“Do you take sugar?” she asked.
“Yes, please. That’s very kind of you,” replied Rosen.
“Do you mind if we get right down to business?” asked Weckerlin, as the girl disappeared.
“The sooner the better.”
Now the new face, Dr. Bernoulli, took over.
“Mr. Rosen, as you know we have indisputable evidence that you have been involved in one of the most serious cases of economic espionage ever uncovered in this country. In that it was aimed at undermining the currency of our country, it was my duty to press charges against you.”
“So that’s—”
“Please let me continue, Mr. Rosen. And I will be quite blunt. As I said we have indisputable and irrefutable evidence. You will get five years at a minimum. We could argue back and forth all day, but believe me, I know our courts. Don’t suffer from illusions that any forces on the outside would be able to help you. The entire affair involves matters of national security and matters which fall under the bank secrecy laws. The proceedings against you, from beginning to end, will be held in camera.”
“Is your job to come here to intimidate me or what?” asked Rosen.
“That’s a fair question,” replied Bernoulli, “and it brings us directly to the purpose of our meeting this morning.”
“And that is?”
“I am here to offer you a deal, as you Americans so nicely phrase it, Mr. Rosen.”
“I read once that the Swiss authorities never make deals,” replied Rosen.
“I’m sure you read correctly. This is an exception.”
For the first time in many hours Stanley grinned.
“All right, let’s hear it.”
“I am prepared to withdraw my charges against you and Dr. Weckerlin is prepared to release you—immediately—subject to a few conditions.”
“They are?”
“First, that you leave this country immediately. Second, that the fact of your short stay with us, and all circumstances surrounding it, are kept secret not only now but forever. That’s all.”
“Just as simple as that, is it? No hookers, no strings attached?”
“Not exactly.”
“Well, perhaps you could be a bit more exact.”
“Fine. All the cash margin you have paid into the General Bank of Switzerland during this past week will remain frozen for ninety days.”
“And what about the gold I am supposed to have bought?”
“All those purchases have been cancelled. Also the foreign exchange contracts have been nullified.”
“On whose authority?”
“Dr. Walter Hofer, the head of that bank, has been informed of most of the circumstances involving your person and he took this step yesterday. Our department agrees that he is fully within his legal rights, since the orders you gave his bank were a direct result of serious criminal activity, of espionage directed against Switzerland.”
“And the cash margin?”
“As I said, under our order it will be blocked for ninety days. Thereafter, if you have shown good faith, the entire $150 million will be returned to you or transferred to any bank of your choice anywhere in the world.”
“Fair enough. But what is to prevent me from telling this sordid story after I leave your wonderful country?”
“A number of things,” replied Bernoulli.
“Like?”
“Like the fact that under U.S. federal law, any American citizen who buys gold bullion is subject to a fine equal to three times the amount of bullion contracted for. In your case, that would be around $600 million. There is also the possibility of prison for up to five years in hard cases. I would judge that they might regard this as rather hard, wouldn’t you?”
Stanley said nothing.
“Then there’s the entire record of your activities at the Basel branch of the General Bank of Switzerland during the past ten years. I am told that the use of numbered accounts in Switzerland to avoid American taxes is regarded as fraud in the United States. I also hear that the penalties in cases where the government has been swindled out of millions of dollars of taxes over a period of many years are rather severe.”
“I see. And your famous bank secrecy laws?”
“Where criminal offences like economic espionage are concerned, these laws do not apply. In cases like yours, where obviously an international conspiracy is involved, there is nothing to preclude us from sharing information, pertinent to such a case, with foreign authorities. In your case, the U.S. Department of Justice.”
“I hear that doesn’t happen too often.”
“As I said once before, Mr. Rosen, there are exceptions.”
“I would call this blackmail.”
“That is your privilege.”
“How much time do I have to think this over?” asked Rosen.
Now Weckerlin interrupted. “As far as we are concerned, months—even years.”
“Yeah,” said Rosen, “I forgot. You fellows have never heard of habeas corpus.”
“Well?” said Bernoulli a few seconds later.
“It’s a deal.”
“Fine,” interjected Weckerlin. He picked up a piece of paper from his desk. “I have your release papers right here. I’d appreciate it if you would sign, right beside the pencilled X on the bottom.”
Stanley signed.
“And now?”
“I will take you to the airport,” said Bernoulli.
“What airport?”
“The Basel airport. We have booked you on an Air-Inter flight to Paris. It leaves just after noon.” Bernoulli looked at his watch. “It’s now quarter after ten. If we get moving, we should make it quite easily.”
“You fellows were rather confident, weren’t you?”
This time Rosen received no answer.
Rosen had already disappeared ahead of him through the door when Bernoulli turned and put a last question to Weckerlin. “What about Bechot?”
“Don’t worry, even with this thing dropped, we have enough on him otherwise to guarantee that he stays inside for at least three years.”
“Poor bastard.”
Weckerlin just shrugged.
Rosen checked out of that Swiss prison in what must have been record time. He did not look back once after he had passed through the heavy doors. He just threw his suitcase into the open trunk of Bernoulli’s waiting car and climbed into the front seat.
“How long to the airport?” he asked as they wheeled out of the courtyard into the narrow street, full of housewives with their baskets doing their Saturday shopping.
“Fifteen minutes,” answered Bernoulli. He handed Rosen a newspaper. “Here’s the morning Herald Tribune. I thought some of the stuff in there might interest you.”
Rosen gave Bernoulli a peculiar glance. Then he unfolded the paper. The garish headline leaped out at him.
“My God!”
“What’s wrong?”
“For Christ’s sake, they’ve actually done it.”
“What?”
“The U.S. has put the official gold price to $125 an ounce!”
“So what’s new about that?”
“Well, I thought it had to come. I knew it had to be underway. But just like that. Bingo. For Christ’s sake!” he repeated.
“Come now, Rosen—”
Rosen put his paper down, and his face suddenly took on an almost enraptured look.
“Now I get it. Now I get it. Why, you dirty son of a bitch. You stupid son of a bitch. You dumb jerks have got the wrong guy. Somebody did the frameup job of the century, and you bastards fell for it like a ton of bricks. You stupid bastards. You pricks have just robbed me of a fucking fortune.”
Bernoulli didn’t say a word. They were now on the straight stretch of express highway that had them to the airport just a few minutes later.
It was a peculiar airport, probably unique, in that it was shared by both Switzerland and France. The border ran right through the middle of the terminal, and it was to this invisib
le line that Bernoulli led Rosen. Bernoulli carried the suitcase.
“Mr. Rosen,” he said. “This is where we part. I don’t expect we’ll ever meet again.” He offered his hand. Rosen ignored it and instead retrieved his suitcase.
“One minute,” said Bernoulli. Rosen’s heart missed a beat, and he suddenly had a terrible pain in his gut.
“What now?” he rasped.
“Your ticket,” said Bernoulli, as he reached into the inside pocket of his jacket. “And your passport.” After handing them over, he abruptly turned on his heel and strode out of sight.
Rosen passed through French immigration without a question being asked. Then he went to the men’s room and vomited.
19
“WALTER, these caviar canapés are delicious,” said Sir Robert Winthrop.
“And the champagne superb.” This came from David Mason.
Walter Hofer merely emptied his glass and then waved at the bartender for refills all around. The glasses were soon again brimming with Veuve Cliquot. Hofer glanced at his paper-thin watch.
“Gentlemen, why don’t we take these drinks with us. It’s well past noon, and I’ve arranged for lunch in a private room just here off of the bar.”
The three bankers walked through the large glass-paned doors to the left, into a small but magnificently furnished suite. A table, set for three, glistened with its setting of crystal and silver. The centrepiece of delicately arranged flowers reflected the bright sunlight that was pouring through the large picture windows.
“Pleasant view, isn’t it.” As usual, Dr. Walter Hofer was right. The Grand Dolder Hotel lay high on the Sonnenberg overlooking the Lake of Zurich, surrounded by a golf course, which was in turn bordered by tall fir trees. Though only twenty minutes from the heart of Zurich, one had the perfect illusion of Alpine serenity. Even the prices were quite in line with the Palace, St. Moritz, or Gstaad. All that lacked were ski lifts and idle royalty.
“I have given instructions to serve lunch at one. That will leave us sufficient time to cover the business at hand right now. Why don’t we all sit around that coffee table over there.”
Once they were settled, Hofer handed a set of neatly bound documents to his friends, retaining a third for himself.
“Well, there it is. All the necessary signatures of the South African government are attached. I and one of my deputies have executed it on our mutual behalf, thanks to your proxies. It was duly notarized here in Zurich on Thursday afternoon. Gentlemen, it represents an airtight document.
“Now let me summarize the details. Our joint corporation which is party to this contract was registered exactly five days ago, in the canton of Zug. We chose the name Intergold. The General Bank of Switzerland has subscribed to 40 percent of its capital, and both of your institutions have received 30 percent each. All the issued shares are in bearer form, and they can be assigned by you to whatever entity in your banking groups you desire. I’m sure taxation might play a role there. Both of your performance guarantees were received in good time. Thank you for your promptness, gentlemen. I know how difficult it sometimes is to expedite commitments involving such large amounts. As you know, David, your letter of credit in favour of Intergold has been deposited with us. And your sterling guarantee has been handled the same way, Sir Robert. My bank has given an unlimited, I repeat, unlimited performance guarantee to Intergold. I think we all agreed that this merited our receiving a slightly higher equity participation in the venture. By the way, since only bearer shares are involved, there is absolutely no way for the public to find out who stands behind Intergold. That may prove valuable. I’ll cover that point later.”
Both of Hofer’s partners nodded.
“Now to the agreement itself. It runs for five years, starting January 1. The contracting parties are the government of the Republic of South Africa, Intergold as guaranteed by the General Bank of Switzerland in Zurich, Winthrop’s of London, and the Republican Bank of New York. Under the terms of the agreement, dated just two days ago, Intergold has agreed to buy the total gold output of South Africa during the five year period following January 1st. The South African government has agreed to sell that country’s total mine output during that period to Intergold on an exclusive basis. The only conditions which relate to this facet of the contract are that both parties agree that the amount to be delivered and paid for will not be less than 30 million ounces annually and will not exceed 35 million ounces in any twelve month period. The agreed fixed price in the first year is $80 an ounce. Each successive year thereafter, the fixed price will increase 5 percent. Key to the entire agreement is that these prices are irrevocably fixed and must remain so irrespective of the prevailing prices on the free markets in Zurich and London. These prices also remain fixed for the duration of the contract regardless of what happens to the official price of gold set by the United States government. I think you can appreciate, gentlemen, how very important this last condition has today become.”
David Mason spoke up. “You are sure that after the president’s speech last night there is no way the South Africans can break this contract?”
“None whatsoever. If they even try, they will be blackballed in every financial market in the free world. That they cannot afford. As I said at the beginning, this agreement is airtight from all standpoints. It has been drafted and approved by the best legal men in both Switzerland and South Africa. If it should ever have to go to arbitration, the Chamber of Commerce in Paris has been given jurisdiction. I think none of us would have to worry about which side they would favour.”
“And if the government is brought down in Pretoria because of this?” asked Sir Robert.
“I hardly think that possible. You know as well as I do the nature of government in that country. It could only be overturned by revolution, and that would only arise out of domestic race problems. I don’t rule that out ultimately, but I think it is highly improbable during the five years of our agreement. But then there’s another factor to consider. The South African government entered into this agreement for very sound reasons. It allows their gold mines, the most important sector of that country’s economy, to work with fixed prices for their output. For years none of these mines could plan ahead, since the price of gold fluctuated much too much. A deposit of ore which can be mined quite profitably at $80 an ounce becomes a financial fiasco if the price dips back to $65 an ounce. By reaching agreement with us on a fixed price for their entire mine output, South Africa opened the way for an optimal exploitation of their gold resources.”
“Yes,” interjected Mason, “but as of last night they could be getting a fixed price once again from the American government: at $125 an ounce, not the $80 we have agreed to.”
“That was totally unknown to both parties during the negotiations. In fact, for years the Americans have repeatedly expressed their desire to totally demonetize gold. They could just have well gone that route as the one they chose not so many hours ago. Then we, gentlemen, would have rather long faces this morning. That could have cost us billions. I repeat, this agreement was negotiated and signed in good faith by both parties, each fully cognizant of the risks inherent in such contracts. There can be no question of its validity.
“And you must not forget article xvi of the agreement. Both parties have pledged to maintain absolute secrecy concerning the existence and terms of this contract for at least ten years. If the South African government chooses, and I now suspect it might, it can easily conceal everything by merely making up the difference between what it will be getting from us and what the mines expect to get for their gold output after the American decision. They can take it from treasury funds. I’m sure they could bury the amounts involved in the defence budget. Such things have been done before, you know, especially in your country, David. No, gentlemen, all contingencies have been foreseen and covered.”
Sir Robert Winthrop and David Mason were convinced. Then Winthrop asked the question, and he asked it softly.
“Walter, how much will
our profit be?”
“Substantial, in fact quite substantial. I made a rough calculation last night after watching the president’s speech on television. The Swiss TV carried it, you know. I must say, he made a very convincing presentation.”
“I agree,” said David Mason, “but what did your calculations show?”
“Let’s take the first year,” said Hofer. “Mine output next year is projected at 33 million ounces. Our gross cost, at $80 an ounce, will be $2.640 billion. Our receipts, upon resale to any central bank at $125 an ounce, will be $4.125 billion. That leaves a gross margin of $1.485 billion. Let’s call it one and a half billion. Intergold expenses will be minimal, really nothing much more than the cost of compensating our banks for their performance guarantees. And transport and insurance, of course. In any case, I foresee a profit before taxes the first year of about $1.4 billion. The canton of Zug, where we have incorporated, has entered into a tax agreement with Intergold. The maximum tax rate will be 12 percent. That leaves an after-tax net profit of just a shade over $1.2 billion.
“My God!” exclaimed Mason.
“Yes,” said Hofer, “it is quite amazing, isn’t it. Of course, you must not forget that we have agreed to increase the price by 5 percent each year. It’s a pity, but it couldn’t be helped. That will mean that by the fifth year our gross margin will drop to under a billion. But for the five-year life of the contract, we should be able to clear $6 billion gross and well over $5 billion net after taxes.”
“Absolutely astonishing,” said Winthrop. “Walter, you have done a truly magnificent job.”
“Sir Robert, the contribution you made during the past few days was invaluable, you know,” replied Hofer. “Your intervention in the London gold pool proved totally successful. If we had not kept the price below $80 an ounce right up to the closing, I’m afraid the South Africans would never have signed. It was very touch and go at the last minute.”
David Mason then spoke. “One thing I cannot understand, even now, is the behaviour of the Russians during the past week. From what we heard in New York, Walter, they started the entire speculation against the dollar and on gold, and then completely reversed field in midweek. Is that true?”
The Billion Dollar Sure Thing Page 24