why Stephan looked a little uncomfortable, even with him. This was high level, secret even, and Stephan was probably close to the limit of what he could reveal. Yet at the same time it was obvious, particularly now that Stephan had spelled some things out. The mill privatisation and the loss of the Stasi millions must be connected. Accounting standards in the East were primitive and it would have been trivially easy to cook the books to show that the mill had had a huge cash balance which could be exchanged for DM. And with the forged document showing the transfer some years earlier the nominal owners, Roehrberg and whoever else was involved, owned it all. It was a perfect loophole in the system. And this time it was the East Germans who would be paying.

  He felt uncomfortable in half lying to Stephan about Phoenix. He wished he could take him into his confidence more fully about both matters but it was impossible at the moment. Yet he knew that Stephan would have been fascinated by what he'd discovered and would have had some interesting comments to make. Oh, well, time enough for that later.

  A movement caught his eye and he glanced towards the entrance. "Oh, here's Bettina. She's early!" he said and stood as she approached.

  Stephan followed in turn. "Bettina! Great to see you again. You're looking well. I hear you've been showing Thomas the sights." They embraced and he pulled out a chair for her. "We've almost finished, just some coffee maybe. What will you have to drink? Or would you like coffee too?"

  "Great to see you too, Stephan, but nothing to drink, thanks." She sat down. "Thomas, I'm so sorry but I've got a splitting headache. It's just been growing over the past hour and I'd like to go straight back to the farm if you don't mind." She turned to Stephan. "I'm sorry. I'd really have liked to have chatted but I'm not very good company. I hope we can meet properly soon, though."

  "I’m sorry too but of course you need to get back. Let's do that though. We were talking earlier about making a social date soon. I want Camille to try a gourmet recipe, a Dresden speciality that I have in mind." He winked at Thomas. "Let's just get the bill. I can have coffee back at the hotel. I've some work to do and a really early train to catch tomorrow so leaving now suits me too."

  Chapter 39

  Thursday January 18 1990, evening and on past midnight

  THOMAS was driving at full speed down the two-lane concrete road, the numerous ruts and holes, coupled with the imperfect fit between the slabs, making the journey pretty uncomfortable. It was very late and they were practically alone on the road but athe gibbous moon, declining and now approaching a semicircle, was shining brightly and gave the landscape a silvery beauty and a sense of mystery. He thought of how differently it felt from when they had come to Dresden only a few days ago, much of that trip having been passed in awkward silence. Now, returning to Berlin, they had spent the first half hour without speaking, but it was a companionable silence, each of them happy in the other’s presence. Every so often Bettina would caress Thomas’s hand or reach over to kiss his neck, on the first such occasion causing him to swerve violently on the road.

  As the few lights of Ortrand disappeared behind them Bettina, drawing back from another caress, laid her hand on Thomas’s thigh. At first they linked fingers but when Thomas returned his right hand to the wheel Bettina leaned closer on his shoulder and began - it seemed by mutual intuition - lightly and slowly, almost absent-mindedly, stroking his thigh with the tips of her fingers. Initially this was just above his knee but her hand almost imperceptibly made longer sweeps, moving higher and deeper. He glanced at her, saw her mischievous grin and caught the sparkle in her eyes. A finger, now probing behind buttons and meeting stiffened flesh made Thomas swerve bumpily on to the verge and bring the car to a shuddering halt, turn, press her hand strongly against him and kiss passionately. Each longed to be back in their bed in Dresden, away from Dieter and his missions, back in the only world that now seemed to them to matter. For longer than was sensible but for far less than they each desperately wanted they clung to and explored each other's bodies as the freezing night air seeped into the car, the chill wind urging itself through the old rubber seals. Eventually, with much procrastination and regret, they again set off down the highway.

  Around an hour later they stopped again, this time by a public phone to call Dieter at home once more. Nobody answered.

  “Where else could he be? Does he have a Perhaps he’s at a girlfriend’s housewoman friend?” Thomas asked as Bettina returned.

  “Not that I know of. His wife died a couple of years ago, and I'm pretty sure he hasn’t had a relationship since. He focuses all his energies on work.”

  They set off again and again drove in silence for some time.

  “I’m sorry, this is a very personal question, but I wondered if Dieter had ever made any advances towards you? You’ve been working closely together for, what, seven years now and you’re such an attractive womanso attractive ... ” He trailed off, aware of inappropriate layers in the question.

  “Never. That’s one of the reasons I respect him so much. When we first met, he could have taken advantage of the situation. I was desperate. Hadn't had a shag for months and the batteries on my Rabbit had run down. I was desperate, I tell you, desperate.” She sensed Thomas staring at her in astonishment. "Oops! Sorry, wrong script. Kind of segued into Bad Mark, singular, without thinking. Right. Ah, yes, here we go. As you were."

  She glanced out of the window at the rain now streaming down, beating rhythmically on the glass. “In reality he offered to help me in all sorts of ways, all clearly disinterestedly. He’s been the closest I’ve ever come to a father figure.” She turned to look at him, her eyes glistening. “You really are something special. We’ve only started making love and you’re already jealous?”

  “Damn right!” Thomas smiled. “That's the Italian influence.”

  “Well, I’m getting a little worried that we can’t get hold of him.”

  “Dieter? Come on, he’d outsmart almost anyone, I think. He’s out, maybe called away to a meeting or something. He'll know from when you called him in Dresden the earliest we'd be back would be after midnight. We’ll try again later. Did you have time to check the pictures? Are the documents legible?”

  “Yes, I looked through a few of them. Georg printed out those with text on large sheets and they’re all pretty clear.”

  He felt around in the back seat for his rucksack, hauled it over and passed it to her.

  “Can you read in the car without feeling sick? You might We need to find something in there that would will compromise Roehrberg. We still don’t have any proof of a link between him and Henkel, unfortunately, or just where the mill fits in, and the better clearer the detail the easier it's going be for himDieter to act.”

  Bettina fished out the cardboard box with the pictures, around fifty or sixty in all. “Let’s see what we’ve got.” she said, turning on the interior light. “Hmmm. This is just a whole lot of numbers. Looks like an accounting report of some kind.”

  “Any names written anywhere that you can see?”

  Bettina flipped through the pictures. “Here’s one. It says Dresdner Mehl Kooperative. Looks like some form of business plan.”

  “I remember finding that. The book itself should be there too - it's got a blue cover I think. That
might help establish a link. Roehrberg's got to be involved in the privatisation, surely. Why else would he have had these documents at home, particularly if they were taken from Henkel's house as looks likely. What about the others?”

  “There’s a couple of pages in French.” Bettina continued. “Contrât d’acquisition ... first few pages of a contract to buy a house in France by the look of it. In Nice. Roehrberg seems to have had a lot of money to invest. Hang on, there's a scribble here - can't quite read it, something about this being personal, not a joint venture. What does that mean?”

  “I think his girlfriend is French. I saw pictures in his study and the people moving the boxes were talking about it. One of them was taken by the sea, looked Mediterranean and so could have been Nice. Maybe that's where the documents are going, somewhere they can't easily be found.”

  “He was supposed to fly to France yesterday but cancelled to go to Berlin in the morning. I told you he was furious and mentioned that some documents had gone astray.” She laughed. "I guess that's your fault!"

  “Do you think he stole the money himself and then killed Henkel to shift blame?”

  “Not sure. Possibly. More likely they were in it together and then Roehrberg got rid of Henkel. Maybe Spitze’s also involved, although I think he’s possibly clean. But Roehrberg had me followed the whole time I was in Dresden and I think the only reason he invited me to dinner was to be sure I wouldn’t be around when he moved his files.” She smiled and caressed Thomas’s neck softly. “Except that Dieter was smarter and had sent you too.”

  “We make a good team!” He smiled at her, resisting the urge to stop the car again.

  “There’s quite a few more.” Bettina said, resuming her working tone of voice. “This one is ... wait, it’s hard to understand, it’s the middle of a contract of some sort ... oh, another house purchase. In Munich this time.”