The Clayton Account

by Bill Vidal

  ‘Don’t worry. I’ll get back to you if I hear anything. And thanks.’

  On Monday morning, back in town, Tom called Ackermann. The latter was solicitous – he respected a man capable of earning over $2 million in a month.

  ‘Mr Ackermann, I would like to go short on sterling once again,’ he said lightly.

  ‘Naturally, Mr Clayton. Twenty million pounds again?’ he asked. Ackermann was on the Swiss equivalent of a high. This one client, the one whose account had almost ruined Ackermann’s career, had now turned out to be a blessing. Ackermann now had orders, relayed to him by Brugger in person, to report directly to Dr Ulm. It had been one of those fleeting moments that men rarely experience in their working career: walking purposefully from his office and saying to the secretary he shared with six other managers, loud and unequivocally for all to hear: For the next half hour I shall be with Director Ulm.

  ‘The figure I had in mind was two hundred million sterling.’

  Tom heard Ackermann wheeze as though a hammer blow had been delivered to his solar plexus.

  ‘Mr Clayton, you only have forty million dollars with us.’

  Clayton smiled at the ‘only’. It was as if a student were being rebuked by his bank manager for going into the red at the end of term.

  ‘How do you propose to cover the rest?’

  ‘I believe you can take it on margin, Mr Ackermann. Should sterling trade above 2.70 you can take my forty million to cover the losses and cash me out.’

  ‘I would need authority for this, Mr Clayton,’ he said quite sternly, which was precisely what Tom had expected.

  ‘Sure, no problem. But let me make one thing clear. I could put the business with my own bank, right there in Zurich, but of course I would have to move my funds from you to them. I expect your answer in thirty minutes – would that be sufficient time?’

  ‘That should be sufficient, Mr Clayton. May I call you at work?’

  ‘No. I shall be out. Let me call you.’

  Ackermann went directly to Ulm, who heard the request without flinching. What was up? He was well aware of Thomas Clayton’s recent profits and more recently Ulm had discovered that Clayton’s employers were holding 250-million-worth of short sterling. Now the man himself wanted to gamble his entire fortune on the bet that sterling would go down. No banker would ever do that without inside information. As to the suggestion that Clayton could place the business through his employers’ Zurich office:

  ‘Did he say you should call him in thirty minutes?’ the Director asked.

  ‘No, Herr Doktor. I offered, but he said he would call me back.’

  Ulm smiled. Clearly he was right on two counts. Clayton did have inside information, and he was hiding his dealings from his bank. In these circumstances the last thing Ulm wanted was his own ability to track the deals removed from United Credit Bank.

  ‘Very well, Ackermann. Tell him yes.’ He leaned back and stared at his manager. ‘On two conditions. First, should sterling move up, as soon as his margin money is 90 per cent spent we cash him out. There will be no extensions without additional cash cover.’

  Ackermann knew that the other 10 per cent, about $4 million, would be deducted as commissions and expenses if the deal went bad.

  ‘Second, and this applies to you, Ackermann: until this matter is over, you discuss it with no one but me. Not even Dr Brugger. Understand?’

  Ackermann certainly did.

  ‘Now take your phone call and make sure all the terms of this transaction are accepted in writing.’

  Almost three-quarters of an hour elapsed before Tom called Ackermann back. In the intervening period he accessed the bank via his computer and, taking a deep breath, he gave it a cautious try. At first he moved with caution. Taurus’ was the guinea pig. He merely removed a small portion of its deposit and lodged it in a different account. And it worked, the system accepting Tom’s password without query. Ten minutes later he accessed the system again. No changes. Taurus’ funds were just as he had left them. No reversals, no flags. He called up his house account. The forward deal was there, still in T. D. Clayton’s name: £250 million forward, showing a £26 million gain. He put in a forward sell deal for another £250 million, validated it with his authorization and executed the trade. The screen flickered a couple of times and the contract was firmed.

  ‘Fuck you too, Hal,’ he shouted out loud and his words echoed around the empty house. Tom was enjoying his play.

  When he eventually called Ackermann, the latter agreed: ‘Two hundred million sterling, sold short, thirty days at: two, decimal, four-eight.’

  Forty million dollars currently at UCB would be placed as margin. It would cease to earn interest while used for this purpose. But the deal would not be done until Clayton signed it.

  They argued that point until Ackermann agreed to fax the papers to UCB in London. Tom gave him thirty minutes to arrange it: time for a cab from Kensington Square to the City.

  As he jumped into his taxi, Tom acknowledged he had just gambled the IRA’s money. And felt nothing – his arm never shook once.

  Ulm, on the other hand, was feeling quite a lot. For a Zurich bank director this was quite a departure. He felt the excitement of having spotted inside knowledge, the surge of greed for easy profits, and a tingling anticipation of the veneration he would receive at the next board meeting. Meanwhile, if the Americans were dumping sterling, then for certain it would drop hard.

  Over the next eight hours Ulm checked and double-checked that he had not overlooked anything. He spoke to his own currency experts. They knew nothing untoward about the British currency but they were pretty certain it was unlikely to move up. Then his head of Forex passed him three significant bits of information. One was an intelligence report that Clayton’s masters had doubled their position to half a billion. The second was an order from the same bank’s Zurich office: selling sixty million sterling short. It was unusual for them to put their business through UCB. Ulm assumed they would have similar contracts all over the market. The third, the clincher, was a faxed copy of an article in that morning’s Wall Street Journal. In it the respected columnist Mel Horowitz wrote on the impact the Single European Currency might have on transatlantic trade. One small paragraph, almost an afterthought, spoke of circulating unconfirmed rumours of some heavy sterling sales.

  ‘If Britain were to join the Single Currency,’ wrote Horowitz, ‘devaluation might make sense. Tony Blair will no doubt take into account the dire consequences of his Tory predecessors’ ERM entry with an overvalued pound.’

  Every instinct told Ulm he was on the right track. And time was of the essence.

  Jeff Langland did as Tom asked. He felt he had no choice. Ever since they had parted at the Reform Club, he had been devoured by guilt. At first he had blamed his wife for pressing him, but finally he accepted that it had been his own fault. He had betrayed his friend out of terror of poverty and unemployment, yet in the end Tom had come up with the money and paid up for both of them. He looked around his office and felt strangely detached. The half-dozen other traders, Swiss boys at least ten years his juniors, laughed and bantered merrily, but Jeff could no longer hear them. He just saw their mouths move, their eloquent expressions. It was all right for them, Jeff thought; they had come from nowhere, their lives always looked up. Jeff knew he did not belong here, just as he accepted that the world he really wanted was beyond his reach.

  He left his desk without speaking to anyone and took the lift to the basement. He squeezed his key ring and the BMW lights flicked once as the doors unlocked. He drove out into a dark, bleary Zurich, and ten minutes later found himself driving south along the autobahn on the Zurich See’s west bank. When he reached the Lunth Canal he left the freeway and switched on his windscreen wipers. It had started snowing again and this became more noticeable on the narrow country road. On the southern bank of the Walensee he came upon a restaurant, newly built in the traditional style, except that all its sides were glazed. Langland turned i
nto its car park and stood for a while contemplating the stube’s bright lights. He could vaguely see inside through the misted glass and briefly longed again for warmth, comfort; hope.

  But no, he told himself moments later: it was completely futile. There was no refuge. He walked along the sloping bank towards the lake, his shoes sinking softly in the fresh snow. He observed that there was no telling where the land and water met, then nature answered him as he felt the crunch of thin ice. Langland walked until he was knee-deep, then paused. He could not feel the cold, which he found odd. He looked briefly at his Rolex and smiled, remembering it was waterproof. Then he walked forward into the white darkness, alone, unhindered, relieved of every burden.

  On Tuesday, as the Euro dropped a few points on account of profit-takers, Ulm placed his order. One billion sterling into Euros. Ulm held his country’s currency in too high an esteem for mere gambling.

  * * *

  An hour later Deutsche Bank spotted the deal. They did not know why it was happening, but continued to watch carefully. By noon, three other Swiss banks got word on the Zurich floor and resolved not to be left out. Credit Suisse took 500 million and UBS half as much again. That sort of speculation being unusual in Zurich, the news spread fast. At 2 p. m., Deutsche sold two billion sterling and by the time the markets closed in New York, the European currency was riding in the clouds.

  On Wednesday the British Government, besieged with questions from the media, released a statement: There is no truth whatsoever in rumours of impending devaluation, and the policy of not joining the single currency during the life of the present Parliament remains unchanged. That did it. By the end of trading on Tuesday, thirty billion sterling had changed hands.

  Speer left his hotel on foot and walked along the snow-covered streets towards Marienplatz. This would in any event have been a day to savour, but in the sunny February morning, as residents and tourists mingled about the historic city, he was truly, deeply moved.

  He still found it hard to reconcile himself with the good fortune that his timing had delivered. When he learnt Morales had been vanquished by his Cali rivals, Speer had debated his next move. In his power was a fortune worth almost $70 million, marred only by the threat of Salazar’s wrath. Speer applied all his acumen to devising some form of accommodation, but the way forward eluded him. The Laundry Man was greedy and ruthless. Either Speer returned Morales’ fortune or he must forever live in fear and hiding. But then deliverance had come from God-only-knew what quarter. Perhaps a pre-ordained destiny, Speer concluded, leading him inexorably to greater things in the land of his ancestors.

  When he heard of the Banker’s demise in New York City, Speer had shaken uncontrollably. It took him some time to accept the new reality, but in truth he had become an unassailably wealthy man. The professionals he had instructed to realize Morales’ – now his – assets were moving at a reasonable pace. Bonds, securities and fixed-term deposits were simple enough to liquidate, but the real estate was predictably taking time. He was not prepared to take chances so he charged the attorneys to take a lower price if necessary, citing other investment opportunities which required him to move fast. One by one the cheques started arriving, the kind that drug-dealers would have killed for, for they were issued under the most respectable of names – Merrill Lynch, Morgan Stanley, City of Phoenix – all as drafts from America’s leading banks.

  Speer had gone to Munich in November and met with high-ranking officers of Dresdner Bank. After many years overseas, during which time he had built a substantial asset base in the Americas, he told them, he was now selling up and coming home. He had some 50 million cash at his disposal – dollars, he clarified – for a good solid investment, long-term. Speer asked Dresdner to look for such an opportunity, preferably in insurance, shipping or finance. Within thirty days they had come back to him, offering a once-in-a-lifetime possibility that would suit a diligent and capable gentleman like himself.

  Now he had come home to complete the purchase. He paused by the Neues Rathaus and looked up at the high Gothic tower. Two minutes to eleven; he would wait. On the hour, the sound of a glockenspiel filled the square and Speer derived personal joy from the admiring foreign faces paying tribute. He resumed his stroll down Burgenstrasse towards the Alter Hof. The old castle’s courtyard was an island of serenity punctuated by the sound of splashing fountains. For an instant Speer felt as if the thirteenth-century Wittelsbacher Dukes were still at home. Through the archway, past the Mint, he reached busy Maximilianstrasse and turned right, his thoughts turning for a moment to distant Costa Rica.

  He had left his junior partner to look after the practice. The junior was competent and hard-working; the law office would prosper under his charge. His brief would be to continue courting South American big money, but well clear of Colombia. Smuggled currency, negociados, anything marginally legal, but no more drugs. In time Speer would visit, to enjoy life in the sun, and cavort awhile with the good-time girls – perhaps when he tired of long winters, but not now. Now a new life, a life his own father would have been proud of, awaited Heinrich Speer in Bavaria.

  He passed the imposing Corinthian columns of the Opera House and turned left into a white-shrouded Marstallplatz, then walked on to number 7, his heartbeat rising with each step. He stood outside and stared at the facade for a delicious moment, the small, immaculate, elegant entrance to the Huber Bank.

  Old Huber sat at the head of the table and rose to greet Doktor Speer. The others, three directors – like Huber, of advanced age – and legal advisors for both parties, greeted him effusively. Today’s meeting was a mere formality.

  Joachim Huber had established the private bank in 1622. Over the centuries his descendants had managed it with care, financing merchants in Bruges and Venice, raising funds to fight the many wars and in the process acquiring a respectable clientele. These days, however, the bank was no more than a repository for the Bavarian titled classes, a mere shadow of its past. The last war had seen many of Huber’s clients disappear through the gates of Dachau.

  Friedrich Huber had remained a bachelor to the autumn of his life and had only recently married a younger wife, an impoverished sixty-year-old lady of unquestionable pedigree. Baron Freddy wished to spend what time was left him in savouring his belated taste of love, free of duties, in the sun, at the house on the Riviera that had been his wedding present to his wife. The bank’s asset value was at best 35 million but its good name had a price too. Dr Speer had offered 50 million and Baron Freddy had accepted gratefully as he thought of Cap Ferrat.

  The papers were signed and the glasses of sekt were poured. Each man took a polite sip. As he wet his lips, Speer shaped a spurious word of thanks to Carlos Alberto Morales, the fool who thought one could deal in drugs respectably and discovered his mistake too late to keep even his own life.

  The advisors soon departed, their fees earned, in pursuit of new opportunities, and Freddy Huber took Speer up the marble staircase to his office. Politely he pointed at the chair behind the Louis XIII desk but Speer shook his head and smiled. Tomorrow would do fine. Now he just wanted to look out of the window, at the ode to life that was the Hofgarten, soul of Munich, nature’s banquet for Speer’s senses for the rest of his working life.

  An ocean away, in New York City, accountants and fraud experts from the FBI and SEC sifted through the Banker’s records. In time they would recover data from hard disks and work their way back to Salazar’s customers.

  But one thing they would never find would be the forty-three accounts that ghosts had opened in as many branches of Swiss banks, from the shores of Lake Geneva to the heights of St Gothard. All in all they contained over $120 million dollars, which their rightful owners would never claim back.

  By the time the investigators finished searching Salazar & Co’s premises, it was two in the morning in Switzerland and the Gnomes of Zurich were asleep.

  Business on the last Monday in February opened with the Swiss franc at 2.19 to the pound. Director Dokto
r Ulm had earned his bank almost $200 million in sixteen days. His colleagues in the supervisory board applauded themselves for having chosen him, and as Ulm later sat in his own office, a few highly placed officials in the know passed by and proffered congratulations. UCB did of course take the profits and rid itself of all the contracts. It surprised Ulm to see that Clayton, though indisputably $40 million richer, did not call to cash his. Ulm told Ackermann to remain alert. The same rules still applied but, his own mind now released from pressures, Ulm decided that he might treat himself and Frau Ulm to a week in Saint Moritz.

  Tom Clayton too was quite ecstatic, but remained unmesmerized by his success. He did not join the others in profit-taking; he would wait until the end. He had six days left to March. On Tuesday sterling rallied and closed at 2.21. The mistake cost his bank $10 million and Tom personally nearly three.

  On Wednesday, before the markets shut down in Zurich, Thomas Clayton closed both books. His employers had made a profit of $153 million in three months. Tom’s benefit from his own transactions stood at $39,726,027, which, when added to his other account balances, totalled in excess of $82 million.

  He called Ackermann with a new instruction, to be confirmed later in the day by fax: he was to make an immediate payment of exactly $43 million to a numbered account held in Geneva at the Allied Irish Bank. Four days early, and in breach of Clayton’s Fourth Rule of Banking: Never pay a bill too soon; between now and its due date, you could die.

  The remaining $39 million were, as always, to be retained by the United Credit Bank. The interest rate of 4.25 per cent was renewed. That would yield 1.3 million a year: Grinholm’s kind of money.

  Tom typed out his resignation letter – subject to payment of last year’s bonus – and delivered it to his ex-employers by hand.

  Later that evening, alone again in Derivatives, Grinholm dropped Tom’s letter in a filing tray and looked at his PC monitor with satisfaction. He removed Tom Clayton’s name from the half-billion trade and substituted his own. While the files were updated automatically he called up Taurus and closed their account. In the morning a cheque for their remaining balance would be sent to their address in Liechtenstein.