Red Wolves & White Knights

by Peter Kysel

  Florisse was secretive about her illness and refused to discuss it in detail. Her health deteriorated during the year, but as she became more seriously ill, she finally allowed me to become involved and accepted my help. On the day I was desperately trying to organise a lung transplant for her, the managing director reprimanded me in front of all the staff, for arriving late, and dismissed my explanation. I asked human resources in Toronto for assistance. They ignored my request.

  #

  Florisse, 20th September 2006

  In May 2006 I attended a conference in Barcelona. The organisers took us to a concert by the Red Hot Chilli Peppers, but I left early and went to bed, leaving the others behind. I wasn’t in the mood for having fun. My wife was ill at home. The following morning I received a text message from her.

  “I had an appointment with my consultant. He has given me six months to live.” This was completely shattering news. She was so young, not yet sixty. I called her with words of comfort and took the first flight back to London. We finally persuaded her doctors to try for a lung transplant, and I took her to Papworth Hospital for the preliminary tests. But it was too late. In September 2006 Florisse died in her sleep, in hospital, waiting for the transplant.

  I was totally unprepared for the intensity of shock I felt. We had been together for thirty-seven years and I was totally lost without her. Our close friend, Mirka said,

  “Those who have gone, leave something of themselves in all of us,” This comforted me. I wanted to believe her. Her words became the prism through which I contemplated my relationship with Florisse, and other members of my family.

  I come from a small and close family who are all deeply engraved in my memory. For each of them, I needed to have mementos. I needed to create places dedicated to them, both for myself and for future generations. It was only after losing them, that I realised how deeply they had influenced my life.

  I commissioned a London artist, Mim Hain to paint a portrait of Florisse, from photographs and from our con­versations about her. Mim succeeded in capturing Florisse, depicting her dressed for the Boat Race ball. Tamara was a little girl, but always remembered that happy occasion, when her mum danced through the house in her long dress, before leaving for the ball.

  My cousin Irena helped me to redesign and restore a family tomb at the Olšany cemetery in Prague. We had it inscribed both in Czech and in English, and Florisse joined my ances­tors. I had only visited our family’s grave once, when we buried my grandfather, fifty years earlier. Life seemed to move in circles. After this burst of activity, came the pain and loneliness. The grief lasted for years.

  I was staying in Patrick’s villa in Begur in late September 2016, when Juliette called.

  “We have tickets for a Red Hot Chilli Peppers concert at Palau Sant Jordi in Barcelona. Henri is not feeling well, would you like his ticket?” I didn’t hesitate and drove off to Barcelona to meet her.

  It was almost exactly ten years after the previous concert by the same band in the same venue. The concert started at 10pm, it was noisy, and the arena was packed. For the first time in my life I responded to this deafening music. We danced in our seats and drank beer till the early hours. This somehow cleared my mind and lifted the depression that had consumed me since Florisse’s death. I walked Juliette to the hotel and drove slowly back to Begur. I was beginning to feel that, perhaps, my grieving had run its course.

  I returned to the villa, sat in a deckchair by the swimming pool and on impulse, reached for my iPad. I had found the strength to write these words.

  I looked out at the garden and recollected a scene from September 2001, when we were holidaying in the villa with Patrick and his wife Suzy. I was at a conference in Barcelona, when large television screens in the hall began to transmit live pictures of the terrorist attacks in New York. After a quick call to Tamara, I jumped into the car and drove to Begur. Outside, the world had stopped.

  I walked up the garden steps and there before me, was a scene of complete tranquillity. Florisse and Suzy were lying on their deckchairs, reading, and Patrick was standing by the edge of the pool, fishing out the leaves. That picture was planted in my mind forever. Suddenly, we were in a lockdown, but we were safe, and the experience bonded us closely.

  By coincidence, three life altering events all occurred in Catalonia. One was 9/11. The other two were connected by concerts in Barcelona, starting and completing the circle of my despair.

  #

  My Blind Spots

  After Florisse passed away, I was vulnerable, stressed and disorientated. My employer expressed no concern for my wellbeing, nor offered any assistance in coping with my sorrow.

  Within a month of my bereavement, on 23rd October, I was called to the head office in Toronto to meetings with the group directors. Once again, they bypassed my London boss whilst reviewing the European operations, the future of the London office, and the investment strategy. In Toronto, I was treated as an honoured guest at the dinner with the global CEO, whereas in London, I was facing increasing hostility. Human resources were still ignoring my com­plaints about the harassment. I had a dilemma.

  My boss is clearly not respected. He resents me. Should I leave Manulife? I’m overwrought by Florisse’ s death. But the work routine and the company of other people is helping me to cope. I’m lonely. I don’t know what to do.

  #

  Dozing Regulators

  Alarm bells sounded at the financial services conference in London. I met the CEO of Northern Rock who startled me with his business strategy.

  “We are growing fast because we’re offering self-certified mortgages. The applicants receive a mortgage, based on a multiple of their income, which they self-certify.” This was a clear invitation to fraud.

  “Have you had any opposition from the Bank of England?” I asked.

  “No. They pride themselves on being a ‘light touch’ regula­tor.” This was worrying. I decided not to invest in Northern Rock shares and went to a meeting with the finance director of the Swiss bank, UBS.

  “Do you keep any of the collateralised mortgage obliga­tions on your books?” I asked.

  “Not while I am the finance director,” he said with a knowing smile.

  “We just package them and sell them on. They are too risky for us.” I nodded in agreement. A few months later, he was replaced, and UBS decided to invest in collateralised mortgage obligations. Then I met with the American insur­ers, AIG.

  “Do you underwrite collateralised mortgage obligations?” I asked the finance director.

  “We don’t underwrite any derivative based products.” She responded emphatically. I doubted her claims, but as I did not have the responsibility for the US holdings, I let her comments go.

  Complex investment instruments were widely marketed by investment banks in 2006. They were risky and potentially toxic. Hardly anyone understood them. Warnings about the lack of proper controls of similar products at Barings Bank, a decade earlier, were recent enough for professionals to remember. Regulators ignored these warnings. I had a low opinion of the bank directors’ understanding of modern investment products. I thought of them as a clubtocracy, without investment experience.

  I left the conference, curious to know who actually owned the toxic debt. My response was to cut our exposure to the financial sector, while the stock markets were riding high, driven by hedge funds.

  In November 2006 I was interviewed on Bloomberg TV about the state of the European financial markets. This cheered me up a bit, but I felt that my enthusiasm for work was draining away. It felt that I was the only one, worried about the financial bubble. My boss gave me a public rebuke. He castigated me at our morning meeting, just before I left the office for Christmas.

  “Our internal models show that financials offer the best value in the market, and you are selling them. That’s irre­sponsible. You have been scaremongering by refusing to invest in Royal Bank of Scotland and Northern Rock.”

  #

  Safari
>
  The dining terrace at the Inyati game reserve, outside the Kruger National Park, overlooked a watering hole. Sipping drinks with Tamara before dinner, we watched in silence as the elephants thundered towards the stream. Relaxing with a gin and tonic, I found myself re-evaluating my life. I was still trying to cope with the loss of my wife and felt my responsibility towards my daughter. I was aware of how much my work had always taken precedence.

  I stayed in my job because I was lonely when Florisse died. But my boss gives me zero support for my loyalty. I’m harassed by this petty-minded man. Human resources have failed to sup­port me in my bereavement. The job is a mistake. Tamara lost her mother and needs her father. I spoke.

  “Tamara, I have lost total respect for my employer. I want to change my life.” Tamara listened and asked, “Are you going to resign? Can I have another gin and tonic, please?”

  “Yes”. We sipped another drink and she said, “You have always worked so hard, and sometimes, we didn’t see much of you. I know that you have done well, but can you explain exactly what you have achieved, so that I can understand? You were a political refugee and began by washing dishes…” Her voice trailed off. I was cheered by my daughter’s interest.

  “It’s easy for an investment banker to quantify his results, because they are all recorded. In London my funds out­performed stock market indices and their competitors. This outperformance can be described as extra value. In thirty years, I created £500 millions of extra value for my clients.”

  “Was that your personal contribution?”

  “Yes., and also my thanks to the country for granting me asylum when I needed it.”

  “You were given a grant when you studied in England. How much?”

  “About £6000, which I didn’t need to repay.”

  “So, the country got a good return on its investment in a Czech refugee. But, what about your work in Prague?”

  “I made two separate contributions to Komerční banka. The KB’s investment management business was worth £100 million when I left. The investment banking division was worth another £300 million.”

  “That’s another £400 million?”

  “Yes. My other contributions were less directly attribut­able. We protected a million shareholders in privatisation funds from being defrauded by up to a thousand pounds each. That would add up to another billion pounds.

  “Successful privatisations added still more value. My team privatised large Czech companies to foreign multinationals. These companies made profits and gave jobs to thousands of people. Their value for the country ran into several billions. It was my most valuable gift to my homeland.”

  “Not a bad result, but I don’t think that your homeland, which turned you into a refugee, would acknowledge that. Anyway, I am hungry, let’s have dinner,” concluded Tamara. Over dinner, I realised that I didn’t want to spend another day in my job. I kept adding up the figures in my head.

  Throughout my career, I regretted that my investment results appeared transient. I always wished that I could leave some tangible results, like a carpenter, or an architect. Now, that Tamara had made me calculate my contribution, I was taken aback, thinking of the £2 billion of extra value. Investment bankers can add value.

  It was a good holiday, and it brought us closer together. On safari, I found the justification to reverse my misjudged job decision.

  Chapter 27

  Financial Crisis

  The world economic downturn began. Gordon Brown became prime minister and Nicholas Sarkozy was elected president of France. Within a month, the scandals of sub­prime lending in the USA began to evolve into a banking liquidity crisis and escalated into a global financial crisis. House prices were falling in the US and began to fall in the UK too. The Bank of England had to rescue Northern Rock, having failed to regulate it. AIG imploded and UBS had to be recapitalised.

  Curiously, the regulators, central bankers and bank direc­tors, were not held responsible for the devastation in the global financial markets they had failed to control.

  #

  European Union

  My first day at the office in the New Year, was a day of confrontation. Under the pretext of investment policy dif­ferences, I resigned from my job. I was counting on our strong, mutual and comprehensive personal dislike, but at first, my boss didn’t respond. For a moment, I was alarmed that he wouldn’t accept my resignation. Then to my relief, he handed me a compromise agreement to end my employ­ment. Both of us struggled to keep calm.

  I glanced at the document and signed it. It was all over. I rose from my chair, said goodbye and left the office, still not believing that I was free. On leaving the building and walking into King William Street, all the tension melted away. I punched the air.

  “Yes!” People looked at me strangely. I didn’t care. On 5th January 2007, I became a free man.

  My timing was fortuitous. It coincided with the early stages of the cracks in the stock markets. Mercifully, I had no more responsibilities for managing clients’ portfolios, or for dealing with my bosses.

  I looked at the reserve list of candidates for senior jobs within the EU. My name was still there, in the No 2 position. I chuckled at the idea that no EU institutions had recruited anyone in the past two years. Their rigorous selection process is a charade; the EU is another chumocracy.

  I mentioned my experience to my tennis partner Rupert, a senior civil servant at the Home Office.

  “You should have told me about your application. You could have had a job overnight,” Rupert said, adding,

  “We are always looking for people to place in the EU, at senior level. We never had enough qualified personnel to send to Brussels.”

  “Pity. I have no more interest in a permanent job” We let our conversation turn to Rupert’s walking holiday in the Dolomites.

  My name remained on the EPSO list in No 2 position until 2012, when I last looked. The EU recruitment practice became an amusing story. Nobody ever believed that the European Commission had had no job vacancies for the thirteen years during which my name featured prominently on the list. Rupert said later,

  “The EU formal process is a public relations facade. All senior jobs are bestowed as favours. Do you want to join the EU to reform it? I’ll get you that job.” We both laughed and I shook my head

  “I wouldn’t wish to break their sacred traditions.”

  “What do you plan to do?”

  “I’m going to learn how to fly airplanes in Kissimmee in Florida”

  #

  Svetlana

  In private, I was restless and despondent. I went to Florida for a month but learning to fly didn’t help. The student pilots were forty years younger than me. I felt lonely. On my return to London Michael Johnson called with exciting news

  “I have met a woman called Svetlana and I want to marry her. Shall we meet?” This couldn’t wait.

  “Come over this evening. We’ll get an Indian takeaway and talk.” Michael was almost forty. He was bringing up a five-year-old son, with his parents and a Russian nanny, in a heavily protected house in Cape Town, but he was afraid his little George could come to harm. Now he had fallen in love, his life might improve. Over dinner he explained.

  “It’s quite a coincidence. Like Nina, Svetlana comes from St Petersburg and studied mathematics. After she graduated, she moved to London and is working as a web designer.”

  “How did you meet?”

  “Through her father. Viktor Gusev came to London to offer private equity investor shares in his retail company. My colleagues in Russia were advising him and helped with the negotiations in London. One evening Viktor brought Svetlana to dinner and I asked her out…” Michael’s voice trailed off.

  “What about little George?”

  “Svetlana is gentle and good with children. She met George in Cape Town and they get on well. She has become his favou­rite auntie. Svetlana has agreed to move in with us. I hope things will work out. We want to get married next year. She’s ten
years younger than me. Would you like to meet her?”

  I met Svetlana a few days later. She was a tall, pretty bru­nette, quite shy, but well dressed. She has either inherited from her mother or gets extra money from her father. Web designers can’t afford to shop in Bond Street, I thought. She seemed less entrepreneurial, but softer and more serious than Nina. Like Michael, Svetlana was a keen tennis player and skier.

  Her mother had died several years before. Losing her, made Svetlana more independent and she decided to leave Russia. She’d already been in London for seven years, and through mixing with people at work, she had shaken off the hard-edged Russian parochialism and became much more cosmopolitan than Nina. I found her a little reticent, but pleasant. I liked her.

  Michael and Svetlana were married in Cape Town in December 2007. Her father came to the wedding and we shared a table at the wedding reception. He seemed rather sad.

  “I would like Svetlana and Michael to move back to St Petersburg one day. I miss not having my daughter close by. I’m lonely.” I fully sympathised.

  “I have been through a similar experience. I also feel disorientated without a partner.” Looking at the wedding guests Viktor nodded.

  “Michael has had it tougher than either of us. I might be losing a daughter, but I’m gaining a grandson”

  “Let’s drink to that,” I said, raising a glass of champagne. Viktor Gusev was a wealthy Russian businessman, but by no means an oligarch. I was relieved not to detect the arro­gance and bluster associated with so many new Russians.

  Maybe it’s because he didn’t steal his company but had to build it up. Also, his wealth is being trickled down to him by private equity backers, rather than being dumped in his lap. He has had to work for it, I thought