Red Wolves & White Knights

by Peter Kysel

#

  Vojta’s Bench

  The village square in Drahonice was empty. On a cloud­less afternoon, the ornate facades of the farmhouses were reflected in the pond. There was no traffic at this time of day. Half a dozen ducks were swimming around the pond. I parked on a sloping grass bank under a lime tree, between the chapel and the war memorial for the soldiers of the First World War.

  Three of us stood around a new granite bench, opposite the bus stop. The mayor joined us for a small dedication cere­mony and said,

  “The village is grateful to you for donating this bench. It will be well used by all those waiting for buses. We shall happily remember your father.”

  “We have had a message of dedication carved on the bench, to refresh everybody’s memory,” said Jitka. At this point, an old man wearing a blue beret and pushing his bike, came over from the pub across the square. Ignoring us two strangers, he looked at the mayor, frowning.

  “What’s this?” he asked pointing to the bench. Then bending over, he read the inscription.

  “Franta, it’s a gift to all our villagers who wait here for the bus,” responded the mayor, somewhat nervously.

  “It’s made of very expensive granite. Who paid for it?” At that point the mayor perked up and pointed at me.

  “This gentleman here. He has donated the bench to our village in memory of his father, Vojta, who recently died in Prague.” The old man turned around and examined my face.

  “So, you are the son of the most famous man from this vil­lage?” Franta shook my hand and before I had a chance to respond, he went on,

  “I was in the pub when Vojta decided to leave for Prague, sixty-six years ago. He was a good man and a great designer. We were proud of him.” The old man turned to the mayor, who was relieved that the interrogation had been deflected to me.

  “This is the most sensible decision the village council has ever made. This bench belongs here. We have been asking for one, ever since the bus stop was put up.” He grabbed the handlebars of his bike and turned to me again.

  “I hope you have had the bench buried in concrete so that it can’t be stolen.”

  “Don’t worry, that has all been done. The bench is here to stay,” chipped in Jitka. Franta said his goodbyes and left us, pushing his bike across the grassy bank towards his house, and our party retired to the pub. After a short celebration, we drove to Prague.

  “Vojta was born in Drahonice and we returned him there. The granite bench was the perfect gift. He will be remem­bered in the village with pride,” said Jitka on the way.

  “Yes, the bench will give prominence to the spiral of his life,” I added.

  “The bench is in a nice spot. The family will visit and remember him.”

  I dropped Jitka off in Prague and continued on to London. I watched the traffic in the rear mirror. I was not being followed.

  Chapter 21

  Red Wolves Eased Out

  The Czech financial crisis was nearing its resolution. Over $20 billion of taxpayers’ money had been injected into the banking system. The government drew a line under the red wolves’ mismanagement in June 2001 and sold its 60% stake in KB to Société Générale for 40 bil­lion crowns.

  Jan Pokora stopped over in London on his way to New York and brought me the news about KB. The three cases of fraud we discussed after Zdeněk Čapek’s funeral, escalated to a loss of 12 billion crowns. Jan also had some surprising, but sad news.

  “There were no scandals in privatisation funds when your deputy Milan Ptáček took over IKS, after you left. Unfortunately, like Čapek, he too suffered from an unex­pected heart attack, and died two years ago. The police didn’t find it suspicious.”

  “Did you?”

  “Our former colleagues did. They mentioned that Ptáček had prevented several fraudulent transactions. They also praised him for selling strategic holdings to multinationals, as you advocated.” We both fell silent over our drinks. I told Jan that I thought Milan Ptáček had done his job diligently when I was in Prague.

  “Do you think that he repented?”

  “Possibly. We were very hard on him because of his past. He was a bachelor and died alone.” I felt sorry for Mr Ptáček.

  “Inconvenient people sometimes suffer heart attacks or disappear.”

  Later that month, I was invited to lunch by two executives of Société Générale, who flew over from Paris. They had picked the river setting of Le Pont de la Tour restaurant. It was a warm day and we dined at a table on the terrace, overlooking Tower Bridge. There were hardly any guests in the restaurant. We did not need to worry about being over­heard. The French bankers had brought with them a list of KB’s directors, for consultation.

  “We’d like you to suggest the people we should dismiss and those that should remain,” showing me their list. I looked at the names and handed it back. It was a mixture of red wolves and various irrelevant stooges, described by the Czechs as white horses.

  “I would dismiss everyone on that list. They are all responsible for bankrupting the bank and for the subse­quent cover up.”

  “You mean that they are either inept, or corrupt,” sum­marised the French banker, putting the list into his breast pocket. No more questions needed to be asked. Instead we concentrated on the food and wine.

  The Czech prime minister commented on the successful sale of KB with relief.

  “By privatising Komerční banka, we have ended the asset strip­ping of large banks in the Czech Republic.” Both he and his main political opponent Václav Klaus came from the principal cradle of red wolves in the country, the Prognostics Institute. There were both responsible for appointing their allies as direc­tors in the banking sector. The multinationals had been called in to clear out the red wolves. The consequence of selling banks to them, drained large swamps in the private sector. The finan­cial sector could now become the backbone of a robust market economy under its foreign owners.

  Our family focused on happier matters. Tamara gradu­ated from Bristol University in mathematics. On 10th July Florisse and I joined her at her degree ceremony. I assumed that she would follow in my footsteps. At our post-gradua­tion lunch, I raised the subject.

  “You have so much experience from your summer holiday jobs in the City, that you would easily get a good banking job.” I was keen for her to follow me. Tamara was expect­ing this conversation. She didn’t hold back in quashing my expectations.

  “I definitely won’t go into the City. The jobs are boring, and most City people are male chauvinists.”

  “What will you do?”

  “Marketing of consumer products. I’ll get a marketing qualification.” That was it. Florisse and I nodded, secretly pleased that our daughter had strong ideas of her own about what she wanted to do with her life. Florisse recognised her­self in Tamara.

  It was not a good year for me. Emotionally I found it hard to shake off the trauma of the car chase in Germany, think­ing that I could have been the target, rather than Michael.

  As I gradually regained my confidence, the terrorists struck on 9/11, triggering the unexpected stock market crash and a reversal in my investment performance. The final quarter of the year was very tense with the effort of rescuing the results by restructuring all the portfolios.

  Chapter 22

  Stability and Tragedy

  On 1st January 2002 the Euro became the legal tender in twelve member states of the European Union, but Britain opted out. The Czech Republic was due to join the EU in 2004 but was also determined to remain outside the Eurozone. In 2002 the Netherlands became the first coun­try in the world to legalise euthanasia. Apple introduced iMac as the first step in undermining Microsoft’s effective monopoly of personal computers.

  Standard & Poor’s produced a research review on Govett’s European funds in March 2002. Commenting on its invest­ment style, the report was reasonably positive, stating that I had brought

  “in-depth knowledge and experience of European mar­kets, compensating for relatively wea
k resources.”

  The review highlighted both the good and bad performance periods and stated, “The fund has outperformed its peers significantly over the past five years, cumulatively to rank 24 out of 140 competitors. The performance was weak… but stabilised over the last 12 months. This improvement reflects the manager’s successful shift toward more defensive growth sectors. The fund gains from the original insights of an experienced manager, who brings considerable flair to the management. The fund retains A-rated status. From the pre­viously aggressive growth stance, the manager has success­fully moderated risk through a responsive portfolio strategy.”

  That was a relief, but as I managed to stabilise the invest­ment performance, a rift opened up in our family life. We agreed to buy a holiday home in France.

  I found a couple of suitable properties in Aix-en-Provence, but when I proposed them to Florisse, she turned the idea down, without any reason. I was confused and unable to persuade my wife to explain, I felt rejected. This was the first challenging year for the marriage, when after thir­ty-two years together, our communication was floundering.

  #

  Countess of Brasov

  Michael and I met for one of our periodic semi-business chats in Paris. This time Nina joined us, indicating that this was to be one of the more material meetings. We all stayed in my favourite hotel, Le Pavillon de la Reine, a 17th century building on the Place des Vosges. Michael and Nina spent their days shopping and strolling around the city. Nina was six months’ pregnant and looked happy and radiant.

  We sat down for drinks in the hotel’s library. Michael and Nina worked out that the car chase outside Frankfurt was a warning from Russian organised crime. They were con­vinced that pressure was being put on Michael to sell his logistics company. After almost a year of tension, I felt that it was ebbing away, remembering,

  “About two years ago, Ilya Vaisman, the finance director of Baltika Brewery, was shot dead at his home in St Petersburg. I met him a few months before he died. He was agitated at the time, because he was being pressurised to sign a beer distribution contract with a mafia company and refused.” Michael nodded.

  “The distribution business is dominated by the mafia. We were the exception. When we were small, we could be ignored, but as a more serious competitor we became a nui­sance. I was approached by Semion Mogilevich in Moscow to sell him my firm.” That name sounded familiar.

  “A Czech journalist friend told me the story of a raid by the police, on a gathering of Russian crime bosses, at the restau­rant U Holubů at Angel in Prague. I knew the restaurant well. Mogilevich escaped the raid and sold the restaurant. He must feel safer in Russia.”

  “Mogilevich admitted that his goons were asked to intimidate me.”

  “And kill us?”

  “He swore that they didn’t have orders to kill me. It all went wrong when his driver lost control of the Mercedes.”

  “Did Mogilevich make you an offer?”

  “Yes, and I couldn’t refuse it. He offered land and proper­ties in central Moscow, in exchange for my company.” Nina added, “We accepted Mogilevich’s offer because the sale gets us out of this clash with organised crime.”

  “It does look like an opportunity to make our life more peaceful,’ said Michael quietly.

  “You deserve it.” We toasted to that. Nina went on,

  “I’ll mange the property business and the rents will give us a good income.” Michael outlined their ideas.

  “Property is a very good investment in Russia. City cen­tres are going to be redeveloped. We have great locations.” I listened carefully and suggested,

  “Consider dividing up your properties into separate companies and appoint local managers. You should remain in the background. Russians are always hostile to foreign owners.” Nina stepped in.

  “My former colleagues know how to deal with petty criminals and corruption.” It was clear that she was going to recruit former FSB men. I felt uncomfortable about that idea and said so, but Michael agreed with Nina. She changed the topic and moved the conversation on, to out­line their greater ambitions.

  “We’ll set up real estate agencies in the large cities in cooperation with Western specialists and I’ll take charge.” Michael nodded again

  “We’re setting up an advisory business, for Russians who want to buy, rent or develop properties in London and New York. Our association with Western agencies in Moscow and St Petersburg will be useful.” It was all very ambitious. Before we finished, Michael added.

  “I’ll set up a private equity fund to invest in Russia. The fund will be based in Luxembourg.” Their plans made me apprehensive.

  Doing business with known criminals, employing FSB agents and creating Russian hedge funds feels wrong. It’s too risky. Russia is a wild east. It pays to keep a low profile. They aim for high visibility. It seems that we have different values. Maybe I’m too risk-averse and not ambitious enough. I expressed my worries again. They listened, without comments. Their silence implied that, as a businessman, I was considered to be past it. Michael turned to another subject.

  “I would like to trace my family connections around Paris. Will you join us on our street searches tomorrow?” I agreed. I loved learning about history through personal events and the stories of families that influenced it. After breakfast, we took a taxi to the Arc de Triomphe for a walk through some of the smartest streets in the city, along Avenue Victor Hugo. We stopped at No5 Rue Copernic, an attractive apartment block.

  “My great-grandmother Natasha lived here. My great-un­cle Gyorgy, who had just finished his university studies at the Sorbonne, left from here for his last drive to Cannes in July 1931.”

  “Why was it his last drive?” asked Nina, while I was perusing the names by the door, for any signs of Michael’s ancestors.

  “He crashed his Chrysler near Sens. Natasha allowed my twelve-year-old grandfather, Mikhail Alexander to visit him in the local hospital. Gyorgy died on 21st July, leaving my grandfather as the first in line to the Romanov crown.” We were moved by Michael’s recollections and studied the building for further clues but did not find any. Michael broke the silence.

  “Let’s walk to the cemetery, where Gyorgy Mikhailovich is buried. Natalia Sergeyevna (Natasha) joined him in 1952.” The Passy Cemetery was small and fashionably situ­ated in the 16th arrondissement. Shaded by chestnut trees and overlooked by the Tour d’Eiffel, the cemetery is equi­distant to the Russian embassy and Rue Copernic. It was a pleasant place to visit. We retired to a nearby brasserie for lunch and Nina asked, “How did Georgy die?”

  “He was assassinated by the OGPU (Joint State Political Directorate – the secret police). The head of the OGPU, Vyacheslav Menzinsky had direct orders from Stalin to repress all anti-Soviet elements globally. This included our family.”

  “Did Natasha suspect anything?”

  “I’m not sure. Before Gyorgy’s death, she was interro­gated by OGPU agents in Paris. She told them that she had lost a baby during her escape from Russia.”

  “She must have been terrified that your grandfather would be the next target.”

  “Yes, that’s why she insisted on having no contact, to protect him. The French police told her that she would remain under Soviet surveillance till her death.” It was a scary revelation to me and Nina. We intuitively turned around, fearing that we were being watched. After a long pause, surveying the traffic outside the Cafe du Trocadero I asked,

  “Hypothetically, Michael. What would you do if the Russians asked you, through another constitutional assem­bly, to return to them as their Tsar, Mikhail III?” Both Nina and I looked at him in anticipation. He cleared his throat.

  “There are precedents set by my ancestors, grand duke Mikhail Alexandrovich and count Gyorgy Mikhailovich. It would be my obligation, to accept gracefully.” Michael ordered a bottle of champagne to celebrate the thought. I raised my glass.

  “Nina, you would become the Tsarevna. Congratulations, but most of all, I wish you,
including the baby, a wonderful and happy life together.” I didn’t add my doubts about their business ambitions. I didn’t want to spoil the happy ambi­ance. We sat in the late April sunshine in the Trocadero enjoying our lunch. A picture of those two laughing young people is engraved in my memory.

  Over time, Michael became my younger alter ego. I came to believe that he had absorbed my experiences and adopted my principles. Over coffee, he referred to our differences.

  “You have your stock market expertise to fall back on. Your business is protected by rules which have evolved over centuries, whereas I work in private equity, which is a raw and unprotected business, especially in Russia.” Nina stepped in.

  “When you needed to get out of your private invest­ments, you called us into rescue you.” I nodded; she was right. Michael and Nina had built their successful business by being based in Moscow and through her KGB influence. Everyone knew that Nina carried the KGB stick. She com­manded instant respect during our meetings throughout the former Soviet Union. I was aware that my colleagues’ naive presumptions about managing Russian investments from London came close to destroying them.

  It was our last meeting. The following day I left for London. Sitting on the Eurostar I felt anxious, for although I admired their ambitions, I was apprehensive about the risks.

  #

  Nina, 14th July 2002

  On Bastille day, Nina was having breakfast at their Kensington flat, thinking, Michael’s 33rd birthday is coming up. I want to get him a special present. A nice watch with an engraved message from me would be perfect.

  Nina was eight months pregnant with a baby boy. He was moving and kicking, and she felt uncomfortable and frus­trated. The weather didn’t help. It had been cold and wet, keeping her stuck indoors for days. Each morning Nina set herself tasks, to pass the time till Michael returned home. This morning though, she was feeling more positive. It was overcast, but dry so she decided to set off for a walk and a shopping expedition.