Red Wolves & White Knights

by Peter Kysel

  In the early nineties, the Czech labour force earned 10% of western wages, while their productivity was 30%. Privatised companies were attractive targets. Multinationals quickly raised productivity to 70%, while wage increases lagged behind. The economic impact was rapid.

  During the following decades, the Czech economy pros­pered. Western multinationals transferred manufacturing operations into the country. At the start of the new cen­tury the multinationals followed up by transferring skilled administrative jobs from the West and the Czech economy became globally integrated. Business investments there are now higher than elsewhere in the EU. The economic swamp has been drained.

  #

  Ambassador No More

  My discussions about becoming a diplomat continued inter­mittently until the appointment of Václav Klaus, as prime minister on 2nd July 1992, when his ODS party won the general election.

  The Foreign Minister, Jiři Dienstbier, a close ally of Václav Havel, stepped down. His last call from the Černinský palace was apologetic. There was now a new regime in place.

  “They will ask you to take language fluency tests” Jiři said, embarrassed, knowing that I spoke four languages. The red wolves set out to eradicate dissidents and their allies by humiliating them. I felt dejected, but at the same time relieved. I no longer needed to agonise about my patriotic duty and the financial sacrifices I would have to make by joining the diplomatic service.

  “I’ll check my diary and see if I have any time for the tests,” I responded politely and we both laughed. I had no inten­tion of humiliating myself before the incoming ruling class. In my homeland, no good intentions remain unpunished.

  Looking out over the roofs of the Barbican from my office windows, I consoled myself. It was a shocking message, but the right one. Diplomats are influencers, not decision makers. I packed my papers, switched off the lights and took the lift down to the underground carpark to pick up my new metallic grey BMW 7. On the way home I summarised my thoughts:

  I’m motivated to do good. I have two years of direct business experience in post-communist Europe, but becoming an ambas­sador was a romantic idea. I was saved from making a mistake.

  I parked the car outside our house and went in to tell my wife.

  #

  Redundant

  Our managing director became more assertive. He called me into his office and snarled, growing red in the face, “I know all about your ambitions. I’ll see you and your fucking cronies out” Axten appeared to be quite insane. My reaction to his outburst was cautious. I ascribed his behaviour to an inferiority complex and tried to reassure him. He ranted on, referring to our colleagues as cunts and bastards.

  I went to consult Geoff, our director of human resources. He listened to my description of the encounter and nodded.

  “I have had enough of it, so I’ve decided to resign,” he said simply and added,

  “I am sorry that I asked you to apply for the job. I didn’t realise that the bank had a secret plan. Axten was the unex­pected joker in Schroders’ pack.”

  “He isn’t fit for his job. Why does anyone employ him?” It was a rhetorical question. Geoff shrugged his shoulders and we parted. I had experienced similar patterns in my previous jobs.

  Bad bosses fragment their teams. When morale goes, good people leave. Then the business itself falls. Is this a warning for Lloyds Merchant Bank? Maybe Axten will be fired before he causes terminal damage. I could get a second chance to run the business.

  I was confident that I was in a strong position. I had been recruited in 1988 to integrate Lloyds investment policy and to improve underperformance. We delivered, with our man­aged funds achieving cumulative outperformance of 11.5%. The bank had effective asset allocation and a methodical selection of investments. All the international offices were integrated into our process.

  Protected by his contract, our boss set out to clear out his rivals. Senior people began to leave. In September 1992, Peter Axten called me into his office once more. He went to close the door behind me. This was a bad sign. Smelling intensely of Brut, he returned to his desk, sat down and pointed a finger at me.

  “You are out now, you cunt,” he announced, with his cus­tomary charm. I didn’t respond, watching his face change. Then, as his face turned purple, he shouted,

  “Put your personal stuff into a plastic bag and fuck off. I want your files on the Russian gold project. Let’s go and get them,” he barked. My first reaction was incomprehension. I followed him into the open plan office. It was eerily quiet and almost empty. Other redundant colleagues had already been escorted out of the building.

  Security guards hovered outside my office. I saw a white envelope on my desk, with the black plastic bag next to it and I got the message. I had seen this scene many times before in the City. Now it was happening to me. Reality hit me at last. I watched Peter Axten in silence, as he took the files. He walked out with them, without saying a word. I closed the door behind him, overwhelmed by this sudden turn of events.

  Numbed, I sat down at my desk and stared at the opposite wall. Then I opened the envelope and read my redundancy terms. After I had emptied a couple of drawers into the black bag, the security guard stepped in to escort me out.

  My performance was irrelevant. I was pushed out under the cloak of restructuring. Surely the investment process will col­lapse without me. Why didn’t the bank back me up? I must contain my anger. No emotional outbursts now. If I burn my bridges, I will never work in the City again.

  I walked to the car. The security guard carried my black bag and dropped it into the boot. Out of sight, in the garage, he gave me a goodbye hug.

  Less than two years ago, I was in great demand. Now I was being sacked by a vulgar nitwit. I ached for revenge.

  Florisse was calm and practical. She imposed a programme of family austerity. More importantly, she had a safe job.

  Our financial situation was comfortable enough. The out­placement agency was helpful with practical advice. I was assigned an office in New Street, opposite Liverpool Street station and a personal secretary, to keep my self-respect. There I descended into a state of shock. It was the first time, since I arrived in Britain, that I had been unjustly treated. Florisse sensed this and made arrangements for me to see a psychologist. I went to see him and let out my pent-up anger.

  “I have been victimised by a bungling bully,” I raged. The psychologist encouraged me to continue. I pulled out lists of performance statistics and raged about my treatment. He waited for me to finish, before responding,

  “You have received a generous redundancy package. Both the bank and Axten will be feeling guilty about the way they treated you.” My appointment went on for three hours. I gradually calmed down and agreed to take psychological tests, to decide what career I should pursue. The report was reassuring, I was suited to a career in investment banking. The consultant also met Florisse, to help her with strategies to cope with my mental anguish.

  “How do you feel?” she asked afterwards

  “I feel calmer. I will put this experience behind me and look for a better job.” As I began to get over the shock, my wife and the psychologist were visibly relieved.

  #

  Russians Imitate Czechs

  Michael Johnson arrived in London, excited about Russian privatisation, He was bursting with questions.

  “Peter, what’s your opinion?”

  “Positive. They have replicated the Czech template. Some 98% of Russian adults have taken up privatisation vouchers.”

  “It’s so frustrating that, as a foreigner, I am not allowed to participate. Did you buy Czech vouchers? What was your experience?” asked Michael

  “I bought vouchers and like everyone else, and I made a profit.”

  “So why do I hear that voucher privatisation was a fraud?”

  “Some people did mess up. They sold their vouchers for minimal profit, instead of investing them. They lost the chance to improve their lives.”

  “In what
way is the Russian scheme different?”

  “It’s a huge mistake to sell large companies exclusively to the Russians. Excluding foreign investors will damage their economy and Russia will be bypassed by globalisation. The Czechs, who encouraged multinationals to participate, will do well, while the Russian economy will remain a swamp.”

  “Why do the Russians restrict foreign ownership?”

  “Because of their xenophobia. I have visited several Russian companies. They are all badly managed and underinvested.”

  “Should the government stop the privatisation process in Russia?”

  “No. Small privatisation is definitely beneficial. Even the bad privatisation of large companies is better than leaving them under state ownership. Without privatisation, the Russian economy would collapse.”

  I badly missed my investment work. Two months earlier I was allocating £8 billion of funds. Now, I just played tennis. I followed the developments in Eastern Europe but was deeply frustrated not to be involved.

  #

  Life on Hold

  In January 1993 I became a consultant at Ernst & Young. Our team was appointed to advise the Slovak minister of finance and the president of the National bank in Bratislava. I began to commute via Vienna. I would spend five days in Bratislava and return, to London for the weekend, keeping my office in New Street as a base.

  We worked in the offices of the finance ministry, not far from a large central park in Bratislava. At lunchtime I played tennis and joined a small group of expatriates. On 1st January the velvet divorce split Czechoslovakia. As a Czech, I found no animosity from my Slovak colleagues, but our relationships were purely professional.

  Privately, I prepared a generic proposal for the launch of a specialist investment bank for central and eastern Europe and offered the concept to several western banks. They wel­comed my presentations, largely just to explore my ideas, but I managed to develop dialogues with at least two banks.

  Boris Berezovsky became aware of my efforts to form an investment bank and met me in Vienna. He offered me his concept of ‘profits privatisation’ involving squeezing com­panies to accept loans at usury interest rates, in excess of 100%. Aeroflot was one of the companies to accept his vulture scheme. Our ideas didn’t mesh, and we parted. Berezovsky was subsequently sentenced for his ‘profits pri­vatisation’ activities.

  #

  Axten’s Dead

  Several months after leaving Lloyds bank, I met John Wright for lunch in the Barbican. After we had ordered, John leaned over and whispered,

  “Did you know that Axten is dead?” I was stunned.

  “No. How did he die?”

  “The police went to his house when he failed to turn up for work. They found him at the bottom of the stairs with a broken neck.” The news silenced me, but John had more gossip.

  “Axten was an alcoholic. He lived with his wife. After he had made us redundant, his wife left him.”

  “Why? Was he abusive to her?”

  “Apparently. He was violent, when drunk. She snapped one day and walked out.”

  “How much did he drink?”

  “Two bottles of vodka a day. More at the weekend.” I looked at John and remembering that Peter Axten was always heavily scented, asked him

  “Why did he always smell of Brut?”

  “He gargled with Brut, to hide the smell of alcohol. After he died they found bottles of whisky, vodka and Brut after­shave in the locked drawers of his office.”

  “Strange that nobody at the bank realised, when they appointed him.”

  “Axten evaded the medical test. They are extremely embarrassed now.”

  “Remind me John, why were you made redundant? You weren’t a threat to Axten in the marketing department?”

  “When he arrived, I felt some affinity towards him. Like me, he came from an ordinary family in Leeds. He never went to university and hated the easy superiority of the priv­ileged classes. To me, he was a real man. He was from my background.”

  “But he was inept.”

  “I discovered how evil he was, when he started bullying people. I sealed my fate by dropping casual remarks about alcoholics,” John chuckled.

  “I can’t think of anyone I disrespected more than him,” I said quietly. John looked at me, shrugged his shoulders

  “It was mutual. He was allergic to smart foreigners, like you. His prejudices backfired. When he got rid of good people, productivity went down, performance collapsed, and the bank’s business imploded.” I could not resist asking,

  “Did he get involved in the Russian gold project?”

  “After you left, Axten boasted of getting the gold man­date for the Lloyds bank’s office in Jersey. Then he had an acrimonious meeting with the Russians. He was dead a few weeks later.” We looked at each other and nodded, without disclosing our thoughts. Instead, we ordered another drink and chatted about our families. The conversation unsettled me. On the way home I wondered

  Was Axten pushed? What could have upset MBR so much, that they would assassinate him? Had I kept my job, would I have ended up with a broken neck, instead of him? Did the redun­dancy save my life?

  #

  London Bomb

  On Friday 23rd April I flew to London for the weekend. The following morning I drove to Bishopsgate, parked the car and went to my New Street office to finalise my proposal for the Raiffeisen Bank.

  As I was leaving the office, I heard a loud bang. The stairs shook beneath my feet. I grabbed the bannister to steady myself. It has to be a bomb. Is the building going to crash? I must get out. Outside, Bishopsgate was a scene of devasta­tion. Several buildings were damaged, and most windows shattered. Fortunately, it was a Saturday. The bomb had exploded near the corner of London Wall.

  The police gave me a security pass allowing me to drive home. I found the car covered in dust, but undamaged. This was the last major bombing by the IRA and resulted in the erection of a ‘ring of steel’ around the City, the introduction of road checks and the installation of a thousand CCTV cameras, to stop terrorist acts in the financial district.

  That same day, after a year of silence, Andrei called, and we arranged to have lunch at the Travellers Club where I had booked a table overlooking Pall Mall. London was quiet after the recent bombings. The dining room was vir­tually empty. I wondered what the meeting was about. A constitutional crisis was unfolding in Russia. The referen­dum endorsed president Yeltsin’s economic reforms on 25th April, but the Congress of communist deputies refused to implement them.

  #

  Andrei at Travellers

  Andrei had gained some weight since we last met. He seemed to have something on his mind

  “I wanted to let you know that I have moved to Jersey. We are managing Gosbank’s gold reserves from there”. Andrei implied that my former employer had been dropped as a manager. Just for fun, I recounted my Hermitage story about the impressionist paintings. Andrei nodded a few times and leaned forward in a conspiratorial manner. He even turned his body towards the window before responding.

  Is he afraid that he could be lip-read by someone in the room? Foreign diplomats are members here and they are always inter­ested in other people’s business. Half-amused, I also moved my chair to face the window, and he began.

  “You had a great idea for our art collections, angliyskiy bankir. In fact, your idea was actually adopted. Descendants of the original owners have now been compensated for the paintings and subsequently renounced their ownership.” I very much doubted that. Andrei is lying about compensations. It looks as though the Ministry of Security has decided to mone­tise the art stolen by the Bolsheviks. I pretended to be amused, but I felt uneasy. Why is he telling me these secrets? I don’t want to know. Axten probably knew much less than this.

  “Are the Impressionist paintings back in the Hermitage?” I asked, to defuse the subject, and Andrei smiled.

  “Maybe some of them.” This made me even more uneasy. Is he implying that the originals are gone and have
been replaced by copies?

  “Have the damaged paintings been restored?”

  “Not all of them, some had to be taken abroad” Andrei said and changed the subject.

  “Tell me angliyskiy bankir, what are you doing now?” He asked pointedly and I laughed sheepishly. This was my opportunity to show that I had become a person of no con­sequence and therefore of no interest.

  “I’m a consultant, advising the Slovak finance minister. It suits me after all the traumas at Lloyds bank. I am earning good money with no pressure and no responsibilities.”

  #

  Biznesmeny

  “Do you remember Mikhail Khodorkovsky and Vladimir Vinogradov from your privatisation seminars in Moscow three years ago? They are both doing really well, and we are investing in their businesses.” I was aware that Khodorkovsky collaborated with the central committee of the CPSU (Communist Party of the Soviet Union). This seemed to be another dangerous topic. I just nodded, determined not to show interest in Andrei’s investment business. He took the hint. I hesitated, before finally asking my crucial question.

  “Andrei, have you seen my former colleague, Peter Axten, since I left the bank?”

  “Err, sorry? I don’t remember him,” said Andrei with a smile. It was a straight lie. This was a coded message. It sent shivers down my spine.

  Axten had become a non-person. Is Andrei confirming John Wright’s story? Did the Russians ply Axten with vodka, break his neck and push him down the stairs? Why? Not wanting to know any more, I apologised

  “I’m sorry. Axten threw me out of the bank. I’ve been thinking a lot about him.” Andrei looked at his watch and apologised for ending our lunch so abruptly.

  “Khorosho, angliyskiy bankir, uvidimsya” (Good, English banker, we’ll meet) he said. I had no intention of seeing him again. We parted politely.