Red Wolves & White Knights

by Peter Kysel

  Chapter 28

  Stock Market Crash and the Wedding

  Beijing hosted the Olympic Games. Dimitri Medvedev swapped jobs with Putin and became president, oil prices hit a record high of USD 147 per barrel. The UK bank­ing system faced a catastrophe, when my former employer, Lloyds bank took over HBOS. Both RBS and Lloyds had to be rescued by the Bank of England.

  The global stock markets crashed. The Western financial system was in meltdown and had to be rescued by drastic cuts in interest rates. The main activity of the central banks was printing new money to support the weaker banks. Swathes of banks had to be rescued by the taxpayers, but a complete meltdown was avoided. Predictably, bank direc­tors were publicly blamed, but escaped their responsibilities.

  Early in the year, I went skiing to Crans-Montana and to Méribel with a rapidly shrinking group. Two decades before, our team consisted of a dozen members. We had been reduced to the last three, Richard, Jan and me. Tamara became engaged to Nick and in 2008 they began to plan their wedding. To my delight, they chose to get married the following year in Prague.

  #

  My Daughter’s Wedding

  The wedding ceremony took place in the Sala Terrena of the Vrtbovská garden, under a large fresco of Venus and Adonis. Vrtbovská is an early eighteen-century palace garden on the Malá Strana. The reception and dinner were held for over a hundred quests at the Museum of Modern Art on Kampa. My hire contract with the museum contained an unex­pected bombshell. There was no insurance. I would be held personally responsible for any damage to the art on display. It was too late to cancel and find an alternative venue, so I took the risk and signed.

  At midnight we had organised a firework display on Střelecký island, facing Charles Bridge. The guests watched this public celebration of Tamara and Nicholas’ marriage, together with thousands of tourists, gathered on the bridge. I was watching with Jack Straw when Michael and Svetlana joined us.

  “How did you manage to arrange such a spectacle, for the newlyweds, in the middle of Prague?” Svetlana asked incredulously. This question was repeated by several other guests.

  “I don’t know,” I said, modestly, not wishing to expand.

  “What a great gesture to celebrate their marriage” added Jack. Prague’s chief fireman, assigned to supervise the fire­works, happened to walk past and said,

  “The council didn’t realise this was going to be a private party. No-one will ever again be granted permission for a private fireworks display.”

  “How’s business?” I asked Michael

  “A client of ours is interested in buying Witanhurst in Highgate” he responded quietly. I was impressed.

  “Rumours suggest that the asking price is £70 million. Is that true?”

  “Around that amount. But the client is also buying another house on Highgate West Hill, and intends to link the two buildings, by means of a tunnel under the heath. The overall budget is likely to be more like £300 million.” Russians spend money in style, I thought, not knowing what to say, but Michael changed the subject, turning to Jack.

  “I have heard about your interest in Russia. Shall we all meet up tomorrow?” We agreed and moved on to the PopoCafePetl night club with some of the other guests. Most of us left after 2 am on Sunday.

  As I lay in bed that night, thrilled that all the wedding arrangements had gone smoothly and that Tamara and Nicholas were so happy, I completely forgot about the museum contract.

  My responsibilities, as a parent are over. Tamara is Nick’s wife. They chose each other well. It will be a successful marriage. Florisse would have been so happy and proud today I often thought of Florisse and how she would have reacted to my actions.

  The next morning I woke up early and went to see the museum manager. She was smiling

  “It was a wonderful party and your guests were so well behaved. No damage was done.” What an enormous relief, I am not bankrupted. With all residual worries gone, I smiled back, basking in the warm glow of satisfaction, having given my daughter her dream wedding.

  #

  Peníkov

  Michael, Jack Straw and I met in the Savoy brasserie, by the river, for a mid-morning coffee. Michael got straight to the point.

  “Svetlana is out jogging. I would like to hear your views on Russia.” Jack had his response ready.

  “Just remember the first lines of the Soviet anthem – ‘the unbreakable union of free republics was for ever created by the great Russia’. The Russians view the disintegration of their empire as the greatest national humiliation. The last two decades of coexistence with the West will soon turn to resentment. Russia will become the enemy of the West again. In your case you’ll be forced to choose sides in the coming conflict.” Jack then excused himself and left, whilst we, trying to digest the implications of his comments, moved on to other topics. Michael said,

  “I’d like to see Mr Kratochvíl’s cave. Our secret files have grown enormously. They are too large to keep in a safe deposit box at the bank.” I got the drift of his thoughts.

  “I’ll fix up a meeting at Peníkov. We could drive there after the celebrations.” A week later Michael and I drove to meet Mr Kratochvíl and to inspect the cave. On the way he mentioned his former employer.

  “The Russian High Court confirmed Borby’s sentence of thirteen years for fraud. He has been granted political asylum in England, so he isn’t going to serve his sentence. Have you been in touch with him?”

  “Not since my visit to the south of France, nine years ago.”

  We arrived in Peníkov and inspected Mr Kratochvíl’s prop­erty. Michael was satisfied

  “It’s perfect. We can build a reinforced concrete room in the cave and store our files there. Nobody will ever look for them in southern Bohemia.”

  Mr Kratochvíl was interested to release the capital tied up in his property. I arranged for Michael to buy the farmhouse and the farmland, anonymously, and lease them back to Mr Kratochvíl, who could then continue to rent the farmhouse out for holidays. The old sawmill was transferred to the local coun­cil, as a heritage site, and restored. After the cave was reinforced and access to it blocked off, Michael transferred his files there. I was amazed at how the collection had grown. The original documents were now stored in a dozen large metal boxes.

  “I am receiving more documents all the time. Most of the recent additions cover the Western facilitators involved in money laundering. The Nordic banks are heavily involved. We also have files on legal firms, accountants, and financial regulators,” said Michael. I was taken aback and asked.

  “How do you get to acquire these incriminating docu­ments on so many of them?”

  “New capitalist principles now apply in Russia. Any secrets can be bought. The intelligence agents in Moscow openly sell data-files on Western companies. Hackers will open any digital systems for a fee, and they don’t get prosecuted.”

  “Don’t the companies inform their clients that private data has been stolen? Don’t they protect them?”

  “They keep quiet when they are hacked because their cybersecurity is weak. Hardly any companies are prose­cuted for careless handling of clients’ data.” I became more circumspect and stopped asking.

  “Be careful how far you go. You could become a target for SFR as well as for MI5.” Michael became agitated

  “We operate within the law. I promised to revenge Nina and to complete our project. It may take time, but I am determined to do it.” I had learnt not to interrupt him when he became agitated. He relaxed and added,

  “We’ll codename Peníkov, ‘The Library’.

  In contrast to Michael, I wanted my life to move in the opposite direction. I yearned for a slower pace. As a widower and a pensioner, I wished to be a man of leisure and a writer. In September, following the trip to Peníkov, I took a holi­day in the Bahamas, to swim, play tennis and unwind after the wedding. When I returned, I took up golf, the ultimate leisure activity.

  PART 8

  Morals

&nb
sp; In the first twenty years after the collapse of the communist regimes, central and east European countries were defined by the emergence of political democracies and largely too, by economic greed. After the initial swamps were gradually drained, millions of ‘new’ Europeans benefitted.

  Despite the efforts of notable people, like Havel, the moral standards of the ruling elites of red wolves have remained low. Just like the Mafia, corruption is their culture. But, unlike the Mafia, the red wolves are not based on family networks.

  As the red wolves slowly retire and die, corruption will hopefully be brought down to tolerable levels and the eco­nomic swamp will finally be drained.

  Chapter 29

  Civil Society, in 2010

  Jonathan was a commercial lawyer in London, about a decade younger than me. He was a slightly overweight Englishman, with pleasant manners. We met on the Highgate golf course. Neither of us was much good at the game, but we enjoyed the exercise and we enjoyed chatting. Our game was slightly competitive, with the loser having to pay for lunch.

  We had just finished playing our monthly round, which I lost. I bought drinks and sandwiches from the bar and carried them to an outside table overlooking the 18th hole. Jonathan put down his newspaper,

  “The National Crime Agency believes that $125 billion dollars are laundered through the UK every year and most of that money goes undetected. The Russians account for a large part of it.” I nodded, sitting down on the wooden bench.

  “The US Treasury claims that another $300 billion is laundered annually there. These figures are staggering, but how is it possible?” Jonathan shifted in his chair and watched a player finishing his final putt, before replying.

  “Opaque company ownership makes money laundering simple. Crime could be cut if the US and UK insisted on proof of ownership of the assets, and on their transparent acquisition.”

  “What would you say is a typical scam?” Jonathan warmed up to the topic

  “Take any Ivan, for example. He sets up three companies. Two companies pretend to lend money to each other, and a third company guarantees the loan. When the loan is not repaid, the third company pays it off under the guarantee. That launders money into the banking system.”

  “Is it that simple?”

  “Yes. This scam is known as the Russian laundromat,” said Jonathan. I nodded.

  “It’s been going on for a decade and the financial regula­tors just look the other way.” We paused, eating our sand­wiches. I changed the subject.

  “I have a friend who is keen to lobby for the enforce­ment of anticorruption laws. Initially, he planned to focus on Russia, but when he realised that it’s the Western banks that are at the centre of money laundering, he broadened his mission. He wants to form a philanthropic foundation to expose international corruption and money laundering. He’ll be in London soon. Would you be able to advise him on how to set up a foundation?”

  “With pleasure,” responded Jonathan. I called Michael and passed on the message. When he and his father George, arrived from Cape Town, the four of us went to play another round of golf. Michael sketched out his ideas.

  “We want to encourage the creation of a civil society in Russia and fight against social injustice. Our aim is to expose the fraudulent privatisations of the mid-nineties. Ordinary Russians view the wealthy elite as vultures, who stole a tril­lion dollars from the country. I fear popular revolts, unless the causes of these injustices are reversed.” Jonathan stepped in, to broaden the discussion.

  “Russian fraud has degraded international business standards, with the collusion of Western banks and politi­cians. We have legislation against money laundering, but in our crony capitalist set up, it is never enforced.” We took a break in our game and he continued,

  “The rising inequality of wealth in the west has helped to make Russian excesses somehow tolerable, but as in Russia, voters will revolt.” We resumed play, mulling over Jonathan’s comments. They seemed pertinent to Michael’s mission. At the next hole, George responded

  “Plutocrats evade paying their fair share of tax, that should also be exposed.” Jonathan took the argument further.

  “Greed is infectious. Moral decay begins at the top and spreads through corporations and into public services. Our society is putrefying,” I added.

  “Compliant regulators don’t enforce the rules and anti-mo­nopoly legislation rusts away. The elites are grabbing the ben­efits of economic growth and the swamps are returning.” We sounded like a group of angry socialists as we tee-ed off at the last hole. At the end of our game, Michael turned to us.

  “We need to revise our mission. The Russia foundation will aim at draining the business swamp.” We went to the bar to order lunch. George explained the background to all this.

  “Seventy years ago, my father set up a family trust to promote reforms to Russian civil society. Whilst waiting for the Bolshevik regime to finally end, the money was invested in Mayfair properties. This trust of ours could contribute at least 20 million.” Michael added,

  “I’ll match that amount. Our friends will chip in too.”

  “Can you summarise the aims of your foundation?” asked Jonathan.

  “We wish to promote the ethical principles of corporate justice, legality and transparency.” We all agreed.

  “How are you going to pursue your mission?” I asked

  “We will expose illegal activities and we will support the crusaders for ethical business,” said George.

  By the time we had finished lunch, Jonathan drafted a man­ifesto for this new civil society. The foundation was created in Luxembourg. Our golf quartet became the trustees, with George elected as chairman and Michael its managing director.

  A few months later, on another golf course, in Kitzbuhel, Michael handed us his first report

  “We have digitalised the original documents and stored them in our secret library. We are ready to launch specific campaigns.” The library was at Jeníkov and during our stroll around the golf course, I mentioned,

  “Michael, I’ve heard that the chateau in Český Rudolec, near Peníkov, is for sale. It’s rumoured that the Russian owners don’t have the money to restore it.” The presence of unidentified Russian owners seemed disturbing. The area was full of old mines, some of which stretched from Peníkov to Český Rudolec. Michael reassured us.

  “That chateau has been sold into friendly hands. The new owners are going to turn it into a boutique hotel. Our library is safe.” I wondered who the new owners were, but Michael would not be drawn.

  #

  Loneliness

  Loneliness hit me hard during the following year. Occasional consultancies were not enough to fill my time and I had no major projects left. Tamara and Nick moved to Texas. The house felt like a prison. Friends could never be a substitute for a partner. Some days, I didn’t speak to anyone and I became increasingly despondent, as I ate dinner alone, day after day.

  “You need to find a partner, or your depression will worsen,” advised my old friend Tony, and so I begin to search for a companion and joined an online dating site. Friends also tried to introduce me to suitable women. Coincidentally, I was approached by an introduction agency.

  “We charge a membership fee of £5000, but in your case, we would be happy to waive it,” the director explained over a drink in a Mayfair hotel bar.

  “Why me?”

  “We have a shortage of men like you.” The idea that I was a marketable product, cheered me up, and I accepted the offer.

  My social life picked up. My pursuit of partners was hin­dered by my lack of dating skills, and by my shyness. The world was a different place when I last dated four decades earlier, and women had become much more assertive. I was bewildered by the deceptive photos and misleading descrip­tions. I listened, over cups of coffee or glasses of wine, to stories of failed relationships, whilst speculating on the real ages of these women. All this confused me. I couldn’t understand why women of my age were looking for partners decades
younger than themselves.

  Potential partners expected me, as a widower, to articulate what I was actually looking for. Having started off with the hope of finding a suitable companion to assuage my loneli­ness, I found myself unable to reveal my feelings and most of my encounters ended on the first date. I attempted to analyse my failures.

  People aren’t interested in my needs and it’s mutual. I am not interested in the baggage of their previous relationships, or in being someone’s pension fund. Dating requires a different approach. I’ ll aim for light-hearted socialising.

  My new approach worked, but in unexpected ways. Surprisingly, married women responded immediately to my light-hearted approach, and took the initiative. I was sought after as the antidote to dull husbands, and my loneliness began to recede. These careless relationships were amusing, but invariably ended in disaster. They never lasted. They all came with a sting in their tail.

  It all started with an unexpected telephone call.

  “Hi, I am Sarah. We met on your trip to Australia. I was working there for a mining company; do you remember me? I moved back to London, and now live in Highgate. Would you like to meet up?” We met for lunch at Frederick’s, in Islington. Sarah was an attractive blonde English woman, who had married a former colleague. Her upper-class hus­band had insisted that she gave up her career. Several years later, having become extremely bored, she contacted me. We began seeing each other. She was looking for fun and found a way of joining me on my consulting trips around Europe. One afternoon as we sat in her drawing room, sip­ping champagne, the key turned in the front door. Sarah froze.

  “It’s my husband!” Fortunately, she had put the chain on the front door.

  “Sarah, let me in” he yelled. She turned to me