by Ian Williams
“Yeah, sure, it’s nothing,” he said. “Stubbed my toe.”
“You need to be careful with injuries like that, Chuck. They can turn nasty,” said the consulate’s FBI guy, who was sitting at the conference table with a bunch of papers in front of him.
Drayton said thanks, that he’d take care of it.
There were six people around the table and another four around the walls, where Drayton took his usual seat and watched the screens come to life: the State Department, FBI, CIA and NSA joined by the Treasury Department, another cloned video conference room, three people around another table.
The President’s visit was top of the agenda, a woman at the Bubble Room conference table running through the draft schedule for the Shanghai end of the visit. Somebody on the CIA screen asked about progress on the cyber stuff, whether the operation was any closer to getting names, because they really needed names, everybody looking at Drayton.
“We’ll get them,” he said. “We’re close”, knowing that he was starting to sound a little repetitive. So he was relieved when the satellite link wobbled a bit. The pictures kept fading and going to static. The sound wasn’t good. An encryption issue, said the tech guy.
That served to blunt the inquisition, and by the time the system was fully restored and all screens were up and running, they’d moved on to economic stuff. Which he stayed for because nominally at least he was Economic/Commercial Officer.
The FBI screen took the lead, a woman with small round glasses saying there was a lot of hot Chinese money flowing to the US, looking to buy American companies, but that the hottest money was into US real estate. Cash buyers with wads of dollars. In fact, she said, they’ve got so much cash they seem willing to outbid anybody if there’s a place they really want. She said there’d been a sudden surge and it seemed like people were desperate to get their money out of China.
Treasury then got defensive, saying foreign buyers helped buoy the real estate market, that we shouldn’t scare them away.
“We are putting new measures in place to stop abuse,” said a man who was hard to identify since the lighting in the Treasury’s conference room clone was even worse than the others. He was just a darkened shadow at the far end of the table.
“But naturally we’re concerned about illicit money flows into luxury real estate,” said the shadow. He said they were working on identifying and tracking secret buyers, the ones using front companies, shell companies, to hide their identities. Usually in the Caribbean.
The woman on the FBI screen, which was much better lit, then raised a big poster-sized picture of a seaside resort, which looked pretty plush, bathed in sunshine, beach in front. Surf.
“Hawaii,” said the woman. “Just sold for US$220 million – all cash – to a company called Rising Phoenix Holdings, which is registered in the Turks and Caicos Islands. But I’m guessing Chinese controlled. And we could show you dozens of others. We are talking wealthy, secretive buyers in a hurry,” she said.
The FBI’s man at the Shanghai consulate then handed out a thin file to each of those in the Bubble Room. He was another Economic/Commercial Officer, at least that’s what it said on the Diplomatic List, and Drayton wondered whether there were any real ones at the consulate.
Half a world away, the FBI said that Beijing was tightening controls over money flowing out of the country, that in theory there was a US$50,000 a year limit per person on what Chinese can take out, but there were a ton of ways of getting around it.
“You can launder through Macau casinos, do lots of tricks with dodgy invoices out of Hong Kong. But that’s China’s problem. We just want to have a better idea who we’re getting as neighbours and where they’re getting their cash from.”
She said they’d tracked a number of big recent transactions to a group of companies based in Shenzhen, the southern boomtown next to Hong Kong, one of which appeared to be linked to the Phoenix company and to others in Hong Kong and Macau.
“Funny thing is, they call themselves trading companies, but it’s not clear what they trade, nor who owns them. We’d love to know more about those companies.”
A man from the NSA said they could maybe poke around a bit inside their systems, but a woman from the State Department screen said best hold back on that. We don’t want to be caught breaking into computers, just as we’re condemning China for doing just that.
“So we shouldn’t do it?” said the man from the NSA.
“We shouldn’t be seen to do it.”
The woman from the FBI said that maybe this required a little more traditional legwork, since there had to be Western advisers, bankers, involved. Guiding the money along. Managing stuff.
And Drayton said, let me help here, I know a guy.
“That’s great. Go for it, Chuck. You take ownership of this. But don’t take your eye off the operation at The Facility.”
Drayton said no, he wouldn’t do that, suddenly feeling very good about himself again, and momentarily forgetting about his aching toe.
*
Drayton reached Morgan on his iPhone on the third attempt, and Morgan said he was at a reception at the Pentagon, which for a moment threw the American.
“It’s a new shopping mall in the south of Shanghai,” Morgan said, giving him the directions how to get there and saying he could meet in an hour.
Drayton messaged Cyril, who picked him up in the old taxi at a rendezvous point a ten-minute walk from the consulate and headed south on an elevated highway, knowing where to go. No map. No sat nav. And not for the first time, Drayton wondered who this guy was who knew the city so well. This NSA trusted driver. And as usual Cyril was giving nothing away.
“I’ve read about this place, this Pentagon,” he said. “It’s a knock-off of the Defence Department’s Pentagon only bigger. And a shopping mall.”
“Jeez,” said Drayton. “Is there nothing they won’t copy?”
“They’ve got a copy of an English town right here in Shanghai, with statues of Winston Churchill and Harry Potter. There’s also a fake Austrian Alpine resort and a fake Jackson Hole. That one’s just outside Beijing. And you know what? I read they’re pulling down a big slice of old Lhasa in Tibet and replacing it with a copy because they think the copy looks better.”
It took them forty minutes to reach the Pentagon. It was vast, bigger than the original and largely empty.
Cyril dropped Drayton in a deserted car park, saying to message when he was ready to be picked up, and Drayton had to walk around two of its five sides before he found a door that was open and had signs of life.
Only one section seemed to be fully operating, and even here the shops were largely deserted. There seemed to be more shop workers and mall security, standing around, than shoppers. He found the coffee shop where he’d agreed to meet Morgan, ordered a latte and took a seat in a far corner, where he started to read a copy of Morgan’s latest newsletter, the MB China Report, thinking, do people actually pay to read this stuff?
Morgan joined him ten minutes later, panting, and saying sorry, he’d got lost on his way over, that it was a big place. He ordered a cappuccino.
“Just reading your report, Tony. Interesting. Just so I’m clear, what you’re saying here is that there are two economies in China: the one that’s a bit wobbly, and one that’s gonna save us all?”
“Something like that.”
“And the wobbly one is stuff like steel, shipyards, where they’ve got way too many filthy factories. And property, all those ghost cities and empty houses. And this economy is gazillions in debt, because they’ve built all sorts of shit that nobody wants.”
“Well, broadly speaking,” said Morgan, nodding.
“And the saviour is what you call the ‘innovation and consumer-driven economy’. You mean inventors, entrepreneurs and shoppers?”
“That’s not a bad sum
mary,” Morgan said.
“And you think the Communist Party’s gonna make all this happen?”
Morgan said he was sure China’s leaders knew what they needed to do, but sometimes they were not too great at communicating it.
“I’ll tell you another problem I have,” Drayton said, closing the report. “It assumes the Party leader actually wants to reform stuff. But I see a guy who’s maybe a few fries short of a Happy Meal and who just wants control. That’s all he knows. Communist Party control. He’s terrified of instability, anything that might threaten one-party rule. And all these reforms you talk about, they mean mixing things up a bit, easing the reins, some pain in the short term.”
“I think that’s being a bit bleak,” Morgan said.
“Look at this mall, Tony. Where are the shoppers?”
And Morgan conceded they might have gone a bit overboard on malls.
“Overboard is an understatement,” Drayton said. “I read this thing saying they poured more cement in China in three years between 2011 and 2013 than was poured in the US in the whole of the twentieth century.
“What are you doing here anyway? Not shopping,” Drayton said.
“One of the developers is a client of mine.”
“Well, that figures,” Drayton said. “How’re my investigations going?”
Morgan said they were coming along fine, that he’d have the full reports soon, but so far they’d found no evidence that the Nanjing chemical company wanted to buy anything in the States and the Shanghai insurance outfit seemed to have stopped trading.
“Is that so?” said Drayton. “What about the Ferrari kid? Chen Huizhi and his old man.”
“Still working on that one, Chuck. I did say you hadn’t given us much to go on. And some of our usual sources seem very reluctant to speak.”
“I’m under a bit of time pressure on that one,” Drayton said. “So whatever you can turn up would be helpful.”
Morgan said he understood, and the American said there was another thing.
“What’s that?”
“Real estate. A couple of Shenzhen-based companies looking to buy in the US. My clients want a bit of background.”
Drayton showed him a sheet of paper from the files with the company names and Morgan nodded, saying, “We’ve acted on their behalf, helped them with one or two transactions. Handled some investments.”
“You know I had a feeling you might have done. Are they sound?”
“Well funded, but very private.”
“Naturally. Anything more?”
“There is an issue of client privilege on this one, Chuck. I’m sorry.”
“I’m sure there is. Which means I will pay you a little more. And ensure that the good name of MacMaster and Brown is not dragged into any federal investigation should the source of their funds be anything less than kosher. You get what I’m saying?”
Morgan sipped his coffee, thinking.
He’d been hoping to make a lot of money out of Mr Fang. But he couldn’t see any real reason why he couldn’t play both sides. And, anyway, Drayton was giving him no choice.
“They have a lot of money looking for a home right now,” Morgan said. “And they are in a hurry. We’ve been looking for real estate for them in the US. In St Kitts too.”
“St Kitts? The tiny speck in the Atlantic?”
“The Caribbean. If you invest half a million dollars there you get a passport. It’s called the St Kitts Citizenship by Investment Scheme.”
“What’s the point of that?”
“A St Kitts passport gets you visa-free access to the States.”
“In through the back door. Well, that’s absolutely great,” Drayton said. “Who are they?”
“I don’t know for sure.”
“You don’t know for sure? But you’re their fucking banker.”
“It’s because I’m their banker,” Morgan said. “Discretion is important.”
“Oh yeah,” Drayton said. “But so is fraud and money laundering.”
“Well, there’s a point man I deal with, a guy called Fang who calls himself Michael. He represents a consortium of investors, government officials mostly.”
“And this Michael Fang – the bagman – what’s his real name? I mean his Chinese name.”
“I’m not sure.”
“You’re not sure of his name? Is that another discretion thing?”
Morgan ignored that and said, “They want six St Kitts passports.”
“Which you’re helping to facilitate?”
“Possibly,” said Morgan, sipping his coffee. “To get the passports Mr Fang will need to provide rather more personal information on his investors than he’s been willing to do so far.”
“Like real names,” Drayton said. “Because I’m guessing that even the good folk of St Kitts need at least a name, a photo and a tiny bit of background before handing over a passport.”
“Mostly they want cash,” Morgan said. “But yes, basically you’re right.”
Morgan said he was going to Shenzhen at the weekend, to meet Fang, but that they still hadn’t fully committed to the scheme.
“They take their privacy very seriously,” Morgan said.
“I am sure they do,” said Drayton. “You know what, I think I might be down that way too this weekend. I fancy a change of scenery.”
Drayton handed him back his report and said he was looking forward to the next one.
“I got lost with all the statistics. Not that I’ve ever met anybody who trusts official statistics anyway. Seems to me they are political, not economic, conjured up as needed.”
Morgan said that was why most economists had their own ways of measuring economic activity.
“Which is precisely my point,” Drayton said, making to leave and saying to keep in touch and not forget the Ferrari kid and his dad. That was still the priority.
Morgan said sure he wouldn’t forget, asking Drayton where he’d be staying in Shenzhen, and the American said don’t worry, I’ll find you.
“I admire you, Tony, trying to make sense of stuff that makes no sense. To me it’s about as clear as Beijing smog.”
– 15 –
Robert
Cindy Wu had done a good job. She always did, and the way Morgan saw it she should have been pleased with herself. But instead she was worried. Angry even, saying, “I don’t like this, Tony. What are we getting into?”
Morgan was looking through her research, three neatly bound documents that she had placed on the table in front of him. They were sitting in the coffee shop of a luxury hotel in Pudong, Shanghai’s financial district, where Morgan was attending a conference about the internet. Cindy Wu had met him there on her way to the airport for a flight back to Beijing. He’d been staying at their apartment nearby; she elsewhere, with friends. Which had become their usual pattern.
“I’m not bothered about those two,” she said, referring to the Shanghai insurance company and the Nanjing chemical business. “It’s as we thought. One’s gone bust and the other’s not far off. No way are they interested in buying anything in America. I don’t know why this client of yours even asked us to look at them.”
Morgan had already given the preliminary results on those companies to Drayton, and he said yeah, that it did seem a bit of a waste of time, but maybe the client just wanted to be certain, not understanding China, the usual stuff.
She then took the third, thinner, document, and placed it on top of the pile, and said, “It’s this one I’m worried about. This isn’t usual at all, Tony.”
The heading on the cover page was “Colonel General Chen Shibo”, and underneath were three photographs. One was of a man in full military uniform, presumably the Colonel General himself, the second of a much younger man in an open-neck shirt and tryin
g to look serious, but not doing a very good job of it, which Morgan took to be the son. The photographs were much more formal than those Drayton had given him, and at first he struggled to recognise either. The third photograph was of a red Ferrari. He recognised that.
“The father’s military. Top military. Secret military. And from what I can tell, very well connected politically. The son’s a waster. But the businesses are all in his name through a string of Hong Kong and offshore companies.”
She said the information was pretty sketchy, that many of her usual sources had been very reluctant to help. She said the Colonel General’s biography had suddenly gone blank about three years back. Before that he’d been into computers, logistics mostly, heading a unit that bought and sold for the army.
“Logistics is always a big money spinner, lots of opportunities for a bit of private enterprise on the side, which is presumably where his money comes from, the money the kid manages, though I can’t say I’d want him in charge of my cash.”
She said she was still waiting for one or two sources to come back to her, trying to get more recent information on the Colonel General. So the report was still a bit preliminary.
“There was a lot of push back, Tony. It was tough.”
“Looks pretty good to me,” said Morgan.
“You said it was urgent, Tony. You also said we were getting paid well for this. It had better be very good,” she said, repeating that she was worried, handling stuff like this. That it could come back to hurt them. Especially now.
Morgan changed the subject, thinking his wife was being over-dramatic, and asking what time their son Robert was arriving from the UK. She said he was on his way, that his flight got into Beijing late that afternoon. She said she’d timed her flight from Shanghai back to the capital to get in a couple of hours ahead of him, and that she’d wait for Robert at Beijing airport.
“He wants to stay in Beijing for a while, then come to Shanghai.”