Corruption's Price: A Spanish Deceit

by Charles Brett

  The sun had long disappeared but the air was still warm enough to stay outside and be comfortable. With the lights on, the terrace offered a soft and agreeable evening atmosphere. After Ángela had served the food with plentiful good wine, Caterina, Emilia and Davide felt well-fed, well-watered and relaxed.

  "Okay, Davide. Now we've small-talked and eaten, why did you send me that email? 'Currently in Madrid. Need you. Please come.' That was terse, even by your standards."

  "And suggestive," leered Emilia, who was clearly beyond being just cheerful.

  Caterina glared at her, not that it made any discernible difference.

  "I'm sorry if the email caused confusion. I wasn't even sure if I should send it. I –"

  "Why ever not?" interrupted Caterina.

  "Let's talk about that another day. More important is your original question. I'm afraid the explanation may be long."

  "Don't worry about that. Caterina and I speculated all the way from Sydney and were no wiser."

  Emilia ignored another glare from Caterina. It was so easy to wind Caterina up about certain things. Davide, or something that he did, clearly belonged in that category. Emilia was becoming steadily more intrigued, especially as Caterina had kept so much about what had gone on in Rome tightly to herself. This bugged Emilia no end. After all, what were best friends for?

  "I need to start back in Rome, but after Caterina left. The HolyPhone project continued as planned. I think Nelson was happy with what we did. Anyhow, all now appears to be working. There are much better controls and organisation of the financial arrangements, now handled through professionals. The Church is changing, possibly for the better, though that is a completely different topic.

  Davide described how, as the end of the contract drew closer, he had begun putting out feelers for new work, principally in Europe and North America. Out of the blue he received an email via LinkedIn from someone called Felipe Garcia-Martín. Normally, he said, he didn't respond to such blind-contact approaches but Felipe came endorsed by an old business colleague in New England, plus he said he was based in Madrid. His profile revealed him as coming from Texas and running the Spanish subsidiary of a US company called OverPayment Recovery Services, Inc., or ORS.

  "I replied and we agreed to talk. He said I came highly recommended for some work he understood that I was doing with the Vatican. I still don't know who gave the recommendation. Nelson? Father Federico? Who knows?

  Felipe had proceeded to embellish what ORS does. Essentially it uses clever software to examine the past accounting records of large organisations to identify possible over-payments or double payments or even unclaimed credit notes. From what he said something like 0.1 per cent of the value of all purchases can be recovered. According to him the buying company usually has written off these past over-payments in its accounts, having not realised they existed and that there was money which it could legally reclaim.

  "Hang on, Davide," interrupted Emilia. "What size of organisation are you talking about?"

  "Felipe explained that the ideal clients have between $1 to $5 billion in annual sales, though there was no upper limit. Below $1 billion is usually too small to be worthwhile for ORS."

  "Stop again. Let me calculate. Assume a company with $5 billion in sales spends, say, $1 billion on purchases each year, then 0.1 per cent is ... If 10 per cent is $100 million, then 1 per cent would be $10 million, so 0.1 per cent would be $1 million. Wow. That's quite a lot of money to lose or forget. How can this be?"

  "We can go into the how later if you want, but you are going through the same thought processes I did myself when talking with Felipe. He explained that he'd recently been appointed to open up the Iberian Peninsula operation in Madrid, partly because he was familiar with the recovery techniques used in the US, partly because he spoke Spanish and partly because his bosses reckoned that Spain must be a ripe opportunity.

  "But I am escaping the main plot. Your calculations are right, Emilia, but too low. The actual percentage recoverable differs for each business but a decade of experience in the US shows it averages out at about 0.1 per cent of purchases per client. The real determinant is how much any given organisation buys from suppliers in a year.

  "And here is the rub. As Felipe described it, ORS performs its computer analyses not just on the most recently completed accounting year, but on the past three to five years. So, using your example, Emilia, the 0.1 per cent average may have an accumulated recoverable value of $3-5 million when spread over those years."

  Emilia said, "Presumably, given its name, ORS recovers these overpayments and keeps some sort of percentage or share?"

  Caterina was becoming ever less happy with the conversation as it progressed. She had thought it was going to centre on her. Instead Emilia was redirecting it in unexpected ways. Worse, she could see Davide liked Emilia being so quick on the uptake.

  "Correct, Emilia. ORS assists the client company to recover as much as possible. The deal that ORS offers is 'no win, no fee'. 'You, Mr Chief Financial Officer at Company X only need pay ORS a percentage, usually between 30-40 per cent, of the value of what we, ORS, actually assist to have paid back to your Company.'

  "When I first heard this I was amazed. Felipe told me that for him it'd been the same. He gave me the example of describing it to his mother who was equally incredulous until he put it in more personal terms for her."

  "Like how?" prompted Caterina, inserting herself into the conversation.

  "Felipe said he asked his mother what she would think if he told her that he knew she was spending $1000 a year that she could get back. Not surprisingly this elicited a positive response. He continued by saying that she could only have money back because he knew where to look for it and also what to ask for – and she would only get it back if he could keep 30 per cent of everything he retrieved for her. 'You mean', she said, 'I'll have $700 to spend again if you keep $300. At least that's better than having lost the $1000.' Was she still interested, he had asked? Apparently his mother had nodded vigorously. The same essential principle applies here, but for much larger amounts."

  "So why did you send me that email, Davide? I still don't get it."

  "Patience, Caterina, patience. And you're going to have to wait a little longer, as I need the bathroom."

  He left.

  "What the 'bleep, bleep, bleep' do you think you're doing, Emilia?"

  "What d'you mean?"

  "You know perfectly well. He invited me yet you are all over him."

  "No I'm not. In any case, why shouldn't I be interested? It is relevant to me."

  "Yes, that may be true. But don't mention it, at least not until I know more."

  "Afraid that I'm going to run off with your boyfriend?"

  "In your case, yes. I know you. And he's not my boyfriend. How many times have I told you?"

  "That's not how you act or react around him. You are more like a teenager in heat than a sheila in her late thirties. What did happen in Rome? You always refuse to explain. Maybe I would be more sympathetic if I knew more."

  "You're fishing again. Anyhow, ssshh! I hear him coming back ... What shall we do tomorrow?"

  Davide returned to the table, unaware that he had been the subject of fevered female debate.

  "Given that it's the weekend I thought that we might see some of Madrid, or go to the Casa de Campo for some open air. It's a huge park that you can reach by the Metro or via an aerial gondola bridge. I recommend the latter. What d'you think?"

  Caterina pondered. She was cross about Emilia's reactions and with herself. She braced to try to seem open and willing.

  "That sounds different. Can we decide in the morning? Before that I still want to know more about why you think you want me?"

  Whoops! She had done it again. Double entendres were becoming rampant between her and Davide. She saw Emilia grinning like mad, which only irritated Caterina further.

  "Why don't you carry on from where you left off, Davide?"

  "Yes, yes. Where w
as I? You both now understand the business appeal? Essentially, there's money to be returned from overpayments held on the books of supplier companies that were not repaid as they should have been. Remember, supplier companies have little incentive to return these owed monies to the buyer company if it doesn't ask –"

  "Because," suggested Emilia, "the money owed to the buyer company, if unclaimed, eventually ends up increasing the profits of the supplier?"

  "Exactly. According to Felipe, it seems that that supplier companies tend to hold these amounts owed to buyer companies on their books for two to three years, in case there's a claim by the buyer companies. This is because their accountants insist on it. In practice, when two or three complete years have passed, the overpayments are released to profit. Or that's what happens in the US."

  Davide hesitated before continuing: "Yet I have a feeling, a bit like the way I guess Nelson felt in Rome, that something more is going on. But it's only that; a suspicion. I ..."

  "But I still don't get it. Where do I come in?" interposed Caterina.

  "As I told you earlier, I'm uncomfortable about what Felipe and ORS are finding here in Spain. The ORS software analysis is very US-focused, proving extremely effective in as far as it goes. All this is organised supplier by supplier so that the ORS recovery specialists, who work closely with its client's Accounts Payable people, receive lists of what to investigate and where to seek repayments. The next ORS task is to approach each supplier, using the analysed data, to ask it to return the overpayments or refund the credit notes or explain why ORS has misunderstood. This is a process that can take several months, with returned monies trickling back to the client, against which ORS eventually invoices for whatever was its agreed percentage. Yet I have this irritant in my eye that there's more in the data than the ORS software brings out.

  "What I would really like is for you, Caterina, to exploit your analytical and pattern matching skills, like when you identified the connection between Weizmann, Michele and Inma."

  "Who?" asked Emilia.

  "They were among the participants in the HolyPhone work in Rome that we were doing," responded Caterina curtly before Davide could reply. She wanted to impress on him that she'd not told Emilia anything. "Anyhow, Davide, I'm beginning to run out of steam. Do you think that we could continue this tomorrow, perhaps if we go to your Campo or over a meal?"

  "No problem. Off you go. I hope you sleep well and the jet lag begins to subside. Oh, remind me tomorrow to tell you about running into Inma."

  Caterina left. Emilia chose not to follow. Caterina sighed to herself, hoping Emilia would behave.

  "I won't ask more about ORS because there's no point in having to repeat everything for Caterina tomorrow. But, Davide, what was this Rome thing all about? Caterina has always been cagey and says little about what happened."

  Davide reflected. He was not entirely sure if Emilia was asking about Caterina, himself, or about their work on the HolyPhone. He decided prudence, and discretion, were the best options, especially as he had no real sense for Emilia. Caterina he knew he could trust. Well, in some things at least.

  "We can't talk about what we did in Rome. I'm contractually bound to confidentiality and Caterina by Interpol. Sorry. I realise it must be frustrating when we mention people you don't know. But that's the way it has to be."

  "Okay, okay. I can't say I'm not disappointed. I'd hoped you might open up when she won't. Clearly you have a conspiracy of silence."

  Emilia smiled, trying hard to take the sting out of her words. Underneath she was more than annoyed. All those hours teasing Caterina had still produced nothing of substance. "What you were describing this evening intrigues me. I look forward to more."

  CHAPTER THREE

  Progress

  Saturday: Casa de Campo, Madrid

  Emilia flashed a smile at the waiter who immediately dropped what he was doing to attend her.

  "Nos cobra por favor."

  "Tres noventa, Señorita."

  Emilia paid. "Oh I do like the sound of being called Señorita! It makes me feel young."

  She favoured David with an almost lecherous grin designed to annoy Caterina. It succeeded.

  They exited the café in silence, each considering their discussion of the past several minutes. Davide led the way outside into the Casa de Campo and what seemed more like semi-desert scrub than a real park. There was more sand than grass but the green of the many trees offered a cooling contrast.

  Caterina debated with herself. Davide had, as usual, captured her interest. It was a recurring and irritating habit. He managed it well, without even seeming to try. What was it about him?

  Her immediate problem was not Davide, however, but Emilia. Did she tell Davide what she had made Emilia keep quiet about the previous evening?

  She listened with half an ear to Davide and Emilia chatting. It was small talk. Emilia seemed to be behaving and not flirting overly much. In any case Davide was not responding, which pleased her.

  On the one hand, Caterina thought, working with Davide at ORS would give her proximity to him, and without Emilia. Though it would be in a professional setting she thought it might be possible to rescue or rekindle what she had messed up in Italy, if she wanted to. Davide did not seem hostile or offended or hurt. He had even thought of her before she had emailed him. But ... The problem was that what he was describing likely also needed some other skills beyond her technological ones, like accounting. She was not the expert there. Emilia was.

  Should she tell Davide now or later? If she told him now he would probably rope in Emilia, which would be good for the analysis and interpretation. After all, she and Emilia had proved several times in the past that they combined well to make a formidable team. The downside: it would dilute her own exposure to Davide.

  Or she could keep quiet. If she did the risk was that Emilia would head off to do other things and pursue other prey whilst she stayed in Madrid working with Davide. That had its attractions but would probably ruin the so-called 'Grand European Tour'. Caterina decided to wait.

  "How long do you think my involvement will last, Davide? Is there any reward in it?"

  "You've emerged from your daydreams?" sniped Emilia. "I was wondering which planet you were on."

  "Thank you, Emilia. You are as kind today as you were on the plane. Anyway, Davide, what do you expect?"

  "Again, I've no real idea. ORS has the raw accounting data. It also has some processing capabilities in-house. I'd guess a day for you to get set up and then perhaps a couple of weeks or so. Not much more unless you find something." He thought for a moment.

  "As for any payment, I'm not sure. If you come up with anything that helps Felipe collect more monies, I'm pretty certain that ORS will pay. Indeed, I've already agreed that ORS should pay at least for two or three days for you to do the initial assessment. That won't be a lot but it'll be better than nothing."

  Davide paused again, before adding, "If it takes longer I will contribute from my consulting company's funds. The last few months, as you well know, Caterina, brought in an awful lot more than my wildest expectations. It wouldn't be unreasonable to share some with you."

  Davide hoped that this was not sending yet more of the ambiguous signals that currently seemed to be their mutual plight.

  Caterina forced herself to consider. Davide was being generous. Would he include Emilia? She could not predict. She decided to take the plunge.

  "It's not that I need the money, though every little extra in Madrid helps of course. We have a budget and the time. Staying with you already makes our living costs negligible, especially when we'd otherwise have to pay for hotels."

  "Of course you can stay. You might even get to meet tío Toño."

  "Davide, there's something you need to know."

  "That sounds ominous."

  "No, quite the opposite. Emilia is more than just an old friend and travelling partner. We trained and worked together. Where I chose to go down a computing path, her speciality beca
me forensic accounting – you know, where someone inspects the financial trails left by organisations and people."

  "Really? That sounds right up our street. Why didn't you tell me before?"

  He turned to Emilia who was listening and more than surprised at what Caterina was saying. It was the last thing Emilia had expected. In fact she had already more or less decided to tell Davide, irrespective of any of Caterina's objections.

  "It was because of me," confessed Caterina. "I asked her not to say anything until we knew more about what you were thinking. Now that we know, it seems stupid not to tell you."

  "Fair enough, though I still think it seems strange you didn't mention anything before. Shall we head over that way? I think there is a restaurante with a terrace where we could have a drink and something light to eat while we work out what we want to do. What d'you think?"

  Emilia nodded while Caterina said, "As long as you let me buy."

  After the waiter had brought drinks and some small tapas and olives, Davide resumed.

  "On Monday I will talk with Felipe. If that goes well I suspect he'll want action and fast, he being American. That might mean Tuesday or Wednesday for the start of your involvement. Given that, if you want to, you should be planning for tomorrow and Monday as days to see more of Madrid. But remember, most of the better museums here – should these take your fancy – are closed on Mondays."

  Saturday: Valencia

  Marta extricated herself from the taxi that had brought her to the Jardins de Neptú, by the beach close to the Old Port area from where the Americas Cup had been based during the giddy days of Valenciano excess some years before. The aggressively modern club house still stood white and proud, dominating what had been the old harbour.

  Taking a taxi meant she didn't have to find somewhere to park, which was always difficult at weekends by the beach and yacht harbour. The downside involved her clothes. She had tried to find a balance between professional, for Inocenta, and alluring, for her 'mister'. Marta hoped she'd achieved it.