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INI Private Bank and Castlemain Private Capital offered their precious services to very wealthy clients, hiding their assets behind an endless number of Chinese screens in the Dublin, the City, Hong Kong and the Caribbean.
Amongst their privileged clients were the families of China’s Communist party elite, the Red Nobility and their Princelings, who used offshore companies to dissimulate their holdings.
Every montage imaginable was used: fathers, mothers, brothers, sisters, in-laws, children, grandchildren, cousins and even more distant relatives, in the ancient Chinese tradition of very extended family relationships, were at the centre of a web of companies stretched across the world to the Caribbean.
Included was the brother-in-law of Xi Jinping - General Secretary of the Communist Party of China, President of the People’s Republic of China, and the Chairman of the Central Military Commission.
The staggering wealth of China’s leaders was almost without comparison, perhaps only the Russian elite could boast of such fabulous wealth. In China, one could have said it was normal given the size of the country. It was a strange destiny for Mao’s successors and even stranger given Xi Jinping’s crackdown on corruption and behaviour that could embarrass the Chinese Communist party with its near ninety million members.
INI Private Bank was part of the system that hid the links between China’s elite and the Hong Kong business world, and Castlemain Private Capital hid the links between Hong Kong and the rest of the world. None of this was necessarily illegal, though most certainly unprincipled. Whatever, but it explained why Pat Kennedy’s faith in the rewards offered from the business his bank ran remained resolutely solid.
As China’s masses looked on, entrepreneurs like Wang Jianlin, the founder of Dalian Wanda, a real estate and entertainment group, saw his wealth more than double to reach thirty billion US dollars, which led Chinese, great and small, to ask themselves why they should not grab part of the action, be it a very small part.
Even Kennedy, who was comparatively speaking small fry when compared to Wang, had high hopes for his own ambitions, after all Wang had leapfrogged Jack Ma the founder of Alibaba, pushing him into second place.
In all the top one hundred China’s richest entrepreneurs were collectively worth not far off half a trillion dollars, or to put that in perspective half of the GDP of Vladimir Putin’s Russia.
Which made David Cameron’s much criticised inheritance look smaller than chicken pickings.
SUEZ
Across the ocean another canal was the focus of international attention. The Suez Canal expansion: ‘Egypt’s Gift to the World’ was being inaugurated in a grand display of patriotic pride. An expansion that had been financed, in part by public subscription, in which the Egyptian people, from the richest down to the humblest fellaheen, had been cajoled into buying state issued bonds, valued at the equivalent of two dollars and upwards.
2015 Suez expansion inauguration ceremony
Standing amongst the guests in Ismailia was the smiling figure of Pat Kennedy. He, thanks to a client of INI Hong Kong, an important shipping company and regular user of the canal, had been offered an invitation as part of the SAR’s VIP delegation.
The eight plus billion dollar investment added a second shipping lane allowing two way traffic, reducing transit time and hopefully increasing traffic and more than doubling the revenues.
The most noteworthy aspect of the construction was the time taken for its completion: less than one year from start to finish. A civil engineering feat that required three-quarters of the world’s dredgers and more than forty thousand labourers seven days a week around the clock.
Critics saw it as an exercise to restore Egypt’s image after the disaster of the Arab Spring and a boost to its sagging revenues. Others, however, doubted the growth in traffic from East Asia and the transit of oil to the West, given the economic slowdown Europe and China.
Egypt’s President al-Sisi faced a pharaonic struggled to pull his country out the profound crisis that weighed on it since the failed revolution of Tahrir Square in 2011. Egypt’s real problem was its two plagues: overpopulation and archaic Islam. With a population of ninety million, and just forty thousand square kilometres of inhabitable land, it was comparable to Belgium, but with a population eight or nine times greater, Egypt was held back by its adherence to an unreformed religion which had brought the Muslim Brotherhood to power until al-Sissi’s takeover.
The country owed its survival to the generosity of Saudi Arabia and the Gulf States, which together provided twenty five billion dollars of financial aid each year, however, their continued assistance depended on the price of oil, a two edged sword, if it rose it hurt Egypt’s economy, if it fell it put the Gulf kingdoms’ capacity to continue their assistance in peril.
Behind the smiles and congratulations of a long list of guests, including including heads of state like François Hollande - who had recently sold twenty five advanced Rafale fighter bombers to cash strapped Egypt, simmered the fear of Islamist insurgents, chaos and rebellion.
All that was of little or no concern to Pat Kennedy, his interest lay entirely in the lesson of how the canal project had been pushed through and completed in such a tight time frame.
The same could not be said for the Nicaragua Canal project, which showed little sign of movement, a major problem for Wang, a disappointment for Kennedy.
But, Pat looked on the positive side, reminding himself of Gore Vidal’s words: It is not enough to succeed: others must fail. The demise of Michael Fitzwilliams had left him in an extraordinary position. He was the head of INI Hong Kong. He answered to no one. The Wu’s left him a free hand if only for one reason: Kennedy was lucky. The others had failed and he succeeded. Good fortune was a thing of great value in the Chinese vision of life.
OIL
As the price of oil continued to slide, so did the value of InterBank, INI’s partner in Russia. The seizure of Sergei Tarasov’s Russia empire could have been seen as a blessing in disguise for the former oligarch. With his offshore assets secure, Tarasov watched as his enemies caught up in the quagmire of OPEC’s internecine struggle for domination of the world’s oil markets.
The Kremlin was forced to batten down as Urals Crude sank to below forty dollars a barrel as expectations for a turn around receded.
The collapse of oil had devastating implications for Moscow and a whole host of high cost producers as an all out price war was declared with Saudi Arabia challenging its rival, Iran, and OPEC members fought amongst themselves in a fierce battle for domination of world oil markets, a war that would drive weaker producers to the brink.
Tarasov watched from a safe distance as Russia was faced another epic battle for survival and not without a sense of schadenfreud, though it hurt him to see his motherland suffering in yet another crisis, which as often was to a large extent of its own making.
It was hard to believe that only eighteen months earlier life had looked so promising. It seemed as if Russia’s leaders led a conspiracy to inflict endless suffering on the nation’s all suffering people, a truism confirmed by Vladimir Putin’s bellicose defence of Moscow’s client, Bashar Assad, firing costly cruise missiles from its warships in the Caspian in a chilling demonstration of military power. A tragedy considering Russia’s reduced straits. It was as if Britain or Spain was attempting to recover their imperial glory in a display of military fire power.
The danger of Moscow depleting its foreign exchange reserves was real, forcing it to monetize its debts, thus bringing more misery to its people, who just as their hopes had risen were faced with a new trial to test their endurance.
Since the very start of Putin’s high risk gambit, Tarasov had, wherever he could, pulled out of commodity investments, focusing attention on assets and property in New York, London or Paris, dissimulating ownership behind secure offshore structures. His objective was conservation and security, putting his personal wealth beyond the reach of the Kremlin and all those who
could take advantage of him as doors that were once wide open slowly closed.
All good things came to an end and so it was with the commodity supercycle. Miners and refiners were fighting a desperate battle for survival, slashing debt, shutting mines in distant lands: Zaire, the Congo, Chile, South Africa and Australia, laying off thousands of luckless workers and selling off assets at knockdown prices in the realisation there would be no quick end to the glut.
Copper, zinc, nickel, oil and coal producers observed China anxiously, a colossus that now consumed half of all the world’s mined metals.
Commodity businesses of the likes of Glencore’s had seriously got their calculations wrong. They had been slow to note the signs that China’s race to development had reached its limits, its housing market had reached saturation point. Everything now depended on how Beijing would manage the next phase of its development: the transition to mature economy status with a solid home based consumer market.
Cornucopia Page 116