Melekov liked to watch London from the air—especially at this time of the evening. The spread of the city was simply enormous. The gas vapour lamps forming their endless lines below, part in yellow, part in a most pure white, gave the impression of an infinity of densely packed people. Los Angeles gave something of the same impact. But not really the same. There the horizon was broken by upthrusting mountains. Here the rows of lights seemed to travel as far as the eye could reach.
Melekov ordered a dry martini—with gin, on the rocks. He observed that Bollinger had done the same. Melekov took out the olive and ate it. He always did that.
Bollinger had needed that one. He called the girl back within no more than two minutes and asked for a second. He then began wrestling with his briefcase. By the time the girl had returned, he had apparently retrieved the object of his grappling search—a rather ridiculously bound dossier, in bright red of all things.
It’s really not all that easy to watch somebody sitting right in front of you in an airplane. But Melekov had the advantage of the sudden darkness which had closed in on the plane as it abruptly moved into the cloud cover at over two thousand metres. It made a perfect mirror of the windows, provided the angle was right. Melekov remained hunched over his window, apparently awed by the fact that there was absolutely nothing to see. It was impossible to follow the text of the document in the hands of the man in front of him. But a flash impression of the capitalized words in mid-page, apparently following a lead-in paragraph, burned into Melekov’s brain: ADJUSTING THE GOLD-DOLLAR PARITY.
What the hell, thought Melekov. If—but no. Probably just another new study on monetary reform by some genius at the Bank of England. But why does Bollinger appear so—harried! That’s the word I was looking for. Harried. He’s not the type.
Bollinger slammed the dossier closed, and with a bit more bouncing around—which normally can prove damned annoying for fellow passengers in the vicinity—once again retrieved his briefcase, put the document back in, closed it, locked it, put it on the seat beside him, and settled back to finish his drink with an almost audible sigh.
Melekov settled back in his seat and ordered a second one himself. They were already starting to cross the Channel, according to the loudspeaker. The rumblings beyond the curtain indicated that dinner would shortly be underway.
Apparently the drinks had already gotten to Bollinger. He rose and headed toward the washroom. Melekov’s eyes automatically followed his movements. Bollinger was taking his briefcase with him to the toilet!
Three minutes later Bollinger returned toward his seat. This time he seemed less preoccupied than when he had boarded. He surveyed the five people up front with no apparent special interest. Melekov put aside his newspaper and looked up. Recognition struck both faces simultaneously, and Melekov rose from his seat as Bollinger moved toward him.
“Igor!” exclaimed Bollinger. “What a surprise!”
“Extremely nice to see you again, Reinhardt,” replied Melekov. “Why don’t we have a drink together?”
“Well, actually I’ve already had one.”
“Me too. But they’re free up here. And I’m sure that you are just as pooped as I am after a day in London.”
Bollinger accepted the invitation to join Melekov without any further hesitation. But first he deposited his briefcase at his window seat. The girl accepted the order for a third set of dry martinis as gracefully as airline stewardesses accept any request these days and returned with the glasses immediately. Probably a hint that it was time to eat, not drink.
“Zum Wohl,” said Melekov, and Bollinger reciprocated with a tip of his glass. “Well, well,” said Bollinger, “you’re going to honour us with a visit to Switzerland?”
“Just a very short one. It’s been six months since my last trip. You remember, we had lunch in the Baur au Lac, Reinhardt.”
“I remember well—especially the three, or was it four, kirschwassers, following dessert. Tell me, are you satisfied with the progress of your new venture in Zurich?”
“Quite,” answered Melekov. “We actually never did intend to make our Zurich operation too big. But still, we thought we had to get our foot into Switzerland just like everyone else these days. The money and capital markets—and, of course, the foreign exchange business—is just too big to be ignored. But London and Paris will remain our chief operational centres in Western Europe.”
“How about the personnel problem?” queried Bollinger.
Melekov chuckled, “Reinhardt, you’d be surprised. We have much less of a problem getting good people than most of the domestic banks. I think that it’s probably curiosity.”
“Tell me,” continued Bollinger, “is there by any chance anything we at the BIS can do for you fellows these days?”
“Actually there is. I think some of our people—from Moscow, not Zurich—will be contacting you again within the next couple of days. We have decided to sell twenty million ounces of gold, and as usual we would like your people to handle it. This is the first time in years that we will be selling, and we hope that you will be especially careful to handle the transaction with the usual utmost discretion.”
“Right,” replied Bollinger. “No worry there, as you should know by now. You must think the gold price is going to hold for a while right where it is, I assume?”
“That’s always a difficult question. For years the free price in Zurich and London has been moving back and forth between $55 and $75 an ounce. It’s really just luck if you pick a week where you are selling nearer one than the other. We can’t always choose just that exact moment we would like, you know. It’s no secret to you or anybody else that we are going to have to make some big payments soon on our wheat imports from the United States. Our supplies of grain, as you must well know, have fallen to catastrophically low levels. So we will need to gather up a few more dollars than usual this winter. Do you think we are making a mistake on timing?”
Melekov watched Bollinger’s face with the greatest possible concentration. No doubt about it, there was a flicker of hesitation before he answered.
“Well, Igor, as you know we really do not have any opinions at the BIS except for those which we publish in our annual report. But I can say this: every central bank in the world has faced the same dilemma for years, namely what proportion of their international reserves they should hold in gold relative to dollars. Of course, your country is in a special position. Like South Africa you produce gold in quantity, and for you it is not just a currency reserve unit but an industrial product, if you like. I would guess that in your case, as you just indicated in fact, to sell, buy, or hold gold is not just a decision upon your judgment of the world monetary situation but is closely related to your varying needs for dollars for foreign trade settlements—gold for wheat, in this instance.”
“Thanks for the advice, Reinhardt.”
“Now Igor, who started this whole Eurodollar merry-go-round in the first place, anyway? I should be asking the questions, not you.”
The girl arrived with two trays. Both bankers attacked their somewhat overdone steaks with gusto. No sooner had they finished than the coffee was served. Both helped themselves to cognac. Neither apparently had any desire to talk shop any longer, and the conversation had drifted back to the late 1930s: to mutual friends, Chamberlain, pubs.
During disembarkation Bollinger extended an invitation to Melekov to drop over to Basel for lunch, if he had time. Melekov declined with thanks. He only planned to be in Switzerland for one day. But he did mention that he would greatly appreciate any courtesy which Bollinger might extend to his colleagues and their 20 million ounces of gold. They agreed to keep in touch.
Bollinger had to hurry to make his connecting flight to Basel. Melekov proceeded through the labyrinth, and after unusual formalities at the immigration desk—they take Russians seriously in Zurich—was met and duly escorted to the waiting car by a reception committee of three. He was back in the fold of the Soviet collective.
At n
ine-twenty-five the next morning Melekov boarded Aeroflot flight 61—nonstop to Moscow.
5
TWO days later, on October 20, Stanley Rosen landed in Beirut, coming from New York via Paris. He looked beat. He also looked a bit wary. This was the first time he had ever ventured into Arab territory. Sure, he was quite aware of the fact that Lebanon was not strictly Arab in that sense. Nevertheless, there was no doubt about a certain tightness in his stomach which had nothing to do with the usual effects of long-distance air travel.
For some reason the plane had been waved off on its first approach from the sea and had had to make a very wide lazy circle, high over Lebanon, before landing. Rosen had been amazed, and even shocked, when the captain had pointed out that Damascus could be seen as a small spot on the horizon in the flatlands behind the mountains against which Beirut snuggled. So close to the lion’s den.
Rosen was, of course, Jewish. But a very watered-down American version. After his childhood in New Jersey he had had absolutely no connection with his ancestral religion. This was not deliberate: it was just so. When he was in New York, it was seldom that he ever gave any thought to his origins. But in Europe, on every trip his consciousness of the fact was somehow refreshed. He was never reminded in a really nasty sense. But reminded just the same.
The facilities at the airport were no great shakes, and it seemed to take ages before he had cleared customs. Outside the building he immediately found a cab, American-size, and after a thirty-minute ride through what seemed to be a surprisingly European city, he arrived at the Phoenicia. Except for the Arab getup of the doorman, he could have been in Miami Beach. While he was waiting for the check-in formalities to be completed, he was served a cup of Turkish coffee right from the brass urn, or whatever it was called. Phony, but interesting. He hated this kind of coffee, but when in . . .
His room was strictly non-Arab. The menu featured hamburgers along with shashlik. The bellhop was all smiles. The maid was dark but cute. Stanley was slowly regaining his equilibrium.
It may seem strange that a man worth at least $20 million could ever lose his equilibrium in this world of the 1970s. But though quite aware of the safety and protection which money assured, Stanley Rosen was equally sensitive to the fact that he had earned it quickly. And although he had earned it on Wall Street, it had been on the wrong side of that narrow street. He was known as one of the cleverest financial operators in New York; he was a regular for lunch downstairs at the “21” Club; his phone calls were usually accepted without hesitation. But he had never seen the inside of the New York Athletic Club, and he had never been asked upstairs to lunch at Lehman Brothers. Yet it was known that he managed over $1 billion in assets. Some people put the figure appreciably higher.
The success of Stanley Rosen lay in the fact that he was endowed with a mental adeptness of almost unique character. Furthermore, he was willing to apply his mind to everything—literally everything—that had to do with money, its management, its use to make still more money.
But he never gambled.
During the days of the great bull market in the mid-1960s Rosen did not plunge into new hot issues with his clients’ funds. He specialized in merger arbitrage and was satisfied with a more or less 20 percent return per annum. He deliberately rejected opportunities for doubling his money through access to a block of shares of sure-fire new companies. In those days of euphoria, instead of using margin facilities, he kept at least 25 percent of his funds in certificates of deposit and Treasury bills, and as the Dow Jones Industrial climbed toward 1000 steadily, he increased the cash or near cash components of the portfolios he managed. He was one of the first to detect that one could get a substantially higher return in dollars by lending them out in Europe for periods of three to twelve months (less one day—for tax reasons), against essentially no risk whatsoever, for the borrowers were the largest financial institutions in the world. And there was where he had most of the funds he managed, while the New York Stock Exchange was dropping week after week and month after month in the grim days of 1969 and early 1970. In mid-1970 Rosen had massively switched continents once more, putting almost everything back into New York: T-bills, Fannie Mae, and blue chips. By early 1971 he was back in Europe. This time he concentrated on German chemical company stocks and shares of the Big Four Swiss Banks. He stayed there quite a while and made another pile in the process. Then he moved to Tokyo and made still another. Rosen knew how to consistently make money in both bull and bear markets. Obviously a good man to know.
When people first met Stanley, they found all this most difficult to appreciate. He was short and fairly tubby. His clothes hung. His shoes were rarely polished. A blue tie and a green shirt were not unusual. He spoke rapidly, most indistinctly, and with a truly atrocious New York accent. When riding with him from Wall Street to midtown, more than one of his new clients had the thought that Stanley would have much more aptly fitted behind the wheel of the limousine than in the back seat.
There was another feature of Stanley which one could not overlook. He liked girls—lots of them. And the damndest thing was that girls really liked Stanley, with or without limousine, with or without the “21.” It never failed to astound his associates when Stanley inevitably ended up with the real stunner at a party, whether in Beverly Hills, the Bahamas, or Greenwich Village.
Rosen did not fool around with small clients. The minimum portfolio he would take on was $5 million. He never solicited clients, and in fact he had not taken on any new unsolicited ones during the past four years. Who needed them?
More than a few people in both New York and Washington wondered who his clientele were—in fact, more than just wondered. Stanley knew this quite well, and therefore he ran his New York shop in a fashion which was impeccable—a model of accounting practices, up-to-dateness, orderliness, supervised with ultra-scrupulous attention to all laws of the land. No, Stanley did not run The Vatican’s money. The blunt fact was that Rosen handled the funds of a group of gentlemen who ranked among the most successful businessmen of the twentieth century—in Las Vegas, Miami, Chicago, Boston, New Jersey. All of them had backgrounds as humble as that of Stanley himself. All of them had accumulated immense liquid wealth since World War II. But none of them had direct access to the legitimate money and capital markets of the world or to the reputable money managers of the world—be they the trust departments of banks, the big-name investment houses in New York, or the la-di-da private counselors in Boston. So you see, there are also disadvantages in being in the Mafia. Not many of course, but still . . .
In 1959 one of their number had met Stanley. They had worked out one of the first private offshore investment company setups to be established in the Caribbean area. Stanley Rosen, in true character, had discovered Curaçao not too long after the Dutch had, it seems. He had carefully developed the necessary bank connections there, had gained the services of a first-class law firm and a world-renowned, non-American accountancy and auditing company. The corporate structure that had been worked out was as near to perfection as one could get in a world crawling with tax inspectors, and plagued by ever-changing tax laws, currency restrictions, death duties, reporting requirements, et cetera ad nauseam. The Curaçao corporation was duly capitalized and received a long-term loan of a very substantial nature. All in-payments were, of course, in cash. The shares and notes were, naturally, all issued in bearer form. Under the rather lengthy bylaws, Stanley Rosen had been charged by the corporation’s officers—all third-generation European residents of the colony—to manage the company’s assets on a carte blanche basis. By 1963 Rosen had managed to triple the original cash input. That sufficed. The word spread—quietly.
In the course of the next five years he had established twenty-seven such entities; their structure increased each time in terms of complexity and finesse. Curaçao had been joined by the Bahamas, the Cayman Islands, and of course Liechtenstein as corporate domiciles. Often two or more of these offshore havens were strung together within one corpora
te complex, with separate directorships, separate balance sheets, separate auditors. The only thing they all had in common was a management contract with Stanley Rosen, or one of his corporations in Bermuda, Panama, or Luxembourg. By the early 1970s the combined assets of this system added up to a ten-digit number. Rosen managed all of it—successfully.
Exactly this thought was passing through Stanley Rosen’s mind as he relaxed into an easy chair in the sitting room of his suite. Running over a billion bucks, and still not satisfied.
The decision that had led to his presence in Beirut had been taken just two weeks ago, over lunch at Delmonico’s. His “partner,” Harry Stahl, had been waiting for over half an hour before Stanley had finally turned up.
“Where the hell you been so long?” Harry had inquired.
“Talking to a new client.”
“Talking to a what? I thought we agreed years ago that we had more than enough to handle. Stanley, I’m warning you. I’ve got my hands completely full now with all the back office work. Christ, you ought to know better!”
“Now wait a minute. First let me tell you what kind of a client. Boy, what’s wrong with you today?”
“Nothing. It’s just that I don’t like surprises.”
“O.K., O.K. But now just listen for a minute. I’m not committed. So hold your horses until you hear my story. All right?”
Harry Stahl had calmed down. He knew his “partner” all too well to doubt that there must be something big involved: something that must interest the bejesus out of Stanley. That was not easy these days. Grudgingly Harry said, “I ordered you a shrimp cocktail and a steak—rare, with french-fried onions.”
Stanley had then told what little there really was to be told at this point. At nine that morning a fellow, who introduced himself as Omar Radazan from Beirut, had called him and asked for an appointment at his earliest possible convenience. He had referred to a man from Miami who was big in the international resort hotel business and a client of long standing of Stanley. At ten-thirty he had shown up. A dapper little bastard. Smooth as silk, polite as hell, about forty. His card had indicated that he was head of the Beirut branch of the Commercial Bank of the Trucial States, headquartered in Bahrain for Christ’s sake. It seemed that all of the Arab banks have branches in Beirut. This just by the way. It had taken Radazan less than five minutes to ask Rosen if he would consider taking over the management of the investment funds of one of his friends, or clients, or relatives—the relationship was never really clearly spelled out. But the funds were. Just over $100 million. At present they were invested in a whole string of U.S. common shares, a sprinkling of preferreds, and a big block of, for Christ’s sake, municipal bonds. Municipal bonds for an Arab?
The Billion Dollar Sure Thing Page 5