by Peter Kysel
After Andrei left, I went into the bar and ordered a coffee. I took it to a large armchair and, pretending to read the newspaper, I mulled over our conversation.
The political situation in Russia is dire. Yeltsin’s opposition are deputies appointed by the outlawed CPSU. Yeltsin declared them to be a political swamp, which he would drain. They have plans to impeach Yeltsin and reverse his reforms. Strangely, Andrei made no comment about any of this. Whose side is he on? Elements of the Russian state, including Gosbank, intelligence services and the St Petersburg’s government have colluded to move assets abroad and monetise them. What is that capital for? Will it be used for reform, or against it? Michael should not get sucked in.
Ultimately, I discovered that transfers of assets abroad had funded the emerging Russian entrepreneurs. Gold bars were used as collateral for bank loans. The proceeds from sales of gold funded the newly formed Russian private banks. Andrei managed Fimaco, owned by Gosbank. This Jersey company received the proceeds of gold sales and managed an offshore fund of $37 billion.
John Wright and I met for another lunch in London. He had the final story about our former employer.
“Axten’s team failed. The merchant bank was disbanded. A sad story of a bank that should have succeeded.” I nodded in agreement, but I had lost interest both in Axten and in the bank. I was no longer struggling with the stressful emotions caused by my unjust treatment. My focus was to find a meaningful role in my homeland.
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Anna’s Reports
Anna arrived in London from Moscow that weekend bringing with her copies of personal files, mine and Michael Jackson’s, on film.
“It’ll be $1000,” she said cheerfully, over a discrete lunch at the Bulls Head pub in Chiswick, away from central London. I handed over an envelope.
“Was it difficult to copy the files?”
“No. The KGB was terminated in 1991. We now have the Ministry of Security. Files aren’t individually locked up. Anyone with access to the library can retrieve them. Hardly anyone comes in, the room is usually empty.”
“How come?”
“It’s a low security library.”
“Enjoy your stay in England. I won’t see you again on this trip.”
“I’m on holiday with my boyfriend. I haven’t met you in London and our lunch will not be reported.” We finished our fish and chips and before leaving Anna said,
“You’ll find a small useful bonus, a report on transformation.”
It would be reassuring if I could trust Anna that our personal files were complete. They reported our neutral business attitudes towards Russia. The last entries were dated April 1993. My file had included various agents’ notes. They began with the Hans’ report from 1970 and ended with Andrei’s notes on our lunch at the Travellers Club. Michael’s file contained random reports by informers, mainly from work and by Starodubtsev. They didn’t mention any links with the Romanovs.
What motivates Anna to keep in touch? Instructions? But I am unimportant. Her insurance against turmoil in Russia? Maybe. Deception? I couldn’t be sure.
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Vienna
A couple of weeks later I was in Vienna, leaving Raiffeisen’s head office at Am Stadtpark, disappointed. My investment proposals had been well received, but the chemistry didn’t feel right. Their stiff formality clashed with the informal collegiate culture I had in mind for the proposed venture. I walked along Ringstrasse, mulling over the meeting and then hailed a taxi for the airport. In that taxi I received a call from London, which would take my life in a whole new direction.
“Would you be interested in running the investment banking division of Komerční banka in Prague? Your business title would be supreme director and you would sit on the main board. You would be paid partly by the British Foreign Office, who have also asked for you to be involved. Our ambassador asked for you specifically. The Czechs need help with their privatisation programme and with the creation of financial markets.” This was the right opportunity. I was thrilled and agreed immediately.
“Yes, I am definitely interested. I can meet you on Monday morning to discuss your offer.” I said simply and pumped the air with my fist.
Yes! This is the job I was looking for, with scope to influence privatisation. We’ ll drain the swamp and remove all traces of the communist economy in my homeland for generations to come. This will be my revenge.
I telephoned Florisse with the news. She agreed that I should resign as a consultant and accept the job in Prague. Florisse was the glue that held our family together and I had learned to consult her and relied on her advice. She was very accomplished in her job, but rarely spoke about it. Our family dramas always revolved around my work.
PART 4
The Most Exciting Job
The job interview at the Foreign Office was straightforward. I had met the ambassador, David Brighty, on my trips to Prague and the embassy knew all about me from my articles in the Ekonom and from the seminars at the CSSB. Czech politicians had asked for me through their government channels. Dr Richard Salzman, now the general director of KB, gave his approval. Details of my appointment were sorted out in a single afternoon. I agreed to start the new job in May.
“As a highly placed banker, with access to secret information, you will have to be vetted by the Czech criminal system, to certify that you never collaborated with the former regime. Your appointment will be made, subject to this clearance. You’ll meet the KB team and our current advisors in Prague. They have done a great job, but suffer from a language barrier.” That was it. I had the job I wanted. This was my chance to finally make a contribution to my homeland.
Chapter 12
Back in Action
The country embarked on a radical economic transformation. More than 100,000 small firms were privatised through private auctions and restitution. The voucher privatisation programme of two thousand companies was launched. Their shares were to be traded in a regulated market.
Acquisitions of strategic Czech enterprises by foreign multinationals had to be negotiated. Domestic companies were lining up to augment their capital by issuing bonds. Five hundred privatisation funds began to offer their shares in exchange for privatisation vouchers. All these activities had to be channelled into functioning financial markets.
My priority was to launch the financial markets by reopening the Prague stock exchange. There were a few hurdles to overcome. The country had had no financial markets for three generations. Nobody in living memory had any relevant experience. Financial terminology had vanished from the language. Were the country’s financial markets to fail, the transformation into a market economy could totally collapse. The more I thought about these challenges, the more thrilled I became about the job.
I needed reliable information about the new regime and the people who ran it. I was fortunate that three of my trusted Czech friends, who had spent two decades with me in exile in England, had returned to Prague. Pavel had become the finance director of Skoda, owned by Volkswagen. Jan was systems manager for Unisys, supplying software to the banks and Tony had his own import business. They were my dependable sources of intelligence. With Florisse’s support, I was ready to go.
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Komerční Banka’s Head Office
The head office of KB stands in a prominent position in the centre of Prague, opposite the neoclassicist building of the National bank and next to the art nouveau edifice of the Municipal House, where Czechoslovakia was declared an independent country on 28th October 1918. Its address, Na Příkopě, refers to a moat which had encircled the Old Town in the Middle Ages. The sole remainder of the city’s fortification is the Powder Tower, between the head office and the Municipal House.
The building was constructed as a bank in 1930. After WW2 it was taken over by the presidium of the Communist Party, which loved its prominent location. Following the Velvet Revolution, the building reverted back to its original purpose, this time being the property of the
largest bank in Central Europe.
In early May, as I walked towards the head office, to start my new job, I studied its imposing façade. The solid polished granite and marble made a strong impression.
I walked through the swing doors of the main entrance and nodded to the receptionist. She smiled in acknowledgement and pressed a buzzer to open the glass doors, to let me up a flight of stairs to the private sanctum on the first floor.
I climbed a sweeping marble staircase, hung with magnificent art deco chandeliers and flooded with light from large atrium windows. By the time I reached the open reception area on the first floor, my personal assistant was waiting. I look at my watch; it was eight fifty. I was a few minutes early.
“Good morning Mr supreme director, your colleagues are waiting for you in the boardroom,” she said, pointing to a leather padded door to the right of the stairs. I paused.
“Good morning Mrs Fischer give me a moment to catch my breath and sort out my papers,” I replied and sat down in the nearest leather armchair. It was deep and comfortable, also in the art deco style. The building had been beautifully refurbished. The image of the bank was all-important. Mrs Fischer looked at me quizzically and said,
“Very well. I’ll fetch you a glass of water.” I was agitated and felt a little faint. The enormity of the task ahead of me was daunting. Will I win my colleagues over to my proposed strategy? What, if the meeting ends up in a confrontation? I could be on the next plane back to London. My mission to Prague could fail before it started. I was conscious that Mrs. Fischer was watching me. I managed to smile, but inside, I was sick with apprehension.
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The Boardroom
I was about to enter the boardroom from which the country had been ruled by the communist presidium. There its twenty men, under instructions from Soviet advisors, took the country’s major decisions. In that boardroom, they had decreed in 1949, to collectivise agriculture. As a result, both my sets of grandparents had had their farms confiscated, without compensation.
The presidium had taken the decision, in 1950, to expropriate all private businesses and to punish their owners. My father lost his fashion business. My stepfather lost his textile business and was sentenced to work as a night watchman for the rest of his life.
In 1951, the presidium decided in the same room to purge all Jews from top party positions. They were accused of Zionism and hanged. My Jewish uncle narrowly escaped the noose by resigning his job a few weeks before his arrest.
In that boardroom too, the presidium decided to eradicate the nation’s savings, in 1953, by replacing its currency. The population was impoverished overnight and became beholden to the regime.
The presidium decreed, in 1955, that middle class children like me, would be barred from access to further education.
Ultimately, they triumphantly declared in 1960, that the economy was now fully nationalised. Based on this achievement, they changed the country’s name to the Czechoslovak Socialist Republic.
I was about to walk into that boardroom with the task of reversing all previous communist policies and implementing the economic transformation of my homeland.
Sitting outside, I felt alone. I had a vision of the spirits of the long dead communist leaders floating somewhere in that room. Their faces and names flashed through my mind and I felt the pain of past injustices, which had hurt me personally, my family and the whole nation. Clenching my fists, I whispered to myself,
Don’t panic. Stay detached. Let go of your emotions. Remember, Florisse’s advice – behave like a civil engineer and drain the swamp.
My experience of living in Britain for the last quarter of a century kicked in. I can lean on my life’s experience, as a native Czech and an English banker. I understand my audience. I have no language barrier. I have my English manners and unique expertise. Let’s go in.
I took another sip of water, stood up, straightened my back and adjusted my tie. I smiled again at Mrs. Fischer as she opened the tall double doors into the boardroom.
My stomach was still churning as I stepped into the imposing room. Mrs Fisher gently closed the doors behind me and left. Everyone stood up. I was about to meet my future colleagues and subordinates for the first time.
It was a large, double-aspect room, with mahogany panelled walls and light streaming in from the high windows. In the centre was a massive mahogany table. Long curtains hung from the ceiling. I noticed a strange smell. I looked at my subordinates and motioned them to sit down. Twenty managers from the investment banking division (IBD) were assembled. Aged from late twenties to mid-fifties, only four of them were women. All were dressed in dull clothes, typical of the socialist era, which made it difficult to differentiate them from each other. They avoided any eye contact. When I spoke to them, they replied focussing on a small section of the boardroom table, just in front of them.
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Colleagues
I had asked for personal files on my colleagues, to acquaint myself before our first meeting. Somewhat reluctantly the personnel department supplied them. I judged that about a quarter of the people in the room were former communists and therefore likely to be hostile. My deputy director was one of them. Another third of my colleagues were young and came from privileged families. They were likely to be opportunists. The rest of my colleagues had neutral professional backgrounds and were more likely to be my natural allies. The bank never recruited dissidents, or victims of the former regime. It was an implicit warning about the senior directors.
I was facing the selected elite of KB. Its best educated people were assigned to the IBD, to privatise the country. My new colleagues studied me with curiosity. They saw a tall, clean shaven, middle-aged man, dressed in a pure wool pinstriped suit, a white cotton shirt with double cuffs and a silk tie. The image of a western investment banker. They shuffled uneasily, possibly aware of their own polyester shirts and shapeless jackets, that did not match their trousers. Some of them wore brown sandals with grey socks.
Having been under foreign domination for several hundred years, we Czechs were masters of passive aggressive behaviour and sardonic manners. They could become hostile towards me, an outsider and an emigré. I looked at them warily. These people worked for the old regime. The regime that had ruined my family.
To suppress my rising anger, I reminded myself stay calm. You can do it. If you win them over today, they will commit to carry out the reforms.
#
Persuader
I spoke in Czech, giving them personal details about myself, to break the ice. I then left my seat and walked around the boardroom table, to shake hands and have a short conversation with each one of them. Reading their files the night before had been useful.
My charm offensive was aimed to disarm them. They were used to the stiff formality of their previous bosses. My colleagues glanced at each other, startled by the informal approach. I completed my circle and paused, to steady my nerves, noticing that some of them had begun to watch me.
“We are about to reverse our country’s economic history.” Now I had their attention. They all looked up. Giving the presentation was a relief. My senior colleagues in the City were masters in dealing with clients and had taught me how to handle them. Short sentences and punchy lines were in order. I avoided jokes with this potentially hostile audience. I reminded myself to pause between sentences to make an impact, and to remain calm. I glanced at my list of points to deliver and began.
“Our privatisation program is unprecedented in world history. It has never happened on such a large scale and so quickly. Czech privatisation is being watched by the whole world. Everyone wants us to succeed. Other countries want to learn from us. We will succeed.” My colleagues looked as if they wanted to hear more.
“We have several tasks to perform over the next year. We will list 2000 companies on the stock exchange. We will create a market for their shares and trade them. We will manage privatisation funds for millions of investors. We
will find reliable long-term owners for the large companies. We will create a market for government and corporate bonds, to refinance the country. If we succeed in delivering all of this, privatisation will be a success.” They sat in silence and offered no reaction. This is going to be a hard sell. I had to get them on board. I asked
“What do you know about financial markets?” They looked down at their shoes, embarrassed. They knew that privatisation was going ahead, but they didn’t understand how it could be achieved. My designated deputy, Milan Ptáček, returned my stare, offering a slightly cynical smile. I repeated,
“We’ll be successful. Your confidence will come from doing the job.” I moved up a gear to sell myself.
“I bring both experience and a good track record. I have worked in privatisations around the world for the last twenty-five years. I have been involved in post-communist countries from the beginning of their transformation in 1990. I created and managed the first investment fund in eastern Europe.” When I listed specific examples, they began to look at me with more interest, so I turned to my Czech experience.
“I advocated voucher privatisation, when it was just an idea formulated by professor Tříska in January 1990. I argued for its adoption with the finance minister Klaus at Koloděje castle. I instructed the central bankers on the financial markets here in Prague, but also in Slovakia, Russia, Hungary, Poland and Slovenia. I have come here from Bratislava, where I advised the minister of finance and the governor of the central bank on their financial markets.” My colleagues were becoming more engaged.