The market maker

by Ridpath, Michael

  "Exactly how much is that? "

  Jamie winced. "We're long four billion of Mexico, and two billion of other stuff."

  "Jesus! What happened? Is Ricardo losing his nerve?"

  "Ricardo isn't. The U.S. Congress is. Have you heard ofthePinnockBill?"

  "No."

  "It's a new piece of legislation that will require Congress to approve any emergency aid package above a certain size. It's specifically designed to prevent the U.S. government bailing out Mexico again."

  "Will it get through? Won't the President veto it?"

  "Maybe, maybe not. There are deals within deals to be done on this one. Let's just say that it has made Mexico's situation more uncertain. Some of the Bradys are down in the thirties."

  Whew! I remembered they were trading in the sixties and seventies before. "So, no bonus this year?"

  Jamie sighed. "It's worse than that. Our capital was one and a half billion dollars at the beginning of this year. At today's prices our losses are bigger than that now. Technically we're insolvent. Of course, all the losses are unrealized. And no one outside the group knows about it, not even Lord Kerton. There's still a chance that the market can bail us out. But until then

  we're relying on money from Chalmet, and creative ! accounting." j

  Jamie was right. I was pleased. But I did my best not i to show it. He was worried. He didn't want Dekker to disappear before he had received his first truly fat ■ bonus. ]

  But as I walked slowly home through the warm sum- i mer night, I allowed myself to smile. So Dekker was in j deep shit? Great! My only regret was that I hadn't put i them there. I did feel slightly sorry for Jamie and some ; of the others who stood to lose their bonuses after all the work they had put in to get them. But Jamie was ' lucky enough to have Kate. What did he want with all ' that money?

  Dekker would probably wriggle out somehow. Prices ! of Mexican bonds would bounce. Who knows, maybe l Dekker would end up making a fortune instead of los- ing it? But right now they were weak, vulnerable. If I wanted my revenge, now was the time. i

  And I did want revenge. Ricardo and his brother had i destroyed my career, stolen my thesis, and beaten me up, all with impunity. The arrogance of it rankled; I couldn't let them get away with it. What had Ricardo | said? "If you're not with me, you're against me." Well, I i was against him, all right. ,1

  But what could I do? i

  I remembered Kate suggesting Jamie should get a job at Bloomfield Weiss. That would annoy Ricardo a little, true. But he wouldn't much care if I joined them. Not that they'd have me, with my brief experience in finance.

  Wait a moment. I had it! It seemed absurd at first, but the more I thought about it, the more sense it made. As soon as I arrived home, I pushed Pushkin to one side

  and scribbled thoughts down on a clean sheet of paper, smiling broadly to myself.

  I would need some luck. But if I pulled this off, Dekker was finished. And I would be responsible.

  24

  I had to wait until the next afternoon. New York morning. I started off with International Directory of Enquiries for Bloomfield Weiss's number in New York. Then the Bloomfield Weiss switchboard for the name of their chairman and the number of his office. Then the chairman's office itself.

  It turned out Sidney Stahl was in London. What luck! I got the London number from his secretary in New York. I tried that.

  ''Mr. Wolpin's office/' a woman's voice answered.

  "Can I speak to Mr. Stahl? I believe he's in London at the moment."

  "He certainly is. But he's in a meeting with Mr. Wolpin at the moment. Who's speaking?"

  "Nick Elliot. From Dekker Ward."

  "Can anyone else help you, Mr. Elliot? I think Mr. Stahl will be tied up for a while."

  I was being screened out. Unsurprising.

  "No, I need to talk to Mr. Stahl myself. Can you tell him it's about Dekker Ward's losses on their Mexican position. And can you tell him I'm calling in an unofficial capacity. I'll give you my number."

  "Certainly Mr. Elliot. I'll tell him," said the woman.

  managing to carry the suggestion that there was not a chance in hell that Mr. Stahl would call me back. I had considered going to Bloomfield Weiss through Jamie's friend, Stephen Troughton. But after some thought rd rejected the idea. I didn't trust him, and I would quickly have lost control of events. Much better to hold out for direct access to the top man.

  I sat by the phone waiting. I couldn't concentrate on my thesis, but read the newspaper. Eventually, the phone rang.

  "May I speak with Nick Elliot?" said a quiet young American voice.

  "Speaking."

  "This is Preston Morris. I work with Mr. Stahl. I believe you called him earlier."

  I looked around. "I need to speak to Mr. Stahl personally," I said.

  "I'm afraid that won't be possible today, sir. Perhaps I can help?"

  The screening was in full working order.

  "OK. Listen. I'm a former employee of Dekker Ward. I have details of their recent losses in emerging markets trading and a suggestion to make. I'd like to discuss it with Mr. Stahl tomorrow. It'll only take fifteen minutes. If he doesn't like what he hears, he can throw me out."

  "I'll check with Sidney Will you hold?"

  "I'll hold."

  A minute later, Preston Morris was back. "Mr. Stahl will meet with you at nine forty-five tomorrow morning."

  "I'll be there," I said.

  Bloomfield Weiss's offices were in Broadgate, a modem complex of brown marble offices behind Liverpool Street station. I negotiated security guards, reception.

  and secretary, before being directed to a sofa outside a closed door. As I was waiting, I remembered Isabel and my visits to Humberto Alves's office. I smiled as I recalled the going over she had given him for awarding Bloomfield Weiss the mandate for the favela deal. I would need all her audacity if I was going to pull this off. I felt almost as if she were there with me, and I resolved not to let her down.

  After a half hour, the door opened, and a small, birdlike man in a white shirt and suspenders came out. He took me in in an instant and wasn't impressed. I could almost see him deciding there and then this was going to take five minutes, not fifteen.

  He held out a hand. "Sidney Stahl. Come in." He ushered me into a large office with a huge desk and a suite of cream sofas and chairs. Two men who had been perched on the edge of a sofa stood up. One young, tall, and preppy; one older and more world-weary. Stahl waved toward them. ''My assistant Preston Morris, who I believe you've already spoken with. And Cy Wol-pin, who heads our Emerging Markets unit in London."

  We shook hands briefly. Stahl's voice was rough New York. He really was very small, scarcely taller than five feet, and he can't have weighed more than a hundred twenty pounds. He seemed dwarfed by the two men next to him, but you could tell he was the boss. They stood back from him, giving him space, as though they were uncomfortable looking down on him.

  "What can we do for you, Mr. Elliot?" Stahl sat down, and the others took their cue from him, as did I. Stahl's eyes looked my way, but they weren't focused. He was thinking of his last meeting, or his next.

  I came straight to the point. "I worked for Dekker Ward for just over a month. I left a couple of weeks ago." So what? said Stahl's face. "I happen to kiiow that

  Dekker has taken on huge positions in Mexican bonds over the last few weeks."

  ''The whole market knows that/' said Cy Wolpin. "Dekker did that Mexican deal that bombed, and they've been buying back bonds ever since."

  I ignored him. I had got half of Stahl's attention. His eyes were at least focused, and pointed in my direction. "Dekker's positions are much bigger than that. They own four billion dollars of Mexico paper, and two billion of other stuff. Their losses on these positions are so great that they're technically insolvent. They're relying on funding from their Swiss shareholder, Chalmet, to keep them afloat."

  Now I had them. "Go on," said Stahl.

  "Well, I know that
Bloomfield Weiss want to expand into emerging markets. And everyone knows that that's Dekker's market. So my suggestion is that Bloomfield Weiss acquire Dekker. Then it will be your market, not theirs."

  Stahl laughed. It was a kind of extended cackle that worked its way up through lungs thickly coated with mucus or tar. The other two men's expressions instantly switched from scornful seriousness to mild amusement.

  "D'you hear that, guys? That's balls for you. The kid's pitching for an M & A mandate." He reached into his pocket for a cigar and lit up. It looked huge compared to his tiny body. Despite the laughter I was encouraged. Stahl's cigar deliberations were giving him time to think.

  "Isn't Dekker a private company?" he asked. "Doesn't that guy they call 'The Market Maker' own most of it? What's his name? Ricardo Ross, that's it! He's not gonna sell to us, is he?"

  "You're right, it is a private company/' I replied. "But Ricardo owns very little."

  Stahl raised his eyebrows. They were pencil thin, as if they had been plucked.

  "Ricardo finds other ways to take cash out of Dek-ker," I said. "Lots of it."

  The eyebrows fell back to their normal position. "So who does own it? "

  "Fifty-one percent is owned by Lord Kerton and his family. His ancestors founded the firm a hundred and thirty years ago. Chalmet et Companie, the private Swiss bank, owns twenty-nine percent. They picked that up in 1985 just before Big Bang. And the remaining twenty percent is owned by other directors."

  "And Ross is one of those?"

  "No, actually. Ross refuses to go on the board. He wants his Emerging Markets Group to be as separate as possible from the rest of the firm."

  Wolpin and Stahl exchanged glances, Wolpin's I-told-you-so, Stahl's irritation. I realized I had briefly trespassed on a political battlefield. But in a moment Stahl's attention was back on me. "Well, how can we buy the conipany if it's that tightly held?"

  "Kerton doesn't know what a hole Ross has got him into. If we tell him, he may want to sell. Especially if once we've hit him with the problem, we give him the solution."

  "Which is?" asked Stahl, puffing on his cigar.

  "Bloomfield Weiss taking on the Dekker portfolio and trading their way out of it. There can't be many firms in the world that could do that. They'd have to be big, they'd have to know how to trade, and they'd have to know emerging markets. That means Bloomfield Weiss and about nobody else."

  ''That would be one hell of a position/' said Wolpin. "The risks would be substantial/'

  I looked straight at Stahl. "I thought that's what you did. Take risks."

  Stahl cackled again. "I like this guy. Of course we can handle the risk, Cy. We're gonna be buying the bonds for peanuts. But what about the Swiss?"

  "I don't know. I've no idea what Ross has told them about his position. It's also impossible to tell where their money is coming from. You can get very little information on Chalmet. Theoretically, it's a small bank based in Geneva, but it has undisclosed billions under management, and I think that it's using its clients' money to fund Dekker."

  Wolpin interrupted. "Chalmet has a reputation in South America as a good place to park dirty money. I'll bet they've got aU kinds of drug dealers and corrupt politicians on their client list."

  This was a subject I wanted to steer well clear of. I didn't want Bloomfield Weiss to scare themselves off with talk of money laundering.

  "There must be a lot of loyalty to Ricardo at Chalmet," I said. "But if they think they're going to lose everything, they might be prepared to change their minds. And once again, the best way for them to get their money back might be to have Bloomfield Weiss take over Dekker's portfolio and trade out of it."

  "Interesting," said Stahl. "So, what do you want, kid? A two percent fee? We have our own people who know about this corporate finance stuff, you know."

  I smiled. "I'm sure you do. And I don't want a fee; I know you wouldn't pay me one anyway. All I ask is that you keep me informed. Tell me what happens."

  "So what's in it for you? "

  "Dekker Ward treated jje very badly," I said, the

  intensity of my voice surprising even me. "I want them to pay."

  Stahl smiled quickly. He understood revenge as well as greed. A more noble motive would have raised his suspicions. "Well, they will. That is if we decide we want to go along with your idea/' he added quickly. But there was something in his voice that made me feel sure he would. I couldn't help smiling. He caught it, and his quick brown eyes twinkled. "OK," he said, standing up. "Well be in touch. Soon."

  Kate rang that evening.

  "How's it going?" she asked.

  "Oh, fine," I said. "I've cleared the flat up."

  "Any news of Isabel? "

  "Nothing."

  "Oh." There was an awkward silence. "Are you going to be OK? With money and everything."

  "Don't worry about me, Kate. I'll be fine."

  "Well, there's always a place for you here, if you need it. Don't worry about Jamie."

  "Thanks," I said. "I'll remember that."

  As I put the phone down I felt a tug of guilt. How would Jamie and Kate react when they found out about the takeover, as they surely would? Well, Kate would probably approve. She thought as little of Dekker as I did. She was as angry as I was over the way they had treated me.

  And Jamie?

  It would be a shock. But it shouldn't be too bad for him. One of the main attractions of Dekker to Bloom-field Weiss was its employees, and Jamie was an important one of those. And continued employment with them would be preferable to Dekker going bust.

  So that was how I persuaded myself that I wasn't letting down my friends.

  And I would be giving Ricardo exactly what he deserved.

  Stahl himself called me back at about eight the next morning.

  ''We're gonna go for it," he growled. "Be at our office in Broadgate at ten forty-five. We're gonna see Lord Kerton."

  I waited for him in the Bloomfield Weiss lobby. He was flanked by two besuited bankers. Although they were both of average height, they towered above him. In fact, as he swept out of the office with one each on either side and slightly behind him, he looked like a Mafia boss with two heavies in tow.

  And these guys were heavies. Bloomfield Weiss had a reputation for aggression that applied to its corporate finance dealings as well as everything else. These two had personally been involved in the dismemberment of dozens of corporations throughout the world. Technically the activity was known as mergers and acquisitions, or "M & A." But some of the jargon gave a better idea of the flavor of what actually happened: "downsizing," "giving value back to shareholders," "shedding noncore activities," "squeezing cash out of the business." And then there was another set of phrases that dealt with the other side of the coin: "golden parachute," "executive incentive scheme," and especially tiiat little three-letter word "fee."

  Stahl introduced me as "the kid I was telling you about." The bankers' names were Schwartz and Godfrey. We hurried across the paved squares in the center of Broadgate to a cab that was waiting for us on one of the side i^treets that adjoined the complex. Dekker

  Ward's office was in a small street just behind the Bank j

  of England. It took us fifteen minutes to crawl there j

  through the City traffic. It would have taken five nun '

  utes to walk. j

  Of course I had never been to Dekker 's City office be

  fore. It was where the traditional, non-Ricardo business i

  of the firm was carried out: trading in British and ex j

  colonial stocks, some private client business, a small j

  fund-management group, and corporate finance. At j

  least that's what I thought went on there. High up in j the air three miles away in Canary Wharf, Ricardo's

  team neither knew nor cared much what anyone else at i

  Dekker did. ;

  The facade was an elegant Georgian four-story build j ing, painted light gray. We walked into what cou
ld have been the entrance hall of a country house. The man at the reception desk was more like a butler than a security guard. After having our credentials respectfully taken, we were ushered into an elevator, and led i into a boardroom one floor up. There an assortment of ■ Victorian financiers stared down at a long polished table. I wandered over to look at the names. There was a j Dekker, and a Ward, but most of them were Kertons. j

  Stahl, too, looked closely around the room. I could

  tell he liked it. He liked it a lot. ''Hey, Dwight, do you I

  think we could fix up the thirty-eighth floor like this? " |

  I glanced at the two bankers and only just managed

  to suppress a smile. j

  "I dunno, Sidney," said the one called Dwight. |

  "We'd need some old photos of your folks. I'm sure we | could find an artist to add the necessary touches."

  Stahl laughed. "I'd get them to put up my old j

  grandma. You know she was a matchmaker? One of ;

  those babushkas who arranged marriages? Boy, did she j

  know how to create a deal out of nowhere." '

  I

  Just then the door opened, and Lord Kerton strode in. With his tall frame, longish fair hair, and his elegant suit, he was all poise and self-assurance. "Morning," he said, holding out his hand, "Andrew Kerton."

  Stahl shook it. "Sidney Stahl. This is Dwight Godfrey and Jerry Schwartz. And Nick Elliot I believe you know?"

  "Actually, I don't think I do," he said, but he shook my hand and smiled in a friendly way.

  Stahl glanced at me strangely. "Nick used to work for Dekker Ward until recently."

  Kerton frowned.

  "In the Emerging Markets Group," I added quickly. "We did meet once."

  "Oh, I'm sorry. I do know many of the people over there, but I couldn't quite place you. Jumped ship, have you?"

  "Actually, I walked the gangplank."