De Berne could have weathered one crisis, but not two. The crash on the Paris Bourse was the consequence of a persistent recession in the country, and a real estate scandal on top of that was too much. The bank, as many others, had been naively and unwittingly embroiled in financing a series of property developments against unsecured loans and fictive guaranties. They had become seriously overextended and were saved by the intervention of the Bank of France, if saved was the word. The family lost control of their bank and after its forced takeover by the French Indo-China Bank de Berne was of little further practical use to Brodzski.
Ennis had initially hoped that there was something positive in the changes, as a result of his friendship with John Howard. Unfortunately that was far from being the case. The new shareholders were more concerned with cleaning up the banks bad loan, than being involved in any further speculative business.
It was precisely at that moment Jean-Yves Lombard appeared at Brodzski’s side like the proverbial saviour. As head of the Lombard Finance, he had put the idea into Brodzski’s head that considerable funds were available from the United Arab Investment Bank. Lombard reasoned that since Indonesia was the nation with the world’s largest Islamic population, there was no reason why the UAIB could not be persuaded to participate in the equity.
He could arrange that through his personal connections, however there was a price, which Brodzski was glad to pay, Lombard would have a seat on the board of directors of Papcon, with a minority shareholding.
Axelmann vigorously opposed Lombard’s entry into the company and made it very plain to Brodzski. He tried to warn him of how Lombard had been embroiled in more than one doubtful financial affair with Middle East banks, but his arguments were dismissed as fanciful, a sign of resentment at the idea another financial man, a banker, entering the firm.
Brodzski, as a result of the difficulties encountered in putting together the Barito banking pool, had started taking more decisions personally without consulting his staff. A challenge and a threat had been placed before him; in the short term Papcon’s financial position was good; the company still had a healthy bank account. Though if new revenues were not quickly generated or Barito’s problems were not resolved, then a serious cash crisis would be on the horizon before the years end. Barito was absorbing too much of Papcon’s financial and human resources, with no early end in sight.
Brodzski had become impatience with Christian Axelmann and John Ennis, and because of that was ready to listen to sycophants and new faces like Lombard, who were always near at hand. The two were powerless, as Brodzski had arranged that all major his decisions were endorsed by his compliant shareholders, giving an appearance of full approval. To Axelmann’s great regret the more serious shareholders had begun to take their distance, often excusing themselves from board meetings, giving Brodzski a free hand.
They were placed before a fait accompli when Brodzski announced that Lombard had been given a place on the board of directors, and at the same time nominated as special adviser to the President, Brodzski. It became increasingly evident that their ability to influence Brodzski’s decisions was slipping.
Together, they set about drawing up a plan, which could be implemented in the event that Brodzski turned against them, as they had started to suspect for some time. Regardless of whether the project went ahead or not, they would be assured of their own personal financial situations. Axelmann’s patience had been stretched to the limit by Brodzski’s attitude and his growing arrogance not to speak of his extravagant spending.
‘Lombard is a crook, he’s only interested in what he can get out of it for himself.’
‘Its normal, he’s going to look after his own interests,’ Ennis said, ‘he’s not a philanthropist, but as far as were concerned we’ll end up with nothing after all the effort we’ve put into this.’
They started to explore the ways and means of transferring part of the monies in the Singaporean banks to other offshore accounts, to be used by them in the event that the situation turned sour. However, it was agreed that nothing was to be implemented until it was clear that it was really necessary.
Lombard’s office was situated on the quai Anatole France, opposite the Louvre, on the left bank of the Seine, in a magnificent building that had been recently reconstructed, maintaining the fine old stone facade which had been designed in an elaborate architectural style that dated back more than two hundred years. The interior was ultra modern, the ground floor housed a collection of fine antique shops that served a clientele, from both France and overseas, who could afford the old paintings and rare antique furniture reserved for wealthy connoisseurs.
His office suite was located on the same floor as that of a leading Parisian stockbroker and the representative office of the Swiss Credit Bank. Lombard had not selected that location by chance but by design.
Jean-Yves Lombard was the son of an old French banking family, whose bank had been nationalised by the socialist government after World War II. He had led a very varied career moving around in the major French banks. In his last previous position he had been euphemistically excused from his functions, carrying the can for a well-protected director in a loan scandal in the mid-eighties. He had engaged a good lawyer and subsequently won his case and was awarded a substantial compensation. He was then engaged as director of a private bank, the Banque Levantine. The directorship was however, a poisoned gift, which a banking executive under normal circumstances would have never accepted. Lombard had little choice after having been quietly put on the banking blacklist by the more established banks - the touch of scandal was indelible.
The Banque Levantine was in turn rocked by a series of scandals perpetrated by its Lebanese and Kuwaiti directors, who saw it as their own personal piggy bank. The Bank of France finally intervened withdrawing their banking license. Lombard was not abandoned, he was well cared for by his Arab friends, he was said to have been be intimate to too many compromising secrets. He maintained a considerable number of valuable contacts and business relations in the Middle East, and into the bargain he once again hit the jackpot once again with royal compensation.
Lombard was burnt out in the traditional banking circles. His only option open was to set up a financial services company, since his total knowledge and experience was based on banking and financial services. He was backed by close and wealthy friends. Lombard International Finance was born with Lombard as the President Director General; his board of directors was composed of close friends, including Xavier de Cubsac, famous for his cognac, and other relations from the fringes of the banking world.
The vocation of Lombard’s firm was the take over old, ailing, businesses for a nominal price; they then stripped them of any marketable assets and pumped up the business with an injection of fresh capital, finally selling it off at a handsome profit as soon the books were passable. In larger operations Lombard International did not finance the take-overs with their own capital, but found the necessary funds in the Middle East and other offshore financial centres, through the network that he had established with the defunct Banque Levantine.
When Brodzski had been introduced to Lombard and learnt of his close links with the Arabs, and his extensive relations he maintained in the banking world, he immediately saw an opportunity to be seized. Axelmann was not of the same opinion, he did not favour business with the Arabs and besides he considered Lombard as belonging to a grey area of the banking and financial world.
Axelmann recounted hair-raising anecdotes on Lombard’s past disasters. Whether they were true or not, Ennis could not be sure, since the French business world thrived on rumours and such stories. As a technical and marketing man, he saw the banking world as an unfamiliar maze.
Once Brodzski’s decided a person such as Lombard could serve his business aims, he proposed that he join the Papcon on his board of directors, proposing a shareholding on favourable conditions. Lombard, impressed by Papcon’s consortium of international companies created for the Barito project, he quickly acce
pted Brodzski’s offer.
He invested a quarter of a million dollars, via Lombard International, in Papcon. However, he was more astute than his predecessors; he made a condition that Papcon pay him a retainer fee on a monthly basis, for his services as special adviser to the President. Over a period eighteen months he received in fees the equivalent to the investment made by Lombard International.
Lombard International was specialised in areas that larger better known finance organisations avoided, he was successful and maintained a very discreet profile. It was not his style or interest to draw unwanted attention.
Brodzski’s made the announcement of Lombard’s appointment whilst Axelmann was absent in Jakarta with Ennis. They had no choice but to accept his decision, any open opposition would have jeopardised their own situations. They sensed that Brodzski was side tracking from the original objectives that they had agreed, and sensed that he was setting a new course without very much concern for the engagements he had undertaken with them.
How long would it be before Brodzski divulged to Lombard the existence of the secret Singapore accounts, if he had not already done so? They decided to initiate a contingency plan, realising that Brodzski with backing and encouragement from Lombard would not hesitate to drop them if it suited his purpose.
Their first move was to protect the Singaporean accounts. They provided the banks with additional instructions, so that the movement of funds of over one million dollars was conditioned by a set of confidential codes. It was a simple step, since it was Axelmann who had originally chosen the banks in Singapore and set up the arrangements, whilst Ennis covered the transfer of funds to accounts from the defence contracts with the tacit acceptance of Finntech.
The management of bank accounts had been entirely left to Axelmann. The codes were not transmitted to Brodzski, who with his signature could if necessary withdraw up to one million dollars from any one of the four accounts.
INSURANCE AND GANGSTERS
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