Due Diligence

by Grant Sutherland

  ‘The Ice Maiden? Yeah, she was on my back yesterday. Ancient history. What is it with her?’

  ‘It’s her job.’

  ‘You seen that new paperwork she dreamed up?’

  I remind him that she’s working for me.

  ‘Sign three times before you take a leak?’ He holds up a hand as he goes out. ‘Look at this. Callouses.’

  Outside the door, I hear him sharing a joke with Becky before he heads back to the Dealing Room. The prospect of promotion has raised his spirits. But it’s Becky’s laughter that makes me realize just how quickly Daniel’s murder is slipping into the past. For most of those who knew him, the tears have dried; questions remain, but the living are getting on with their lives. Most but not all. Not me or my father. Not Ryan.

  Vance comes in without knocking, he drops the FT on my desk. ‘Read the “Lex”?’

  I haven’t, so I read it now. The Financial Times sets its best and brightest loose on several City stories each day: their short, well-informed pieces appear in the ‘Lex’ column. Its reputation has declined lately, but it remains a useful sounding board for the City. This morning there’s a piece on the Meyer bid, and the opinions it offers on the Parnells’ board and management are scathing.

  ‘Malign neglect? Close to libellous, isn’t it?’

  ‘Not our worry.’ Vance takes back the paper and gives it a second perusal. ‘I’ve faxed it over to the Meyers, make sure they see it.’

  I ask if the Meyers are drawing down the rest of the credit line.

  He admits that he hasn’t raised the subject with them yet. ‘I didn’t want to rock the boat,’ he says. ‘We’re nearly there.’

  I remind him that we’re also nearly in breach of Capital Adequacy, the ratio of capital to borrowings, set by international statute, that governs our loan book. Gordon Shields, our Finance Director, has been onto me about it already this morning. The Meyer bid is really stretching us thin. Times without number I’ve seen Vance take someone on his team aside to tell them not to confuse the interests of the client with those of Carltons. Now I recite the lesson to him.

  ‘I'll have Cawley and Haywood take a look at the options,’ he says. ‘See what they can turn up.’ Then he fixes me with a steady look. ‘We might have capital adequacy problems, but if this bid falls apart you’re going to have a meltdown in Corporate Finance.’

  ‘Whose opinion’s that?'

  ‘lt’s not an opinion, Raef. The headhunters are gathering.’ He goes to the door. ‘By the way, Lyle seems to be getting personally involved in the Parnells defence. Any reason for that?’

  ‘You know Lyle,’ I say, and Vance makes a sound. He knows Lyle all right. ‘Stephen, have any headhunters contacted you?’

  He smiles at me but doesn't answer. When he turns and goes out, closing the door gently behind him, the hairs prickle up my neck.

  I phone Sir John immediately. No time for the usual discursive approach, so I ask him directly if he’s unwound that deal yet, the one with the clearing bank. He tries to deflect me. ‘John,’ I say, ‘have you done it? Yes or no?’ A moment's silence, then he answers, ‘No.’ His tardiness, for once, is welcome. I tell him to leave it in place for now, and he seems quite pleased.

  Hanging up, I press my hands to my face. I can’t imagine Carltons without Stephen Vance, I really can’t. An old saw of my grandfather's comes to mind. No friends, no leverage: no leverage, no friends. A cynical truth that explains many of the City’s dark ways. And I have a sudden queasy feeling that very soon here at Carlton Brothers, we will need all the friends we can get.

  2

  * * *

  The Meyers have their headquarters in Spitalfields, behind Brick Lane. Forty years ago they rented a shopfront in the same building. They were in the rag-trade then, but after moving into property they gradually bought out the other tenants. The brick exterior is shabby, but the reception is all plush carpeting, pale blue, and mahogany-panelled walls.

  As we step inside, Vance mutters, ‘Once more into the breach.’

  We have had some more bad news overnight. Bainbridge, an arbitrageur, South African but based in London this past year, has built up a four per cent stake in Parnells. Apparently David Meyer has taken the news badly; he wants someone to blame. Stephen Vance has been summoned.

  Normally I'd be content to let Stephen deal with it alone, he’s easily a match for David Meyer. But when I got into work this morning, and saw him, I changed my mind. Stephen does not look well. Lack of sleep; pressures of the bid; worries about Ryan: I don’t know what’s done it, but today he seems to be carrying the weight of the world. He was surprised when I said I’d come with him. No need, he said. But I assured him I had nothing better to do.

  On the way over he gave me the dossier that Haywood had prepared on Bainbridge in the early hours of this morning. There are articles from the financial press in South Africa, Canada and Australia, the markets in which Bainbridge made his name as a player in mining stocks; pieces which related a familiar and depressing story. Bainbridge’s arrival on a company’s register was the signal for the canny investor to get out. Those who didn’t generally found themselves pushed to the sidelines, voiceless, as he transferred any worthwhile assets into his personal holding company before departing to perform the same stunt elsewhere. A profile from the FT in the dossier puts his fortune at around eighty million pounds.

  As we enter the office Reuben rises to greet us. But David Meyer doesn’t bother: he starts straight in.

  ‘So tell us the sob-story,’ he says. ‘What went wrong this time? Who dropped the ball?’

  Reuben invites us to sit. Then he sits down himself and rests his clasped hands on his stomach. He asks Vance to explain. David paces the room.

  Deliberate and concise, Stephen gives an account of the Bainbridge holding. There isn’t much sign of his earlier weariness now: he seems to have this enviable ability to call up some hidden resource just when he most needs it. David interrupts, but when I hand him our dossier on Bainbridge, he slumps into a chair and reads.

  Once Vance is done there’s a brief silence, then David closes the Bainbridge dossier. He looks from me to Vance. ‘You fucked up again.’

  Vance bristles. ‘With respect—’

  ‘Don’t give us that.’ David slaps the dossier down on the floor. ‘We’re not paying for excuses. You told us 180 and we’d get Parnells. Now you’re telling us what? Sorry, you made a mistake?’

  ‘We weren’t to know Bainbridge’d get involved.’

  ‘Wrong,’ David shouts, leaping to his feet and pointing at Vance. ‘Knowing when a prick like this Bainbridge is coming in, that's your job. That’s why we pay you.’

  Reuben says something in Yiddish. David answers in the same language, then turns back to Vance. ‘You’re saying we can’t get Parnells now? We upped the bid-’

  ‘We can do it with your support,’ Vance says.

  ‘Then go ahead.’

  It isn’t like Vance to let things get under his skin, but I can see that he’s had more than enough of David Meyer. Reuben intervenes. He asks Stephen if the Bainbridge holding has been confirmed. Vance explains that we’re expecting the Stock Exchange confirmation later this morning, then he points to the dossier in David’s hands. ‘One thing I can tell you, he won’t be making a bid for Parnells himself. He’s a spoiler, not a manager.’

  Reuben asks exactly how much of Parnells we’ve secured. Vance tells him.

  ‘Now Bainbridge has four per cent,’ Reuben muses aloud.

  ‘And you schlemiels,’ David points at Vance again, ‘have one per cent.’ At this blunt reminder of our cock-up, Vance winces. David Meyer mutters to himself, the one word I hear clearly is ‘shambles’.

  I address Reuben. ‘Stephen’s appearing before the Panel this morning. Indications are, we’ll be slapped over the wrists. The Meyer Group won’t be dragged into it.’

  David Meyer laughs bitterly. ‘Why not? You’ve already got us answering questions in a murder inv
estigation.’ He waves a hand airily. ‘Takeover, murder. Another day, another fuck-up.’

  Reuben looks from his brother back to me. I’m beginning to realize just how hard Vance must have worked to get the deal this far. ‘We don't doubt your good intentions,’ Reuben says. ‘It’s your results that concern us.’

  It is my turn to wince. We have, by any measure, handled the Meyers’ interests very poorly. But I assure Reuben that we will still win Parnells.

  But there’s no reaction from Reuben. David smiles unpleasantly. And then Vance, as he's done so often before, comes to my rescue. He gives them a short dispassionate assessment of how the bid currently stands. He, too, concludes with an assurance of victory.

  ‘Remind me,’ David says. ‘Have I heard that one before?’

  But Vance has taken the bit between his teeth now. Unruffled, he reaches into his briefcase and takes out a file. Then he goes across to Reuben’s desk and begins his performance.A minute later he has Reuben on one side, David on the other, and all three of them are bent over the open file, talking numbers. Stephen Vance really is something. When I first started in corporate finance, he used to take me along to a lot of his meetings, and I generally felt then, just as I feel now, surplus to requirements. He could talk under wet cement; and not only talk, but convince and inspire. But I think the thing I admire most about him is that, unlike so many in our business, he has real and genuine standards. One of those early meetings he took me to, I have never forgotten.

  It was at the head office of a major industrial, and it lasted about ten seconds. The company was interviewing a number of banks, a beauty contest: they wanted to select one of us to manage their affairs in the City. It was a big deal at the time; we’d been working on it for weeks, even my grandfather was involved. When Vance and I walked in we found the company executives seated in line behind a table. There was one chair in the centre of the room, the whole thing laid out to intimidate. The Chairman didn’t introduce himself. He said we should keep our presentation brief, and he pointed to a small bell on the table. When I’ve heard enough, he said smirking, I’ll ring the bell. The rudeness was pointed and deliberate. Vance looked at me and smiled. Then he walked to the table, picked up the bell and rang it in the Chairman’s ear. I don’t think I’ve ever seen a man look more surprised. We didn’t get the business, but that gesture stood ever after as a benchmark for me. It taught me that there exists a level below which even a corporate banker shouldn’t sink in pursuit of the deal; it taught me to maintain my self-respect.

  Twenty minutes later, on the street outside the Meyers’ offices, Vance thanks me.

  ‘What for?’

  ‘You didn’t walk out.’ He pushes his fingers up through his greying hair. ‘That David is a first class pain in the arse.’

  The performance over, Vance looks tired again. I ask if he’s heard any more from Inspector Ryan.

  ‘Jesus,’ he says, laughing. ‘One thing at a time.’ Vance, the corporate banker’s banker, has nothing in his sights but the bid. On the corner he hails a taxi, steps in and gives the address where the Takeover Panel have convened. ‘Coming?’ he says.

  I wish I was. Unfortunately my days of thinking about just one deal night and day — in the shower, on a plane, in my bed — are over for ever. My father’s son, I have inherited a place at the table of an altogether lonelier and more uncertain game.

  As Vance pulls away in the taxi, I glance at my watch. Hugh Morgan will already be waiting.

  3

  * * *

  ‘We got a break.’ Hugh beckons me in and invites me to pull up a chair. There’s a whiteboard by his desk. On the left side of the board Hugh has copied the details from my fax: the hierarchy of the Carlton Brothers management, from Sir John on down. A maze of arrows and questions marks join the names. On the right side there’s a list of deals in red lettering, and more arrows.

  Looking over his shoulder at the screen, I ask him how it looks.

  ‘Seen worse. Okay, from the top. We dumped miscellaneous, so I churned money-market and forex from the system, looking for patterns. Zero. Too many deals. A few crooked deals a week, they'd just disappear into the statistical noise.’

  ‘This is a break?’

  ‘Hang on. Last night I was thinking about that note. You know, from Penfield? It said "over the past twelve months," right?'

  I nod, unsure where this is taking us. Something else occurs to Hugh now.

  ‘First,’ he says, leaning across to tap the list of names on his whiteboard. ‘Anyone above this line joined Carltons in the last year?’

  ‘Tony Mannetti,’ I tell him. ‘He came across from New York.’

  Hugh wants to know more, so I explain how Mannetti came to us. It was a quid pro quo, part of the standstill agreement we worked out with American Pacific after they’d built a stake in the bank. Once we’d made it clear to Eric Gifford that we wouldn’t offer him a seat on our board, he quickly lowered his sights. He suggested we pool some resources in selected businesses. As it happened, American Pacific had built one of the strongest funds management teams in the US while our own efforts in that department were foundering. He offered to send us one of American Pacific’s rising stars for a short time. Mannetti came. Two months later, both the head and deputy of our funds management team left for greener pastures. When Mannetti offered to stay, we cleared it with Eric Gifford, then accepted. Until the past few days the arrangement has worked out well.

  ‘Until the past few days?’ Hugh echoes. It will become public knowledge anyway, so I tell Hugh about the cock-up. ‘We’re in front of the Takeover Panel right now.’

  ‘Ah,’ he says. ‘So Mr Mannetti’s not flavour-of-the-month. What’s he like?’

  ‘American. A bit flashy. Not exactly my taste. You can rule him out on this fraud thing.’ Hugh asks me why. I nod to the screen. ‘He’s funds management, ninth floor; he doesn’t even have access to the Dealing Room. And the cock-up happened while he was on holiday.’

  ‘No access at all?’

  ‘None.’ It comes out in a tone of regret. I’ve worked with Mannetti for the past several months, but unlike with everyone else above the line on Hugh’s whiteboard — Vance, Sir John, Henry Wardell and half a dozen others — I’ve developed no real liking for the man. It would be convenient if he was the fraudster, but he isn’t.

  Hugh doodles some more with his pen. ‘Okay, the note. Last night I started wondering why whoever it was only sent it now. I mean, if he’s known this stuff's been going on for a year, why wait till now before he sends the note?’

  ‘Maybe he didn’t know. Maybe he just found out.’

  ‘One possibility. But what if something else triggered it?’

  ‘Like?’

  ‘Like a deal,’ Hugh says. ‘A crooked one that just got done. One the note-sender didn’t want to happen.’ I’m no expert, but this suggestion seems like a rather wild guess, and I say so. Hugh isn’t troubled. ‘Then allow some time for the note-sender to turn things over, or for something else to occur—’

  ‘Daniel’s murder?’

  ‘I checked with the Post Office,’ he says. ‘The note could have been sent just before, or just after, Daniel died.’ He types then, telling me he’s narrowed the field even further. ‘I concentrated on forex: there was a big surge in deals late December.’ In late December, I recall, the French Franc collapsed, there was pandemonium in the Dealing Room. Our settlements staff had to work shifts to stay on top of the volume. ‘If someone wanted to hide a deal, this’d be the place. There were two big days, the twenty-seventh and -eighth. I’ve done a search and scan on all the Franc deals your lot did both days.’ He hits one final key. ‘Hey, presto.’

  The screen goes blank for a second, and then three deals appear. Alongside each deal, there’s a name; and though I’m staring straight at it, I can’t believe what I see.

  ‘Shobai,’I say.

  But it isn’t Shobai I’m looking at, and nor is Hugh. He points to the second name.
>
  ‘Odin. You know them?’

  What now? Christ Almighty, I think, what now? I shake my head. To give myself time, I point to the third name, Twintech. ‘Who’s that?’

  But Hugh won’t be put off, the Twintech and Shobai deals aren’t a fifth the size of the Odin transaction.

  ‘Get this,’ he says. ‘Someone scrubbed Odin off the main file. My software picked up the gap, and I traced the transaction number. I cross-checked the counter-party code and turned up these guys, Odin Investments.’ He gives me more details, proud of his work, and of what he’s found.

  I ask about Shobai and Twintech, but Hugh is dismissive.

  ‘Small fry. Probably statistical anomalies. Odin’s the one.’

  He’s wrong. I know it, but how do I tell him? The Odin deal was a one-off; it can’t possibly be part of the fraudulent trading referred to in Penfield’s note. But how do I explain that to Hugh?

  ‘Concentrate on Shobai,’ I say.

  ‘Have you been listening?’ Then he speaks slowly, word by word, as if to an idiot. ‘Someone scrubbed Odin off the main file. Your problem is Odin Investments. Are you reading me?’

  ‘You’ve done good work.’

  ‘That’s not what your face says, Raef. What the hell is this?’

  ‘Forget Odin.’

  He gives a snort of choked laughter. ‘I’m doing you a favour here. Now it’s forget it? No way.’

  ‘Hugh-’

  ‘No way.’

  He is becoming angry. Up at Oxford, when he got his teeth into a problem, he simply would not let go; and that Petrie case, the same thing. And now? I choose my words carefully.

  ‘Hugh, it’s not necessary to investigate the Odin deal.’

  He searches my eyes, and asks me to repeat what I have just said. So I do.

  ‘Fuck,’ he says quietly.

  ‘Listen—’

  ‘No,’ he says, stabbing a finger at me, ‘you listen. You already knew about this Odin deal?’