by John Gubert
Jacqui laughed mockingly, “But most of what we have on them is phoney.”
“I know. But some is true. And they will be scared witless about the bits that are true. They’ll believe the rest and think they were ill-informed or unaware.”
Jacqui nodded, “Stupid of them to do those insider trades. That would put them in prison. But the falsification of the letters and all that rubbish about murder and blackmail is hard to believe.” Then she looked pensive, “The Brits here are so crazy. They make lousy criminals. And they are so easy to manipulate. At least the old guard is. The new lot are more professional. They’ll be tougher.”
“Perhaps,” laughed Charles. “But so will we be. That’s if we head back this way.”
“The gang warfare is going to start soon. The funeral could be a problem,” said Jacqui reflectively. “I guess that the prostitution and extortion boys will try to make a deal. They’ll realise that the drug’s side is in for a tough time. We could sell to them but the price will be bad.”
Charles shrugged his shoulders. “Who cares? We just need to get out. In any event we will be using any money we get from the drug side to bail out the bank. So it won’t really be ours.”
Don’t assume your father has left the money to your mother without strings attached. He thought that you would be annoyed and hurt by her getting the money, but I bet it’s in trust or something and that the kids are also beneficiaries. Still, there won’t be anything left after the bank is bailed out through his guarantee.”
Jacqui was not overly concerned, “Once the guarantee comes to light, and that’ll be soon enough, we’ll get ourselves named as executors to help the bank. What’ll your father do?” she asked.
“He’ll buy back the shares he sold and he’ll manage to keep out of sight of the surveillance guys in the markets. There’ll be so much activity that his will be lost in the sheer volume. All the hedge funds will seek to make a play. Don’t forget that you will need to adjust the register. But the details won’t be available before Friday or the following week. So we need to make sure that nobody tries to take a print out of the register. Go into the programmes as we planned and stop that happening.”
She nodded, “Do we have anything else to do?”
“Not that I can think of. We need to keep alert. The next weeks are going to be tough. We need to see that nothing goes wrong.”
“And then we head out for the island. Douglas will have sorted that all out. It isn’t long now? Nothing can go wrong, can it?” she asked nervously.
“Everything could go wrong. That’s why we have to be careful. We’ve set your father’s mob up against two of the vilest Mafia bosses in the world. Delaney will have it in for us. The establishment will look to protect their own. The Fed and the Bank of England will write their own agenda. They’re in it up to their necks, too, and they are going to have to come out smelling of roses. And then we have our fall guys. They’ll try to find someone to blame.”
“We stay together. We’ll get through. But just let’s be careful.”
The next day went to plan. The auditors were working and couldn’t really tell them anything new. They knew they were up to their necks in it. They would have to alert their insurers that there could be a huge claim on them. They were gloomy, even by their normal standards.
The lawyers prepared the announcement. They talked to the Fed in New York and the Bank of England. The board meeting was strained. Giovanni grabbed the high moral ground and made sure that the establishment figures on the board knew what he apparently thought of them. And his language was more fitting of a mafia man than a banker. The targets of his apparent wrath just sat in shock as they saw their worlds crumble before them. Jacqui wore a pained look and didn’t even greet them on their arrival. This was not a happy team. But Charles got what he wanted. They even found that there was no humble pie to eat. They were lost in a vacuum that marked the end of their lives, as they knew them.
They released the announcement in time for the evening news bulletins. They stressed the soundness of the company. They stressed this appeared to be a one off. Charles liked the announcement. It left the door open to the next one they would undoubtedly make, the one that would announce a further five billion of losses. They had agreed with the Stock Exchange that their shares would continue to trade the next Monday. There was no point in suspending them. In any event, they wanted to be able to buy back the ones they had sold.
On the Monday the share price crumbled. Everybody was a seller. It fell from twenty seven to eighteen dollars. From eighteen dollars it fell to ten and then to six. The volumes were incredible. Jack Ryder passed the message that he’d bought back half his position at a twelve-dollar a share profit. He would alert them as he bought more.
The next morning they flew to America and prepared for the funeral. Jacqui’s fears were ill founded. The funeral was a quiet affair. Mind you, few would have wanted to have dinner with many of the guests. Police photographers updated their records outside the church. Thuggish looking old men vied with each other to show grief. The church was dignified. The priests talked of heaven. But the congregation thought of the hellish battles to come. They were as close to mourning as night is to day. The service was an excuse for forging alliances as they all prepared themselves for the gang warfare to come.
After the service, Charles and Jacqui met at the lawyers. They had a will. Di Maglio had re-written it just two months back. He had re-made it after they had taken the Empire from him. He left all his wealth to his nephews and not Jacqui’s mother. Charles found that amusing and somewhat ironic. There was even an element of poetic justice in it all. There were seven nephews. They included his brother, Aldo’s, son. But they also included some nephews from two brothers-in-law, in whose deaths Di Maglio had allegedly played a part. The poor guys would think themselves rich. Charles only hoped they didn’t start spending the money before it was taken away.
That evening, it was back to England. Charles and Jacqui stretched out side by side in their beds, as the plane winged its way back to Heathrow and its sombre early morning welcome. Wednesday and Thursday went more quietly. The share price recovered to ten dollars. Then the auditors came to see Charles. They looked grim, but then auditors often do. He waited for them to tell him their tale of woe and wondered how much they would have uncovered.
He looked at the senior man. He would be the one who led the way. He was incredibly grey. His hair was grey. His suit was charcoal grey. His tie was blue grey. And his pallid face was tinged with grey.
“We believe,” said the senior man, “that the losses from derivatives in your treasury area are as you have been advised. It was simple. The prices made were wrong and the valuations used were wrong. It was a computer error. It was as simple as that.”
“Rubbish,” Charles exclaimed sharply, for he didn’t want the great and the good to get off. “There was gross negligence on the part of my senior colleagues. They should have checked out why we always won the business against the competition. Everyone knows that’s a danger sign.”
The auditors said nothing. “I want your professional opinion on that issue and formally in writing as part of your report,” Charles added. The auditors were caught. They could hardly exonerate Dunkillin and Sir Brian. And that was Charles’ aim. And it also begged the question of their failure to spot the strange pattern of trading during their audits. Their report would make interesting reading, for it could boomerang back on them.
“But we have more bad news, I’m afraid,” said the grey auditor. “There appears to have been a series of bad loans made. They are very bad ones. There’s a hint of fraud too. We need to examine more. But it looks bad.”
“Will we need to make more provisions?” asked Charles. He wondered what they would reveal.
“No doubt,” replied the grey one wringing his hands in concern.
“What level of bad debt do you expect?”
“It will be at least three billion,
possibly five or more. We need another week or so to be certain.”
Charles played astonished, “Is it all a write off?”
“We know three billion is a bad debt. One loan especially worries us. It was for a billion and it looks like a fraud involving the Honourable James’ son.”
“A billion,” Charles exclaimed in mock horror.
The grey auditor nodded miserably, “Here’s the schedule of known bad loans. Here’s another schedule of suspicious loans that we need to investigate further. They make another two billion.”
Charles buried his face in his hands as if in despair. He then looked up, “I need to call a board meeting and I need to talk to the lawyers. I need you there to explain your findings. The rest had better get back to work. I leave it to you to bring in more people if that will accelerate things.”
Charles called Maria to his office and told her to get the US on line and ready for a board meeting. He knew that the great and the good were unaware of these latest events. It would be interesting announcing it to them. He then called the Bank of England and told them the news. He also informed the Fed. The regulators were in a state of near panic now. They could foresee a run on banks. This was their worse nightmares coming true.
“Can you guarantee that you can keep the bank afloat?” asked the Fed.
“Not till I know the extent of the losses. But we should be helped by the guarantee that Di Maglio gave in the sale document. I have to assume that his estate will not be pillaged in the meantime. I’ll ask our lawyers if we can do anything to protect us against such an event.”
“What do you mean?” asked the regulator. He had had no involvement in the sale arrangements and, therefore, knew nothing about the dreaded page thirty-three.
“Di Maglio gave a guarantee. His estate will ensure that no US depositor loses out.”
Charles could almost hear the whoop of delight from the Fed regulator. He could almost visualise him scurrying from his office to unearth the wonder document. Of course, they did not know yet that they would hit further problems on the fund side. But that was a problem still to come.
The board meeting was brief. Charles advised the Honourable James, Lord Dunkillin and Sir Brian that he expected their undated resignations on his desk within ten minutes. They would be suspended, pending clarification of their role in the different fiascos. In the US, he did the same with McGarth and the Honourable James’ son. Giovanni took over the reins in the US. Charles became acting chairman in the UK and he brought the senior partners of their legal advisers and auditors onto the board as a temporary emergency measure.
The lawyers talked to the Stock Exchange. They would issue a statement and Charles agreed that he would be willing to loan up to five billion to the bank, although he knew that would, in reality, never need to happen. That promise would allow them to carry on trading, but it hardly solved their problems. The shares could only fall.
They made the announcement at the close of business in New York. The following day, their shares hit six dollars again in panic trading. Jack Ryder called and told him he had closed out all the sales. His average price had been ten dollars. That meant twelve to thirteen dollars a share profit after expenses. On this sideline, alone, they had made a cool billion and a half profit.
And Charles knew his father would have been taking advantage of his insider knowledge to trade in other shares. And, better still, the stock markets were crumbling on the news of the losses and frauds. Charles would have been surprised if they hadn’t made another few hundred million through that route.
The weekend was a time to draw breath. But, on Sunday, the news of the poor investments of the US funds broke. The bank had lent money to companies without substance. The investment managers had bought shares in those companies. The companies had defaulted as the money they had borrowed was spirited out of them. The shares were worthless. They said lightning never struck twice. But they had had three major strikes. They had been hit with scandals around derivatives, the loans and now the US funds. Their share price was at half the issue price. The newspapers were all questioning whether they would survive. A run on the bank was inevitable.
Once again Charles found himself in the hallowed portals of the Bank of England. This time they had an open line with the Fed in New York. They had established that Di Maglio’s accounts held just five billion dollars in all. That was a bit less than they had expected. But, at least, it was almost all readily available in cash, deposits or federal funds. Paradoxically, his investments had been as conservative as his business was unorthodox.
The Fed would seize the funds on their behalf the next day and use them to bail out the US bank. The terms of the guarantee Charles had written were so all-embracing that they could use it for anything. They agreed the money would buy back some of the funds. The prices would be depressed, as the defaulting companies held were valued at zero. That way the investors would get at least some money back. Their confidence was important as most investors were also depositors. And if the depositors withdrew their money, all hell would break loose.
It was agreed that they would pay two billion to investors as compensation for some of their losses. That would buy them some gratitude from their richest clients in any case. But the bulk of the money had to go to shore up the bank. They would explain the guarantee to the world at large. That would help confidence but not re-establish it.
And the Di Maglio estate would never see the proceeds of the scam. Indeed the beneficiaries would never know of it. The shares in IBE had all been placed in trust; most had since been sold to the public and the rest would be worth whatever they got from Associated. All in all, a tidy sum. Juliet and baby Claire were already billionaires.
As for Di Maglio’s share in the proceeds of the frauds, the estate also got precisely nothing. As the money had not been distributed at the time of his death, under the agreement, Charles and the other conspirators shared his take. And that meant the bulk went to Jacqui, Charles and his family, with a small balance to Giovanni and Maria. Those two would be seriously rich and neither, not even Giovanni, would want to do anything to alter that.
The UK side could still bring them down. So they came to an agreement after a long night of haggling. Charles stretched out the negotiations on purpose. He was not concerned, he planned to snare his white knight the next day. And that white knight, a company that would really bail out IBE, would be Associated.
So he agreed to deposit five billion dollars next day in the Bank of England to support the UK end of the bank. They all felt this would calm the market. Charles also told them that he would discuss a merger with different people in the City. He left them at 4am. They saw him as a man of integrity. Little did they know how far from the truth that actually was.
The next day the press coverage was universally kind to him. Little was said of the suspended directors for fear of legal action. But the innuendoes were in all the reporting. The rumours spread like wildfire over the City. Their reputations were in tatters. Their guilt was proven before their crimes were known. Charles and Jacqui were the honest victims. They had ploughed their proceeds from the share sale back into the bank to protect the depositors. The press, the politicians and all the pseudo-experts who were wheeled out at times like this, were totally fooled. They all pronounced if more people behaved like them, the City would be a far better place.
One person who despised the deification of Charles and Jacqui was Sir Piers Rupert Jones. He was the head of Associated. He did not know that Jack Ryder was Charles’ father, but he knew him as one of his associates. And there was a history of animosity between them. They had forced him to pay over the odds when he acquired United Bank of Europe some years back, and there had been several other reasons for his antipathy towards Charles. But at 8am Charles was back in the office and on the phone to Sir Piers. He was his usual curt self but agreed to see him. They would meet later that day.
It was 11am when Charles appeared at the door of As
sociated. Its gleaming tower was just a three-minute walk from their office. Maria accompanied him in her role as his personal assistant. He had brought her along to make Sir Piers feel awkward. Women in business suits always made him uneasy.
The morning had been better than he expected. The run at the bank had been manageable. They had lost around a quarter of a billion of deposits. The share price had been volatile and was now stuck at a miserable eight dollars. The auditors had also advised that they would complete their work by the end of the week. Charles would have a definitive report on all loans by the weekend.
Sir Piers walked in. He didn’t offer to shake hands. He nodded at Charles without moving a facial muscle. He ignored Maria. She promptly sat back and crossed her legs. This served to make him more anxious.
Charles looked at him with amusement. He saw a patrician figure. He saw the arrogance of power, the absence of intellect, the overwhelming and misplaced self-confidence.
“Sir Piers, I would like you to bid for IBE. At eight dollars a share, it’s a snip.”
He looked at Charles as if he were barking mad, “I wouldn’t touch that Mafia riddled money shop with a barge pole. I can’t even think of it as a bank.”
“That’s unfortunate,” Charles said. “We’ll just have to adopt plan B then.”
Maria opened her mouth in delight. She seemed overjoyed, “I told you he’d say that. Plan B it is then.”
“And what is Plan B?” asked Sir Piers haughtily.
Charles looked at him, “Plan B is summarised on this piece of paper.”
He passed the paper to him. It was a schedule. It read like a death sentence to Sir Piers. The papers to be issued were damning to the extreme. They were copies of statements relating to insider trading by him and associates. They were documents alleging his involvement in a murder a year or so back. And there were others showing his bank had been used for major money laundering exercises. The first was a genuine set of documents. The second set was all-fake. But it was impossible to prove that. And the third was genuine, although nobody would ever know the provenance of the money laundering. How could Sir Piers realise that he was sitting opposite one of the world’s experts at such corrupt games?