by John Gubert
“If I can get the agreements, I can put up the cash Monday morning. I can authorise the transfer start of business in Europe. So they’ll be waiting well before New York opens.”
The auditors and lawyers conferred. They then agreed. Charles would stand by. But the die was set. The legal hearings would be started. They had a weekend deadline. Charles was unconcerned by the money he would have to put up. That would put him in good light once again. The sanctification of Charles Rossi would continue. The US banks would not have claims on them. And he knew enough about the Di Maglio world to know that his nephews would not fight any court battle, for fear of what could be discovered about the rest of their nefarious activities.
Charles knew they would get their money back. He was sure that the businesses he would acquire from the Di Maglio estate would be worth four or five billion on a relaxed sale timetable. The three to four billion was an estimate on the base of a fire sale. Jacqui would get some inheritance from her father’s estate after all.
As for his deposits in IBE, they would revert to him once Associated took over the bank.
Against the grim background of gang warfare, they waited that weekend for the courts to decide. The banks all set up their paperwork. The money was pinpointed. They waited for the two key judgements. The court in the US, considering their purchase of the Di Maglio businesses, would be the first judgement. The Fed and Bank of England would then judge on the solvency of the banks after the cash infusions. If they got positive judgements, they would be able to announce the saving of the IBE on Sunday, well before any possible run on its operations. And Charles had a meeting with Sir Piers on Monday afternoon. It was scheduled for after his board meeting. He was confident that the bid would take place.
Charles ran over the arrangements with his father. He agreed all the actions and the logic of the decisions. Charles explained them to Jacqui. She arranged a meeting of the survivors of the London board-room meeting of the previous year.
There was Charles, Jacqui, his father, Giovanni and Maria. Di Maglio was out of the picture. Stephens was long dead. A few others had died. But the winnings were far greater than they had ever planned. Charles suspected they would make in excess of thirty billion. Their total family wealth was going to hit thirty five billion plus. And that would be mainly in cash. That cash would fund their next campaign for they were too young to retire. But before then they needed to take care and complete the deals.
They had distanced themselves from the collapse of the Empire. They had manipulated that collapse. They had distanced themselves from the criminality associated with the collapse of the bank. Now they would distance themselves from the banks that they had created, as they were absorbed into Associated.
Charles would go with the lawyers to the Bank of England. They were expecting him. They would then hand over some of the papers to the authorities and they would need to decide what action to take against the allegedly dishonest directors. That would constitute an amusing revenge for their arrogance. Charles regretted the Honourable James’ fate, but not the others. But it had to be all of them.
Charles started the meeting. Giovanni, on a video link, was charm personified. Charles’ father looked proudly at him. They all had played their roles to perfection. They knew the meeting could well be bugged. In fact Charles was betting on that. And he felt that, if it wasn’t being monitored, then Delaney was not the man he reckoned. And he had little doubt about that judgement. Charles called the meeting to order and advised that he had taken over the acting Chair in the UK and the US. He continued, “I have asked Jack Ryder to sit in as an observer on this special board meeting and help us on any issues relating to stock markets. I have also asked our auditors and lawyers to attend as well as their board nominees. Maria Carter is also here. I take it there are no objections.
Tonight, we will advise the end of the intense examination into the affairs of the bank. We will advise that we have been systematically fleeced. Over and above derivative losses that we have crystallised at two point eight billion dollars, we have an enormous bad debt mountain. It stands at five point eight billion dollars.
The bulk is through the US banks in a series of embezzlements, many of which go back to before our acquisition of the US operations. The balance is in the UK. As you are aware our investment funds took stakes in many of the companies to which we were lending money. That was, of course, totally unethical and I am absolutely horrified that management condoned it or lacked the controls to identify the misdemeanours. The fact is that the funds have lost substantial sums. Those fund holders are our depositors. Their losses put the banks in the US at risk. We plan to give guarantees to fund holders, to limit their losses, and these are likely to cost us two billion dollars
Giovanni interrupted, “There’ll be panic and a run. There’ll be a massive run. Where do the funds come from?”
Charles replied quickly, amazing him with the news, “No, we can cover a run. I have taken steps. Di Maglio’s guarantee will be exercised.”
“I heard that mentioned. What is this guarantee? What have you fabricated? I thought it was from Rossi and Di Maglio Holdings, not Di Maglio himself. Anyway, he’s dead.”
“It’s from Di Maglio. I am talking about the one in the sale document.”
“There wasn’t one,” he retorted.
“There was. I have a copy here. The Fed has an identical copy. You must have forgotten about it. Could the auditors fax Giovanni a certified copy of the appropriate pages of the document and highlight the relevant text?”
Moments later, Giovanni looked at it. He looked at Charles, over the video link, with amazement, “You son of a fucking bitch,” he exclaimed.
“Hey watch your language. That’s my mother-in-law you’re maligning,” interrupted Jacqui with a mischievous grin. She was relaxed now. For the most costly game in financial history had been won.
Giovanni shook his head, “Aldo’s kid will kill you. He thinks he’s a billionaire.”
“I think we should avoid personal issues. The reality is that we have to use two billion dollars of the money identified in the Di Maglio accounts to support investors in the funds. The balance of six billion or so will be used to counter some of the other losses in the US. The balance sheet can manage the difference.”
“There’s around five billion cash only in Di Maglio’s accounts. I know that. I have the audited figures,” interrupted Giovanni.
“There is five billion in cash. As I said two billion goes to the investment funds. That leaves three billion plus three point five I have bid for the balance of the assets. These are the hotels, casinos, pharmaceuticals and so on.”
“They’re worth more,” growled Giovanni.
“Then bid more. But we need the money from the guarantee by Monday and I am bidding on that basis.”
He shook his head again, “Aldo’s kid will murder you. The other nephews will too.”
“So be it. The last I heard they were in the thick of gang warfare. We’ll come across that hurdle when we get there. But they should be aware they would be the first suspects. I hope they have more sense.”
“What about the UK end?” It was Jack Ryder who planted the question.
“I have agreed to continue a guarantee of two billion. With that the balance sheet ratios stack up. It is also important to note that I am seeking a purchaser for the bank. I hope to be able to enter into negotiations with a major financial institution. I take it I have board approval?”
Everyone nodded. The board meeting ended. Everyone left the big boardroom, but Charles. Jacqui, Jack Ryder and Maria reassembled in Charles’ office. This time there was no link with Giovanni, other than over a very special scrambled telephone line. The room had been swept for bugs. All was secure. Charles was certain that even Delaney would not be able to penetrate this security.
Charles spoke, “I will be frank and tell you what we have made and what everyone’s share is.”
Charles kne
w that this was not entirely true, as he would be silent about their share dealings in IBE itself and also their insider trading activity. That had raised around one and a half billion for them. And they had creamed off a further three billion during the scam. But he continued. “Let me run you through the final figures on the private balance sheet. In all, we made thirteen billion from the sale of seventy five per cent of IBE. The bad debts made us five billion, as some were genuine. The trading made us two point three billion, a bit less than planned as the idiots in the trading room actually lost some money on official positions. The scam we pulled on the investment funds made us five point two billion.
We take the proceeds of the share sale and 60% of the scams and frauds. Mr Di Maglio’s thirty per cent share is redistributed proportionately among us survivors. Allowing for that and the fact that Stephens is no longer with us to share the pot we agreed, there’s over half a billion dollars each for Giovanni and Maria. That’s a hell of a lot more than we ever expected.”
Maria looked at Charles, her eyes sparkling as she contemplated the scale of her wealth. “That’s so much more than we planned.”
“When we planned, we acted conservatively and we thought there would be more of us around the table. And the scams became bigger and bigger. We underestimated the greed and stupidity of the great and the good. The frauds were larger. And we also underestimated the American love affair with strong performing investment funds. That helped too,” said Jack Ryder.
“So,” added Charles, “I’ll make your shares available as soon as you give me account details at a bank in one of the countries on a list I will send you. You can guess these are ones that don’t ask many questions; especially of the super rich. The payment will come to you from a multitude of banks around the world, in different amounts, and will not be traceable back to us, however many forensic accountants are set the task.
He continued, “We need still to sell off the Di Maglio businesses but that doesn’t affect your payment. I also have to see the Bank of England again and the police. That’s going to be interesting, but pretty tough for some of our former board whose resignation letters I have in my hand. And they are further confessions of guilt.”
As they split, Charles prepared himself for the inevitable discussions with the authorities. They went as expected, focussed on solutions and not root causes. Finally, the courts agreed to their requests. They then made the announcement they needed to make. It was 8pm, Sunday.
It read, ‘IBE advises that, as a result of a series of unauthorised and apparently fraudulent loans, it has incurred, primarily in the US, bad and doubtful debts of five point eight billion dollars. The frauds date back to a period preceding the date of acquisition of the US interests of the bank. However, a substantial proportion was initiated in recent months.
Mr and Mrs Charles Rossi, who own 25% of IBE, have successfully petitioned US courts to activate a post sale guarantee of the late Mr Giorgio Di Maglio. As a result, a sum, in excess of six billion dollars, has been injected into the US interests. Mr and Mrs Charles Rossi have acquired for cash the hotel, casino and pharmaceutical interests from the estate of the late Mr Giorgio Di Maglio to enable part of this cash injection.
The Courts have also approved the allocation of two billion dollars from the estate of the late Mr Di Maglio to be assigned to investment funds sold to investors in the US. It is clear that there were fraudulent activities being undertaken by the management of those funds. This contribution will cover a good part of the shortfall resulting from these activities.
Mr and Mrs Rossi have also converted two billion dollars of their earlier guarantees into loans to the bank in the UK to reinstate the required capital ratios for the UK.
The auditors are willing to confirm that there is no loan with past due capital or interest on the books of the bank, except those fully provided for. They are also confident that there are no other significant at risk positions in the trading and derivative areas.
The Bank of England and the Federal Reserve Bank of New York confirm that they are content that the capital positions of the affiliated banks of the IBE Group are adequate and that the interests of all depositors are protected to the extent required under US and UK law. Insurance of depositors continues in force to a hundred thousand dollars in the US for each depositor and fifty thousand pounds in the UK.
The company also advises that the Honourable James Johnson-St John-James, Sir Brian Ffinch-Farquar, Lord Dunkillin and Hector McGarth, all former directors of the Bank, are helping police with enquiries. Mr Percival Johnson-St John-James, the son of the Honourable James, and a former senior executive of the bank is also assisting the police. Other investigations may lead to further arrests.
We would also note that the US authorities have stated that there may be residual monies in the estate of the late Mr Giorgio de Maglio and that they are taking action to seize these under racketeering laws in the US. They have agreed, though, that all their claims can be subordinated to those of the bank and that they have no recourse to it for any shortfalls.”
That brought the press to an ecstatic crescendo of vilification of the great and the good. It brought self-righteous articles about crime not paying as the Di Maglio wealth was seized in retribution for his decades of crime. And it brought a glorious and obsequious adulation of Charles and Jacqui.
Delaney called, “You expect us to believe all this. You have to be joking, Charles. We’ll be watching you.”
Charles laughed, “Don’t forget you owe me and I have enough information to sink you.”
The poor man was not amused. But he knew Charles was telling the truth. There would be no trouble from Delaney’s quarter, especially as Maddy’s secret accounts had never been declared.
Giovanni called. “You screwed Di Maglio’s estate for the cash he had. You screwed it for the assets in the hotels and other things. You screwed it for its stake in the scam. You set up the authorities to claim any balance on the estate. Someone’s going to cotton on and they’ll be after you. You double-crossed us all.”
Charles laughed, “Giovanni, I didn’t double-cross you. You have your share. You have the money you stole from Di Maglio. Other than Maria, nobody knows of the split. And Maria knows we changed it but is not sure how. She’ll keep quiet. You’ll keep quiet too. You both know what’s good for you. Go off and enjoy being rich beyond your wildest dreams. After all, with what you skimmed off Di Maglio, you must be pretty well a billionaire.”
He was quiet. He would remain so. At least he would remain so for as long as he didn’t tire of life. And Giovanni loved living more than revenge, especially, if the revenge in question brought him no gain.
Then the markets in Asia opened. The share price trembled but held up. The depositors did not desert in droves. The other banks cut back their lines of credit but to no great extent.
They held their breath as London opened. The same situation continued.
Then, in the afternoon, they anxiously watched New York and followed events round America through into California. It continued. The bank remained solid.
And that caused the phone call he had been waiting for. It was Sir Piers.
“We’ll buy. It will be at eight dollars a share in our stock. It’ll be done and quickly; I don’t even want your personal business in any bank I run. We’ll buy your shares for cash. And we’ll repay your loan. That means you get your two billion back and a further two and a half billion for your shares. There’ll be papers to sign. But they’re not significant.”
Charles didn’t trust him one bit, “What papers?”
“There’ll be an agreement to keep out of the business. Things like that.”
Charles shook his head, “You get your papers back and that’s all. You get the originals.”
“Then the deal’s off.”
“I think I’m going to enjoy this. I’ll sell a few of your shares and then release the papers that incriminate you. And the financial press will k
now all about it for tomorrow morning. Come on you don’t have a choice. Your board has agreed. You won’t have told them about the papers. So you better call them back and tell them. Or agree and keep quiet. And do it now.”
Sir Piers crumbled. The poor fool agreed to do everything on trust. As if he could trust Charles. The thought of joining the long list of friends under investigation was too much for him. They met the next morning and agreed the sale with the lawyers present. Charles already had his board approval from the earlier meeting.
That evening their shares were transferred as the funds flowed in. The link with the bank was over. All that was left was to sell off the Di Maglio holdings. And that happened sooner than they envisaged. The phone call came from one of the large private equity funds in New York. They wanted to buy the entire Di Maglio package. They haggled for a couple of hours. Then they were joined again by the lawyers as Charles sold out for four point five billion, with completion to take place in the next two weeks.
The family kitty had risen to close to forty billion dollars. And Jack Ryder called to say he had liquidated all their investments. They drew up the accounts. It was all in cash waiting for the next opportunity. But this time round, the game was approaching its end. The only open issue was for the courts to decide. The great and the good would be sentenced, but that would take years.
Charles’ parents headed back to the South of France. They felt they needed a break but, at the same time, Charles knew his father was already monitoring the stocks he had identified. Maria had done one last covert job. She had raided the offices of Associated. And that raid had produced copies of their entire target takeover list. That list was with Jack Ryder, who was researching their performances and their every stock market move. So, as Jacqui and Charles drank champagne at home that night, Jacqui looked and said, “It’s all over for now, isn’t it?”