The fact was that for George Foreman this was a rather small project. So having finished his monologue, he ordered two small cognacs: Remy Martin, with water on the side.
The swirling and swallowing of the cognac was done in silence. Then Foreman had the last word, as he was used to having.
“Luckman, I want you to start moving the beginning of next week. Just get yourself a long airplane ticket. Two of them, come to think of it. You’ll need your wife on this trip. She’s got a lot of spunk.”
Then Foreman leaned forward and in a soft voice said: “And remember, Luckman, not a word of this to anyone. If it leaks that we’re in the market for a bank in Europe, everybody over there will be out to hold us up on price. This is secret and it must stay that way until we’re ready to make a concrete move.”
Fifteen minutes later the Luckmans’ big night was over. Less than an hour later, both were sound asleep in Los Altos Hills, with the help of ten milligrams of Valium each. Normally they only took five milligrams. But now Donald was a Senior Vice President.
When George Foreman got home—he lived only five minutes away— he neither took a Valium nor went to bed. After saying goodnight to his wife, he turned on the TV, and settled into his favorite chair in the den. Channel 4 flickered on. For years, Foreman had rarely managed more than five hours of sleep a night. This meant that there was almost always a gap between the Country Club and bed. Thus Johnny Carson. He filled up time, and Foreman no longer liked to think about time. He was entering that period of the seventy-year itch . . . the craving for one last piece of really big action.
Johnny had already finished his standup, and was just welcoming Zsa Zsa Gabor to his show, for probably the 89th time. Foreman couldn’t stand her. So he switched off.
The phone rang. Automatically, Foreman glanced at his watch. Two minutes short of midnight. Must be either a wrong number or a kook.
“Hello,” he said cautiously.
“George Foreman?” The voice was hardly that of a kook.
“Yes,” again carefully.
“Frank Cook. I hear you’d like to get in the banking business in Europe.”
It had to be a hoax. Nobody ever talked to Frank Cook.
“Where are you calling from?”
“London.”
“It must be the middle of the night there.”
“It is.”
“Mr. Cook, I hope you don’t mind my being somewhat skeptical. We’ve never done business together. So I can hardly know whether you’re authentic or not.”
“I agree. You’ll have to take my word for it.”
“How could you possibly know we’re interested in acquiring a bank in Europe?”
“Because it was the last item on the agenda of your Board meeting today. Should I recite the other items? Such as the $5 million write-off you’re going to have to make on that bad loan to Nuclear Development Corporation? Or . . .”
“No.”
“Fine. Shall I proceed with the real purpose of this call?”
“Please do.”
“There’s a bank in Lugano, Switzerland, called the International Bank of Sicily and America. It’s what you’re looking for. It can be gotten fairly cheap. And quickly. We’ll help you get it. Provided you’re prepared to move now.”
“Why?”
“That later.”
You don’t argue with Frank Cook.
“We don’t do things this way, Mr. Cook.”
“Fine. Then just forget this call.”
“Wait a minute!” Too hurriedly, but Foreman was more than just slightly off balance.
“I’m waiting.”
“We’d like to do a bit of our own checking first.”
“I understand that. Just as long as it’s done right now.”
“I’ve got a man leaving for Europe on Monday.”
“What’s his name?”
“Luckman. Donald Luckman.”
“All right. I’ll have one of my men contact him later next week.”
“Where?”
“We’ll keep in touch and decide that. Agreed?”
“Yes.”
“Fine. Good night, Mr. Foreman. I’m looking forward to doing business with you.”
Click.
Frank Cook!
George Foreman did something he hadn’t done in ten years. He decided to have a drink at midnight—alone. This generation has seen only a handful of men in the class of Frank Cook: Gublenkian, Ludwig, Hughes, Hunt, Getty, Englehardt. A race unto themselves. True billionaires. They had achieved heights that the likes of Onassis or his wife could only wishfully aspire to. Heights which a George Foreman could hardly dare dream of. Because theirs was the world of super-risk, the exact opposite of the world in which bankers are supposed to exist. But it was a world which held attraction for any mortal man. And George Foreman, in spite of what was said behind his back at the bank, was very mortal indeed. So he proceeded to do a second thing, which he hadn’t done in at least twenty years. He picked up the phone after midnight. It rang ten times on the other end before somebody picked it up.
“Luckman?”
“Yes.”
“George Foreman. I want you in my office at eight tomorrow morning. Sharp. Goodnight.”
He almost slammed the phone down.
It felt good. The chase was on. And, finally, he was riding with the elite of this planet. Not bad for a sixty-eight-year-old. But one thought did linger.
Why did Frank Cook need him?
What was Frank Cook up to this time?
8
WHAT was Frank Cook up to? Rigging the world’s silver market, that’s what.
The thought had occurred to him many times. But until July 14, 1967, it had not appeared feasible, for a quite simple reason. The United States government, due to its vast hoard of silver, controlled— completely controlled—that market. No one, not even Frank Cook, was megalomaniac enough to take on a situation like that.
But on July 14, 1967, Uncle Sam had given up. The reason? Up until that point the American government had been both willing and able to stabilize the price of silver at exactly $1.293 an ounce, by simply selling to all comers at that price. But gradually a shortage of silver developed. The photographic industry used vast, and ever increasing, amounts; the electronics industry, the nuclear industry, plus the old types of users in the silverware and jewelry industries—all were consuming the metal like crazy, at a rate far exceeding new mine output. Then on top of that, suddenly everybody started to hoard the stuff: in the form of Kennedy half dollars, Swiss five franc pieces, even plain silver bars. Because all over the world people began to feel that the value of their paper money was being eaten up by rising rates of inflation. There were only a few havens; but the surest of these were precious metals, especially silver. The U.S. government stopped the coinage of silver as a first step to conserve the metal. Dozens of other governments followed that example. Then they recalled silver coins, to melt them down, and replenish government inventories. But still the drain had continued. By law, the United States, through its agency the General Services Administration, had to maintain a minimum strategic reserve of silver, in case of war. So before that minimum was approached, the drain had to be halted. And the best way to halt it was to let the price rise, rise to a point where the demand would level off to a reasonable level, to a level where it could be matched by new output from silver mines once more.
So the government turned silver loose.
And up the price went. Way up. By January 1968—just six months later—it stood at $2.40 an ounce. Double. There was no reason why it could not go to $5.00 an ounce, provided world demand held up, and the supply was held down. World demand no one individual, or group, can manipulate. But supply? That’s something else. Harry Oppenheimer has proven that where diamonds are concerned. But no one had ever tried it on silver. Until Frank Cook.
Why Frank Cook? Because, next to the United States government, he—or rather his companies—owned the largest silver invent
ory on earth. His group served as the middlemen in the silver business. When Kodak needed silver, it came to Frank Cook. So did General Nuclear. Also Metalgesellschaft in Germany, and Gaevert in Belgium, and the jewelry makers of Florence, and flatware producers in England. Of course, they did not come to Frank Cook directly. They went to International Precious Metals Inc. in New York, or Precious Metals Ltd. of London, or International Edelmetale of Frankfurt, or Metaux Precieux Internationale of Paris. By feeding the customers sparingly, by making sure that no excess metal was ever allowed to float around in the international markets, Frank Cook was in a perfect position to make sure the price of silver went up. And up. And up. Which would mean that the value of Frank Cook’s silver inventories would do the same. And thus his profits. But even Frank Cook’s cash resources and credit lines were limited. He—that is, his computers—had first calculated whether they would suffice to corner the new silver market. The answer had been yes, but barely yes, provided no new source of silver emerged.
But that was exactly what happened in January of 1968. From nowhere. First, just a few hundred thousand ounces. Then a half million. Then a million. The speculators, who were unwittingly supporting Frank Cook’s game plan in a beautiful fashion, suddenly got worried. There seemed to be more silver around than everyone had thought. The prices on the metal exchanges in London and New York hesitated, faltered, and then plunged. By February 23, the price was back to $2.00 an ounce. Frank Cook did not like that one bit.
So he—his people—started looking for the leak. In Hong Kong, in Panama, in Zurich, in Singapore. Where the hell was it coming from? In desperation, Frank Cook assigned his right-hand man to the job, Nick Topping. He found it. In Dubai. And from there, the search quickly led to a man by the name of Firdausi. An Iranian. But it soon became obvious that the man did not have the financial resources to be able to swing a deal of this size. Again Topping went to work. And came up with the next answer: a bank in Lugano called the International Bank of Sicily and America. Firdausi had visited it three times during the past six months. An investigation of that bank had indicated, beyond any doubt, that there was something very fishy about the people involved there. Correctly employed, such information would mean that that bank could be had. Buy the bank, and you could probably buy Firdausi—and stop that silver. Provided, of course, they were partners in the silver thing. That would, in any case, have to be verified.
But Frank Cook could not risk buying that bank, or any bank. The last impression he wanted to create in the world’s banking community was that he intended to join them—and become a competitor instead of a customer. If he did, every bank in Europe—maybe also in the States— would slash his credit lines to nothing. That was no solution. But he could, perhaps, set up the same play for somebody else—logically, another bank. And then play it by ear from there. But what bank?
Nothing developed for weeks. Then it was there, starting like many other business deals, with just a routine bit of intelligence. In this case it was a telex from the president of an electronics company on the West Coast, meant as a favor. He was on the Board of the First National Bank of California, and they had just decided to make a move into Europe. He thought Frank Cook might want to know—maybe they could start doing business together in Europe in the future. That was all—just a well-meant gesture.
The man in California almost fainted when Frank Cook called up to personally thank him—and to find out a few more things about the First National Bank of California. Then he moved immediately into action. Well, almost immediately. Before Frank Cook made any significant move he spent hours mulling it over—at home, alone, and at night. After the call had been completed, he sat there in the almost complete darkness of his library, pondering the next step.
“I’ll keep Topping on this,” he decided, “and get him to lend a helping hand to that fellow Foreman is sending over. Luckman.” Frank Cook prided himself on his perfect memory where names were concerned.
“It’s going to be like putting Mohammed Ali into the ring with Lillian Gish.”
He smiled.
9
DONALD Luckman would not have liked that Lillian Gish thing. Debbie might have. In any case, both were completely unaware of those dark thoughts of that dark man in the dark room. All Donald was trying to do was a simple scouting job: of a bank that his boss might want to buy. Foreman had toldhim to start easy. No immediate direct approaches. The best place to start would be Zurich, not Lugano. In Zurich they knew everything that was going on in banking circles in all of Switzerland. And in Zurich they knew how to keep their mouths shut. So that’s where the Luckmans had gone.
Scouting out a bank in some countries is relatively easy. In Switzerland it is not. Because Swiss banks are quite complicated animals. They don’t just take in savings, issue checkbooks, and lend money. No, they also act as stockbrokers, they trade in Swiss francs, American dollars, Brazilian cruzeros, Iranian rials—sometimes through official channels, sometimes in gray or completely black markets. Their customers range from Swiss housewives to Cuban exiles to Americans trying to dodge unjust taxes at home. They own insurance companies, watch manufacturers, armament producers, shipping lines, and in one case, a big piece of a silver mine in Iran.
Normally when you acquire any corporation, banking or otherwise, the first step is to go through its financial statement with a fine-tooth comb. This usually takes a team of auditors weeks, even months, due to the mass of information to be digested and analyzed. Not in Switzerland. About one hour by one man suffices. Corporate financial statements there provide about as much useful information to the general public as does the annual report of the CIA. Those issued by Swiss banks, substantially less.
Donald Luckman had discovered the futility of this approach almost immediately. He had acquired the barest skeleton of a balance sheet of the International Bank of Sicily and America, but it told him next to nothing. So he had moved on to step two: checking the bank out with the competition. In the States this is standard practice, and everyone is usually most happy to cooperate: to hint at any suspected bones in a competitor’s backyard; to reveal how hard its president drinks; to discuss who the bank’s major customers are; to put a definite limit on how much one would prudently lend that bank; and even to give a quite definite estimate on what the bank was worth, give or take a million or two.
But again—not in Switzerland, and especially not in Zurich, the heart of gnomeland, where even a request for the time of day is regarded with suspicion. This Luckman was also finding out the hard way. It was not that the right people weren’t receiving him. With letters of introduction from George Foreman, Chairman of the Board of America’s ninth largest bank, how could they refuse? But that didn’t mean that they had to say anything useful. Luckman’s last trump card was Walter Hofer, Chairman of the General Bank of Switzerland. But it turned out that Hofer was out of town—in Paris. So it was one of his top executives, Herr Dr. Kellermann, who had been more than happy to see him. Yes, Kellermann explained, they had received a letter of introduction from Mr. Foreman. In fact, it was only last year that he had had the pleasure of visiting Mr. Foreman in San Francisco. Such a lovely city. Their banks maintained correspondent accounts with each other, had for many years. The balances were, however, not big. They could be bigger, especially those in Zurich. Was that what Mr. Luckman wanted to talk about? No, not exactly. Aha. Well, perhaps over lunch one could hear more about what Mr. Luckman wanted. And over lunch it went like this:
“Now Mr. Kellermann,” began Luckman, after the last piece of Wienerschnitzel had disappeared, “the real purpose of my visit is to inquire about another bank here in Switzerland.”
“Oh?”
“Yes. It’s in Lugano. The International Bank of Sicily and America.”
“Ah, yes.”
“Well, sir, I wondered what opinion your institution has of that bank.”
“Yes, we know it.”
“You do know it?”
“Yes, we do.”
“Net worth?”
“You know, the value of their capital and reserves, after deduction of possible write-offs for bad loans and the like.”
“No, I’m afraid that’s not possible.”
“Not possible?”
“Yes.”
“I see. Well, could you perhaps give me a feel for their credit standing? Like, what’s the limit you people have put on any inter-bank loans to them.”
“Ah, that we never discuss.”
“I see. But you do do business with them.”
“I would have to inquire further. That is not my department.”
“I see. Would you say that their reputation is good, generally speaking?”
“I have heard nothing negative. Nor anything positive, as far as that goes, but of course . . .”
“That is not your department.”
“Exactly.”
“I notice from their latest statement, which is rather meager, that a rather substantial amount is listed on the asset side under ‘Participations.’”
Luckman showed him the balance sheet. Kellermann put on his glasses and studied it carefully.
“Yes, I see that.”
“Is that usual?”
“Is what usual?”
“To have such a large sum invested in that fashion.”
“You mean under ‘Participations’?”
“Yes.”
“It is neither usual nor unusual. That item could include many things.”
“Such as?”
“Well, it could merely be that the bank owns some shares of A.T.&T. Then again, it could mean that they own a factory of some type. That might be a bit more risky, I would think.”
“Indeed. Now in this case . . .”
“I have no idea of what might be involved.”
“There’s one other item that struck me.”
The Silver Bears Page 11