Blood Money (3 page)

Now things are definitely starting to fall into place. John checks the images he's saved of the Mercedes entering Birchin Lane and studies the passenger in the back seat. A chauffeur driven Mercedes with a banker in the back has just got shot at with assault rifles in the middle of the City.
What the hell has been going on?
Gibson gathers up his CCTV image print-outs and goes to report back on his findings to the guvnor.

Many of the officers who attended the scene have by now returned to the station, and word gets round that the DCI wants everyone who's been working the incident to gather in the main conference room on the 2nd floor. Once everyone's assembled, one by one the guvnor gets everyone to pool-in their information. The first officer to report explains that the bullet casings have been confirmed by ballistics to be AK-47, and adds casually “A no-brainer really…”

“And why would it be such a no-brainer?” the DCI asks, clearly puzzled by the nonchalant comment. The officer in question suddenly feels very self-conscious, unwilling to reveal his interest in firearms to the gathered assembly. There's a brief pause before the same voice speaks up again, but a little quieter and more timidly than before. “Well, the casings found at the scene are tapered, not parallel. This feature is pretty unique to the Russian made AK47…it prevents them from ever jamming no matter what muddy, dusty or freezing conditions they're used in.” The man pauses to look around before explaining a little more “The AK47 is the gun always used by the baddies in war films; it's instantly recognisable because its magazine has a distinctively curved ‘banana-like' shape, and that's because of the taper on those casings. Anyway, like I say, ballistics positively identified them as soon as they saw them. Also we were lucky enough to recover two rounds. Despite being pretty mashed-up, they're currently being checked for a match against our database of known criminal firearms.”

The man sits down, relieved to no longer be the focus of everyone in the room.

When the guvnor asks what's known about the vehicles used, John Gibson steps forward to share the CCTV images with everyone and whilst he sticks his six best print-outs onto the incident wall he simultaneously reports back on the license plate numbers and when and where the stolen vehicles had been reported to have been taken from. Then he turns round to face his colleagues and offers his deduction that the driver of the black Merc with the plate KRON05 was chauffeuring the head of Kronos Capital Management into work, and just yards away from his London office he'd been the target a carefully planned attack. There's no banter in the room, everyone's too busy thinking about the scenario that John's putting forward, weighing it up, considering potential motives (mainly down to the fact that the intended victim is clearly very rich) and then speculating on the type of criminals most likely to have been behind such an attack.

In turn, everyone else chips in with their information until everything known to date's been declared. Next, the boss details out the work he wants various small teams to focus on. Several CID are tasked with interviewing the eye witnesses who have already come forward, some with finding out what's happened to the missing truck. Crime scene teams will focus on gathering evidence from the abandoned BMW and on Birchin Lane. Other policemen will spend the next couple of days grilling all the snitches in London to see if they can discover who supplied the guns that were used and another pair of detectives are detailed to track down the two men who fled from the battered BMW.

John Gibson is ‘on his tod' today because his long standing CID partner, Bill Warren, has booked this Monday off to take a long weekend away with his wife. Nevertheless, because the pair of them frequently get used in bank-relations work the gaffer assigns them the important task of interviewing the apparent targets of the incident, the head of Kronos and his chauffeur. John's chuffed with this assignment as it's clearly key to the whole incident.

Whilst John is thinking about the best way to approach his part of the task the DCI continues doling out the remainder of the work. Uniforms will keep Birchin Lane closed to the public until scene-of-crime-officers complete their work. This won't be for at least another 24 hours, possibly longer. In the mean time the guvnor declares that he'll be organising a news briefing at the scene this very afternoon, so he can get some TV coverage to quell the growing public concern being fuelled by the press. He explains he'll use the opportunity to appeal for further eye-witnesses who have yet to make themselves known to come forward.

Additionally, four uniforms will put in a bit of HVP (high visibility policing) around the area for the rest of the week, questioning city-workers moving through the area; in particular they'll focus on people coming into work between the hours of 7 and 8 o'clock each morning.

With the meeting over, the crowd of officers breaks-up and John migrates back to his desk. He jots down some notes and makes the call to Kronos HQ to arrange through the Fund Manager's personal secretary to interview Mr Alexis Vasilakos and his personal chauffeur, Eddie Slater at Number 60 Lombard Street at 11am tomorrow.

Once his shift is over, John goes back to his cheap flat near Finsbury Park in north London where he finds his fiancée on the lounge floor with Mustard, their pet cat. Rebecca is deeply engrossed in watching play-back of the video they'd taken during their recent nature-watching holiday in Tenerife. She glances up momentarily to say ‘Hi honey' before returning to the output from their camcorder.

Whereas most people go on holiday to lie on beaches and while-away their time reading trashy novels, Rebecca and John spend their summer holidays indulging in their shared passion for filming wildlife, and the rarer and more exotic it is the better. Living close to Epping Forest as a young girl, Rebecca's interest in the natural world began by watching the local birds, foxes and badgers until she expanded her curiosity to cover anything that crawled, slithered or swam. And it didn't take long in their relationship before John got consumed in her interest as well, so now they're forever planning trips away, like their recent holiday to the Canaries to find and film species such as the indigenous bottlenose dolphins, loggerhead turtles and the colourful varieties of local lizards and birds.

John and Rebecca, once merely enthusiasts are now rapidly becoming quite experienced at filming wildlife in its natural habitat. Just prior to their holiday they'd upgraded their camcorder to a cutting edge high definition model with an in-built hard drive so large as to be able to store several days' worth of continuous recording. Exactly what they'd need to cope with the enormous amount of footage they always seem to take during the course of a fortnight's holiday.

John can see Rebecca's so deeply engrossed in watching the play-back that there's no chance of her doing any cooking tonight and since he doesn't fancy offering to do any himself he begins looking through a Chinese take-away menu in the kitchen whilst he pours his fiancée a large glass of Chardonnay. Once he's popped the cap off a chilled lager he's taken from the fridge he rejoins her in the lounge and passes her the menu along with her glass. “Dinner's on me tonight…take your pick.”

Modestly believing to be at best ‘average looking', John considers himself to have done very well in snaring a girlfriend as pretty as Rebecca Kavanagh. They'd gotten to know each other because of her being the little sister of his best friend Steve. And despite having been together for several years now, John still finds himself captivated by her full-lipped smile, her long soft hair and her velvety smooth skin.

“So, how was work Beccs?”

Never needing to be asked twice to begin a conversation, Rebecca begins venting all the frustrations that have built up during her day.

“Well apart from my spineless boss continuing to be too hesitant and gutless to act on the pretty conclusive data I keep giving him???”

This gripe is not new to John's ears; he gets to hear about it more than several times a week. “Actually, there's something I need to tell you about…this afternoon Steve rang me to tell me he thinks he's about to be laid off again.”

John rolls his eyes upwards at the ceiling in despair. Steve Kavanagh's career as an architectural steel fabricator seems destined to fail. In the current recession, the building construction industry is being particularly hard hit with companies large and small cutting staff in an attempt to tough-it-out through these lean times.

She bemoans the situation further, “And if he's right, it'll be the second time in six months. He's already got £20k of debt, and now he's facing the dole yet again!” Rebecca can see the frustration on John's face. “I know you won't approve, but if the worst does happen I'm thinking that I'd like to give him some of the deposit money we've been saving up. Do you think that would be ok?”

Steve is Rebecca's big brother, and even though he's also his best mate John is reluctant to risk the savings they've been jointly squirreling away for the last three years to put down as a deposit on a place of their own. They've been saving so hard, living in cheap, crummy rented flats like this one so they can afford to put money away and attempt at last get themselves onto the property market.

“He's a grown man for goodness sake. I know we're in a recession but he's a skilled steelworker. If he loses his job I'm sure he'll get another one pretty soon. We don't have to pick him up and dust him down each time he takes a knock. -And I think you mean ‘loan-him' not ‘give-him' don't you?”

“Ok, you're probably right, but let's keep it as an option, just in case the worst happens…”

John can't look into her big, brown eyes without softening. He takes a slug of his cold beer and changes the subject, “So apart from that, you're having more of the usual problems at work then?”

Rebecca Kavanagh is a senior data analyst in the Financial Services Authority at its headquarters in Canary Wharf. The FSA was set up in the year 2000 to regulate financial services in the UK, taking the function away from The Bank of England by Act of Parliament. It's funded from levies on the firms that it oversees and regulates, which include things like banks, stockbrokers, fund managers and financial advisors.

Rebecca is the team leader of a small group of analysts in an FSA department tackling market abuse (known to everyone else as ‘insider dealing' or ‘insider trading'). Market abuse includes buying shares in a company with inside knowledge about, let's say, a forthcoming takeover. It also covers creating a false or misleading impression in order to drive up (or down) the price of shares to a distorted level. As the law stands you can't be sent to prison for market abuse. The ‘worst' that can happen is that you face unlimited fines and/or public censure (an official public announcement of industry misconduct i.e. name and shame). –Something that's proving about as effective as an ashtray on a motorbike. The risk and reward for this white collar crime is completely out of balance when compared to a ‘working class' crime such as physically robbing money off someone, for which you could be sent to prison for three years or more.

The FSA have been wholly ineffective at tackling insider dealing compared to the American equivalent, the Securities and Exchange Commission (SEC) who rack up huge numbers of convictions each year to their credit.

In the whole of 2006 the FSA only managed 109 enforcement actions. It also received much criticism for not forecasting the 2008 international financial crisis. The FSA's excuse for not having seen it coming was that it had always believed that the markets were self-correcting, and that the leaders of businesses were better at assessing risk than any regulator. Additionally, because the FSA focuses on individual companies rather than the banking industry as a whole it had failed to see that risk-taking had become excessive across the board and thereby had been unsuccessful in seeing the impending disastrous breakdown of confidence in banking which in the UK started with the collapse of Northern Rock in 2007. Although working at the FSA has its upsides, right now the morale in the organisation is at a pretty low ebb because of their continued in-built ineptitude at tackling market abuse effectively.

John's heard all Rebecca's complaints about the FSA many times over and it's always the same issues time and again. He's also heard her mention Kronos on more than a few occasions, and tonight he is particularly curious to find out what she knows about Vasilakos and his business dealings.

As soon as the Chinese food arrives (baked prawns for him, satay vegetables for her) and once they've got it all out onto some plates John decides now's as good a time as any to get his fiancée to ‘talk shop'.

“Beccs…. Kronos Capital Management, -you know quite a bit about them don't you? They're one of the companies you've investigated recently, yeah?”

John's work occasionally crosses over into areas that Rebecca also focuses on. “Why do you ask? Have they done something to suddenly be of interest to the police?” John knows it'd be unprofessional to divulge too much, so he gives her the briefest of explanations, “I'm tasked with interviewing the manager tomorrow along with my partner Bill. Anyway…all I managed to find out about them before leaving work is that they're a hedge fund company, registered in the Caymans.”

John already knows that the Cayman Islands are frequently linked with money laundering, where the direct or indirect proceeds of crime are put through a company (often a financial institution) in ways designed to conceal their true origins and ownership. If done professionally, the money concerned loses its criminal origins and appears legitimate. The Cayman Islands have a tarnished image because of many years of inadequate financial regulation which have only recently begun to tighten. It's popular for companies to register there because it's one of the least taxed places in the world, with no income tax and more importantly no corporation tax either.

Rebecca's face shows that she is pleased to be able to have a conversation with John about financial services which even she has to admit can be quite a ‘specialist' subject. She begins enthusiastically: “Because of their unbelievable profits, which frankly are so large as to be highly suspicious, I can claim to be a bit of an expert in Kronos's operations.” Momentarily she stops to take a sip of wine.

“They only started up in 1995 and now have more than £15 billion in assets under management. Since 2006 the company's main £8 billion fund has averaged 35% annual returns, after fees, making it one of the most successful financial products in the world. Kronos charge a very reasonable management fee of 2% and a profit participation fee of 20%.”

In the past there were several occasions when John wished his girlfriend wasn't such a finance geek, but tonight he's genuinely pleased that she clearly knows much about the man he'll be interviewing tomorrow.

“Kronos Capital Management is one of the institutions that I've been most focussed on for the last 18 months. In fact we started looking at them about four years ago. Put simply, their hedge funds are just too good…
–They outperform most others by quite some way
and that's a clear red flag that market abuse is going on. It's run by a Greek called Alexis Vasilakos.”

John nods, but plays dumb and asks “What else?”

“Well” she continues “they have their own internal trading desk, staffed by over a dozen traders, and for something like 15 years Alexis's has employed complex mathematical models to automatically execute a large proportion of their trades. But in the last four years, the performance of his funds has gone super-nova. I can't see that Kronos is doing anything special compared to other hedge funds. Most of his competitors are also using computer-based models to predict price changes in easily-traded products. Everyone's models are all pretty similar, based on analyzing as much data as can be gathered, then looking for non-random movements to make market predictions. Alexis employs the same mix of staff as his rivals do, with many specialists from non-financial backgrounds, including mathematicians, statisticians and physicists. Big deal, they all do that. However despite everything appearing normal there's something that he alone has been doing differently since four years ago, and I'm not sure what, but whatever it is…it's caused him to suddenly hit a vein of gold that shows no sign of running out.”

Stopping to take another sip of wine she fixes her fiancé with a raised-eyebrow look that says ‘So…cum'mon then, I've told you all this stuff, now you tell me what your real interest is?'

Reading the expression on her face, John decides to make a comment as innocently as he can by way of a response. “So, like I say…-Kronos came-up at work today, and when I saw it was a company registered in the Cayman Islands, it immediately made me suspicious, you know, that there might be money laundering and that sort of stuff….”

“I understand why you might think that, but the Cayman Islands are a major, and I mean major financial centre. Vasilakos manages a Hedge Fund, and that needs to be done in or near somewhere like London or New York, but you'll find that these funds are always registered in some OFC.” She glances up and can see John is confused, “-Sorry, an offshore financial centre.”

“The Cayman Islands are the fifth-largest banking centre in the world and recently they've been introducing new, stricter financial regulations, -so don't jump to any unnecessary conclusions. However, I can feel it in my bones that the performance of Kronos is just too good to be true and it is driving me nuts that the FSA can't pin anything on them.” John is even more curious now, “Surely if they trade just prior to an announcement and stuff like that there are patterns that can't be explained in any other way other than Insider Dealing?”

Rebecca's food has been getting cold; she's unaccustomed to her ‘shop talk' being of interest to John. “Having a pattern is not good enough. The FSA is a lot like the Police. Many of our successful proceedings start from tip-offs passed on to us from traders, allowing us to then gather sufficient evidence to make a case. With Kronos, there has never been anyone who's been brave enough to come forward and give us that vital connection. Alexis seems to do things in his own individual style, -for example I've never understood why he bases himself in the centre of The City when most hedge fund managers now work out of Mayfair. He's a real piece of work, very much an individual, a bit of a loner in the industry I guess and it's become a hobby of mine to keep tabs on what he gets involved with. Alexis is extremely well connected, several cabinet ministers and more than one Supreme Court Justice are on pretty friendly terms with him. But whereas most other institutions make sizeable donations to things like children's charities and AIDS foundations, there's never been anything on record as Alexis having done anything like that. Most people who make donations don't keep quiet about it, they expect to milk it for all the good publicity they can. You'd think he'd be bothered about PR just as much as everyone else wouldn't you? But apparently he isn't.”