Matthew took the lid off his cappuccino and drank. God, it was good. He couldn’t just sit down at his desk and begin to work again. He was too keyed up. He strolled up and down drinking his coffee.
He thought about George and Josephine and his mother. He’d send Josephine a present of some money. Not much, but something. Whatever he did, he wouldn’t jeopardise his chance of making the million now.
He thought about his shame. He told himself that insider trading is a crime without victims, but he knew it was a lie. When he bought his bonds, somebody else was selling them: an investment manager maybe, or a pension fund perhaps. If they hadn’t sold, somebody’s pension would pay a little more, somebody’s savings would be that little bit more valuable.
He shook off the uncomfortable logic, and thought instead of his father’s company, about how much it was worth and how long it would take to sell. Matthew hadn’t decided how much of his father’s cash he’d give to his family. Maybe a quarter to Josie, and a million or so to each of his brothers. The world was all before him and he’d aim to be generous.
As Matthew drank his coffee and mused, he saw an apple in front of him. He reached for it absent-mindedly and bit into it. It was bitter and unripe.
As he put it aside, he suddenly saw what he’d done. He had picked Deane’s last, precious, forbidden apple.
The bonsai forest and the dwarf apple tree at its centre looked reproachful, menacing even. Matthew picked up the half-eaten apple and wandered guiltily away.
6
The building was a manor house auctioned off by its original, posh but penniless, owners shortly after the roof had sprung its first major leak. The building had been purchased, tidied, prettied. Tall iron gates operable by remote control sprang up at the entrance. Local girls were interviewed for menial positions and the prettiest ones selected. Soft-spoken doctors with mediocre qualifications and a melting bedside manner swished in and out in their discreet German cars. It was unflashy, but immaculate, a clinic where the sick rich are gently reminded that wealth is always to be preferred to health.
Behind a high mahogany desk in the front hall, a whitesuited receptionist icily surveyed the two newcomers: a pretty young woman, not especially well dressed, and an older woman, obviously frail and in need of treatment. The receptionist was unimpressed. The cab that had brought them had been local, meaning that the new arrivals must have arrived by train, and no one who travels by train is wealthy enough to obtain treatment here.
‘You’re here for a consultation, are you?’ she enquired with freezing politeness and indicating the older woman with a tiny flick of her chin.
‘No, no. I haven’t come about my mother,’ said Josephine. ‘I’ve come to visit one of your patients.’
The receptionist eased up. Even wealthy people have poor relatives. ‘Of course. Who was it you wished to see?’
And Josephine told her.
Summer 2000
Summer is here, the first of the millennium. It is hot and bright. The water companies are moaning, the news papers mutter about climate change, and the skies are already scorched by holiday jets heading south.
Summer is a time for young men’s thoughts to turn to love, but right now some young men are preoccupied. It is 16 June 2000, and there are 392 days to go until Bernard Gradley’s deadline. That’s little more than a year.
1
‘How are you, Zack, you revolting sod?’
Dixon Banderman was in a good mood. He made a habit of swearing at Zack whenever they met as a reminder of their first encounter, screaming at each other on the zebra crossing outside Coburg’s. Zack, naturally, reciprocated.
‘Not bad. How about yourself, you repellent old fossil?’
‘Good, thanks. You want a bonus this year, or do you want to give it to the Partners in Hardship Fund?’
Zack gave the matter some thought. ‘Well, I’m the first to help the needy, Dixon, but the partners are such an ugly bunch and dishonest as hell from what I’ve heard. I’ll take the bonus.’
Dixon grinned. He liked Zack.
‘Fair enough. God knows it’s small enough.’ Dixon’s face changed and his voice grew businesslike. ‘Amy-Lou has given you the rundown on strengths and weaknesses and all that?’
‘Yeah. My strengths are that I work hard, my work is always top quality, and I’ve made plenty of money. My weaknesses are that I’m a bit arrogant, a bit insensitive, and a bit hard to work with.’
‘A bit arrogant?’
‘Amy-Lou might have used a stronger term, it’s true. I do think I’m smarter than most people I work with, but then again, I am smarter than most of them. So what am I meant to think?’
‘There’s more to this game than brains, Zack. You won’t work well in this organisation if people don’t like you, and the same goes for our clients.’
‘Fair enough. I’ll be sweet as a kitten from now on.’
Banderman held Zack’s gaze a moment longer, then picked up an envelope and handed it over.
Zack tore it open. The slip inside told him his bonus was two hundred and fifty thousand dollars plus a salary increase which Zack didn’t register.
‘You should feel pleased with that. That bonus puts you into the top twenty percent of your peer group, which is a tremendous achievement for your first year. You’ll have a good career here, if you want it.’
Zack was pleased, but not over the moon. Unlike Matthew, the bonus didn’t play a big part in Zack’s plans for the future. Either Zack was going to make partner, or he would find a way to Sarah’s money, or both. Either way, a quarter of a million dollars didn’t make a lot of difference. This was just spending money. Still, it was nice to have. He could buy something for Sarah, maybe for her parents too. And Josie. She should have something. He could get her something from Aspreys perhaps, a necklace or something. She always used to love jewellery.
‘Thanks,’ said Zack briefly.
Banderman smiled internally. Zack probably meant it when he said he’d try to be nice, but he didn’t stand a chance. The young man didn’t even realise when he was being rude.
‘OK. You can probably guess why I wanted to have this chat.’
‘It’s to do with finding a replacement for Hal Gillingham, right?’
‘That’s right. As you know, we’ve had our headhunters searching for a replacement and we’ve all been grateful to you for holding the fort in the interim, especially since I know that you’ve still been working hard for Amy-Lou.’
‘It’s been my pleasure.’ That was kind of true. Zack worked hard because he needed to. On the other hand, Sarah was beginning to wonder who exactly she was engaged to: a future husband and father, or a workaholic business machine. They hadn’t rowed about it, exactly. Sarah was uncommonly mature about these things, and Zack had managed to stifle his natural impulse towards aggressive sarcasm. But it was an issue, like sand in the folds of their clothes, that chafed constantly and wouldn’t disappear.
Banderman nodded. He could imagine the conflict.
Most partners at Weinstein Lukes were divorced, or else their spouses had long since decided to remain wedded to the bonus cheques while looking elsewhere for love and sex. The relationships that worked best were those where both partners worked crazy hours for American banks and left the kids to be brought up by a succession of motherly British nannies. It screwed the kids up - but, hey, at least when they grew up they’d be able to afford the therapy.
‘What I wanted to ask you, Zack, is whether you felt able to take over Hal’s role permanently. We’ll find somebody else to take over the projects you’re doing with Amy-Lou, and you can devote yourself to tax stuff. Full-time, your show entirely.’
‘My show entirely? Gillingham’s job?’ Zack was delighted. If he had to choose between the Gillingham job and the quarter of a million bucks, he’d have chosen the tax job without a second thought. The quarter of a million was neither here nor there. The tax job was Zack’s passport to partnership and the key to his father’s fortune. ‘T
hat’s absolutely fantastic, Dixon.’
‘D’you think you can handle it?’
‘Handle it? I’ve handled it for the last four months, haven’t I? Even when Hal was still here, I was running things. He showed up at the office, but it was me that ran the deals. Of course I can handle it.’
‘Good. In that case, I’d like you to start transferring all your remaining non-tax-related assignments to other people. I want you full-time on tax.’
‘Excluding Hatherleigh Pacific, right? I get to keep the Hatherleigh Pacific deal?’
‘Is that still alive? You were hired back in November as I remember.’
‘Yes, of course it’s alive,’ snapped Zack. ‘The company wants to wait for the price of South China to fall before going after it. They’re expecting bad news on the shipping market to depress the price.’
‘And has the price fallen?’
‘Not yet. It’s at forty-five bucks, and they want it to go to forty.’
Banderman raised an eyebrow. He didn’t believe the deal would happen. Zack breathed out through his nose and made an impatient gesture.
‘If they say it’ll go to forty, it will. These guys are very smart and they know their markets better than anyone. They’ll do the deal and they’ll do it with us.’
Banderman shrugged. He didn’t care. The Hatherleigh Pacific deal bore all the signs of an entanglement which would cost the bank a mound of work and bring in nothing at the end of it. But if Zack wanted to keep it that badly, then he could. It’d be something for him to learn from.
‘This guy Hatherleigh, he’s your father-in-law to be, right?’
‘Right.’
‘OK. Keep the deal. I wouldn’t want to spoil your family get-togethers.’
‘Thanks. There’s just one other thing,’ said Zack.
‘Yes?’
This was the moment Zack had been waiting for: the moment when Gillingham’s job was finally, definitely, irrevocably, his. Gillingham’s last great idea, the idea he’d had that sad morning when alcohol had finally mastered him, the idea that Zack had stolen with a smile before flinging its creator to the ocean floor - the idea’s time had come, with Zack secure in the knowledge that the glory would be his and his alone.
‘It’s to do with an idea I’ve had. Gillingham’s ideas were always tailored to suit each particular client. That was great for the client, but a lot of work for us. It would take us a day to think of an idea, a month to work out the details, then three months or more just to negotiate the contract. I want to get away from that. I want a tax idea which will fit everyone. I want to move from haute couture to ready-to-wear. I want to make a tax dodge so uniform that we just roll the contracts off the photocopier. I want the idea to be so simple that every salesman in the bank can sell it to every client.’
‘Ah! The Holy Grail, right? Hal used to talk about that too. He said there was a goldmine there, if you could only find it. Don’t spend too much time looking, Zack. Hal never found it, and he searched long and hard.’
‘Dixon, I’ve found it.’
‘You’ve what?’
‘I’ve found it, Dixon. There’s still a lot of legal work to be done, but I know it’ll work. The idea came to me in Hong Kong ...’
And Zack began to explain. The idea wasn’t his. It was Gillingham’s. It was a brilliant concept, a Holy Grail worthy of the name. But Gillingham wasn’t there to claim the glory. Gillingham had gone off on a fourmonth blinder, which had brought him once again to the verge of liver failure and an early grave. The threat of death had induced him to check into his old clinic, but recovery would be slow, and his stamina was less than it had been. Nobody would doubt that the idea was Zack’s.
Banderman was soon lost, but the details were immaterial. The important point was easy. Zack had found a way to let gamblers make a one-way bet. A certain type of financial bet - called a derivative - is like a bet on a horse race. If you win, you can double your money, or even more. If you lose, you lose. What Gillingham had found and Zack had stolen was a way to swing the odds in favour of the gambler. If you placed your bet through Zack’s tax loophole, your winnings would be tax-free, while if you lost, your loss could be offset against tax. Through this loophole the taxman would unwittingly subsidise gambling, and the bigger the bet, the bigger the subsidy.
Zack was talking about a completely legal tax dodge that could be sold through salesmen across the Far East to literally thousands of potential clients.
‘You got a name for this product?’
‘I call it RosEs,’ said Zack. ‘It stands for -’
‘Don’t tell me what it stands for. But I like the name.’
‘Dixon, I need you to make sure the bank throws its weight behind RosEs.’
‘Have you had the lawyers test to see if this dodge is solid?’
‘I’ve got opinions to say it’s bomb-proof in Hong Kong, Singapore, and Malaysia. I’ve got lawyers looking at the concept in six other Pacific Rim countries. So far, they’ve come up with no major objections. I expect the idea to work in every territory.’
‘Bomb-proof, huh? You send your legal opinions to our corporate lawyers in New York. If they’re happy, I’m happy. This has got to be squeaky clean, but as soon as our lawyers tell me it works, you’ll have my support. We’ll push your RosEs so hard, we’ll be growing ’em on the moon.’
Zack grinned. Banderman was the head of corporate finance in Europe. He wasn’t just a partner, he was one of the most powerful partners in the bank, and he never exaggerated. If he said the moon, you’d find RosEs on Jupiter.
‘Thank you,’ said Zack earnestly. ‘Thanks a lot, dungbrain.’
2
Another conference. Another yes decision.
This time it was a leasing company, Albion Leasing. It had borrowed a ton of money to buy equipment to lease to people, thus allowing it to borrow another ton of money to buy more equipment to lease to a whole lot more people. The game of musical chairs had been wonderful while it lasted, but one day the company’s salesmen ran short of sales, while the company’s accountants discovered that the mountain of debt had developed a nasty overhang. The inevitable happened. The debt mountain went into avalanche. Banks demanded their money. Albion couldn’t pay. Customers heard about the problems and took their business elsewhere. The trouble got worse.
Right now the Bank of England was banging heads together, trying to sort out a rescue plan. But meanwhile, true to form, the courageous banks were selling off their loans at huge discounts to anyone brave enough to buy. And, true to their form, Fiona, Ed Deane and Matthew scented a profit and were sniffing around.
There wasn’t any magic in their game plan. The Bank of England negotiations were going through a particularly fraught couple of weeks and some of the banks had lost their nerve. That’s common enough. Unlike the swashbuckling investment banks, high-street banks contain some of the world’s most timid people, the sort of people for whom adventure means a brightly coloured tie. When the going gets tough, these heroes squeak with fright and run for shelter. And, as they run, they lose all sense of proportion. They’re prepared to sell for forty pence in the pound what ought to be valued at sixty. Just because a loan’s gone bad doesn’t mean it’s worthless.
So Fiona, Ed and Matthew went mouse hunting. They called around town, seeing who squeaked loudest. They tossed out bits of cheese - letting it be known that they were interested in buying loans to Albion Leasing - and watched to see who came nibbling at their door.
Out came the mice, whiskers twitching. Different mice placed different values on the loans. Some wanted seventy pence in the pound. Others had no price in mind, they just wanted whatever they could get. Fiona, Ed and Matthew watched the rodents come and go, meanwhile conducting their own intensive research.
Right now, they needed to come to a decision. They agreed that the real value of the company loans was around fifty pence in the pound. If the Bank of England negotiations went well, the loans could be worth sixty. Meanwhi
le, they knew they had mice willing to sell out for between thirty-five and forty pence. The maths was simple and the team agreed without difficulty. They’d go for it. As usual, they wanted to bet big time to profit big time.
But first, Matthew had a call he needed to make, part of a well-practised routine.
‘Coffees?’
‘Great,’ said Fiona.
‘And an apple,’ said Deane. He still hadn’t forgiven Matthew for eating his last apple from his bonsai forest, and he took care to remind Matthew of it about twice a day, every day. Matthew had grovelled profusely, bought Deane a second dwarf apple tree, complete with half a dozen ripening apples, and by now considered himself entitled to ignore Deane’s grumbling.
‘You’re nuts,’ he said. ‘Isn’t he nuts, Fiona?’
‘He’s nuts ...’
‘There you go, you’re nuts ...’
‘... but you still shouldn’t have eaten his apple.’
‘You’re nuts too,’ said Matthew and went out for the coffees.
The streets were hot. Most people, like Matthew, were in shirt sleeves, their hot grey jackets, relics of a Victorian dress code, left behind them in the office. Matthew walked quickly. He came to the little alleyway and looked furtively around. He saw no one he recognised, though the streets were crowded and it was hard to tell. He ducked up the alleyway and came out into the little garden. It was nearly lunch time and the pub was already filling with people. Everywhere in the sunshine, office refugees sat on benches with sandwiches or stood round drinking under the tree.
Matthew hesitated. He preferred to be alone. How ever, it would be hard to find anywhere completely private and he needed to make his call fast.
He dialled the well-known number.
‘Good afternoon, James Belial speaking. How may I be of service?’
‘It’s Matthew Gradley. I want to check my account balance.’
‘Matthew, my dear fellow! One of my most fortunate clients! Truly blessed with the golden touch. Let me see.’ Matthew caught the sound of Belial hitting a few computer keys to get the right screen up. ‘Yes, indeed. Lady Luck rides with you, my friend. Your modest portfolio of sixty-eight thousand pounds has grown to a remarkable two hundred and eighty thousand in just a few months. Is it luck, or do you have a secret formula?’
The Money Makers Page 37