Blood Money (4 page)

Seeing that her partner's plate has been emptied, she affords herself a little bit of time to take down a few mouthfuls of food even though her mind is still fully engrossed in the strangeness of Alexis and his outrageous profit making abilities. “I wish I could fathom-out why he doesn't give a shit about his public image. And also, he doesn't seem to care where he makes money from, and I've got a perfect example for you that'll sum the guy up. He was one of the key players who personally targeted the downfall of HBOS and Northern Rock with aggressive short selling once the rot in confidence set in. So you see, he wantonly makes money out of a situation that could have ended up bankrupting the entire country and then leaves it to the British tax payers to bail out the banks.”

Stopping momentarily to put a bit more Chinese food in her stomach she summarises the situation, “John, believe me, there is no way Kronos is that successful without some form of ‘sharp-practice' going on. And with the volume of the trades Kronos makes there won't be just the odd bit of market abuse going on, it must be endemic. So I'm more than just a little bit peeved that my team has never had so much as a whiff of how he's doing it. That fat fuck must think he's so smart, the slimy little tax-dodging shit!”

Influenced by the wine and years of frustration, Rebecca realises that her last comment went a bit far, but at least she's showing her boyfriend how strong her feelings are about Alexis Vasilakos…

“Becc's, so I don't say something dumb tomorrow when I go over to Kronos HQ, in layman's terms go through with me once more what's so special about Hedge Funds. Why do they seem to make more money than anything else going on in the City? And in particular explain again how short-selling works.” John knows that city bankers are often real arrogant arseholes and he really doesn't want to advertise his ignorance of their world.

Knowing that John normally turns-off when she talks about such things, she checks first “If you're sure, but you're going to have to let me pitch it how I pitch it. I'm not doing it to be condescending or anything, I'm pretty sure you know much of this stuff already but I'll give you the full picture for ‘completeness', okay?”

John nods for her to begin blasting him with City-speak. “Ok honey, I'm tuned-in and ready. Take it from the top.”

“Ok babe, here it comes…-Hedge Funds have only risen to notoriety very recently; because they've been creating many of the very richest people on the planet. The idea behind them is the principle of ‘shorting'. Shorting allows you to bet on falling share prices rather than the traditional technique of trying to buy what you see as undervalued shares that will have the potential to rise over the long term. With shorting, the ‘fund manager' finds someone to ‘borrow' shares from; shares that he thinks will fall in value. He'll ‘borrow' (not buy) them under the terms of a written contract, the contract will say that for a specified fee he'll return them at a specific date in the future. Anyway, once he has identified a stock that he speculates will fall in the very near future, he approaches people who own them and who will agree for them to be borrowed and makes a contract. Now that he owns some borrowed shares, the manager sells them, for example for £1.00 each, and if he is correct and the share price falls, the manager can buy them back after a relatively short period, like maybe 2 months later, at a lower price, e.g. at 80 pence each. The fee might be say 6% for 2 months (6 pence commission to the person they were borrowed from), so the manager makes 14 pence of profit from each share.”

“In contrast, the traditional way of making money from shares is ‘Going Long' -jargon for buying shares as an investment, hoping that many, many months in the future the value will rise so you make a profit when you sell them. And by the way, whilst you are waiting, you also get to earn a ‘dividend', -a bit like an annually paid amount of interest on the money you've got tied up in a bank account.

Now there is a new way of making a profit from a falling share price in a relatively short timescale. Hence ‘short selling'.

The name ‘Hedge Fund' comes from the practice of balancing risk. If the market rises, you can make money on your longs and lose on some of your shorts, if the market falls, you make money on your shorts but you may lose some on your longs. It is known as ‘hedging', like ‘hedging your bets'.”

“It's a fact of life that because of the way the City is set up, there are dozens of reasons and influences for analysts, company CEO's and brokers to overstate the value of a company's share value. Share values are a bit like house prices. Most people think it is healthy to see these values continually rising, it makes everyone feel good and there are elements of inbuilt positive feedback to keep this happening. However in the City (just as in the housing market) such a state of affairs cannot go on forever. There has to be a ‘market correction' at some point. After a sustained period of booming share value there will inevitably be a short period of bust. In relatively small periods of time, hedge fund managers who can predict these sudden falls can make a windfall for people who have invested their money with them and at the same time balance or ‘hedge' these high-risk gambles with sensible longs on less volatile and hopefully rising sectors.”

“But additionally, the short-selling idea has another twist. By using borrowed money (from banks) as well as money from investors, the hedge fund manager can take a greatly leveraged position, making the size of the risk much greater but at the same time enabling the possibility that the fund can generate far greater profits. But here's the key problem. -Hedge funds are very lightly regulated as they are often registered (like Kronos) in places like the Cayman Islands, so in the UK all the FSA can really do is to limit the type of people who can invest in them, limiting the number of vulnerable investors who can expose themselves to the very great risks. With hedge funds, the only thing we can do is ensure only the very rich (who can afford to lose money) are allowed to invest.”

“Hedge fund managers now have quite a tarnished image as being reckless speculators. In times gone by, stockbrokers used to be genuinely concerned about the health of the companies that they invested in. Now it's often said that today's shareholders are only interested in short-term profit and nobody in the City gives a fig for the long-term health of the companies they invest in. Hedge fund managers epitomise that recent public perception. Oh…and as the hedge funds become larger and more powerful, there's a new concern that the amounts of borrowed money (from banks) that could be lost by the hedge-funds losing their gambles could collapse the banks themselves. When banks collapse, the economy of the entire nation is de-stabilised.”

The more she thinks about John seeing Alexis tomorrow the more she starts to worry. “Listen John, this Alexis Vasilakos…. you need to watch yourself with that one. Though he looks like just another fat cat banker I've heard he's got a shitty temper and everyone's properly scared of him. I know you can look after yourself, but I've been told that people only cross Alexis once. He's a really nasty piece of work and I've lost many a night's sleep concerned about what could happen to me if I ever did manage to nail his ass for insider dealing.”

As soon as he gets into the station the following day John simply can't get together with his partner fast enough.

Detective Inspector Bill Warren has 22 years more experience on ‘the force' than his whipper-snapper of a partner. He's mellowed with age like a fine wine, with more complexity, more character and more structure than his idealistic young colleague. Having taken Monday off to spend his anniversary with his wife, Bill had ended up missing all the excitement over the shooting in Birchin Lane, but it doesn't take John long to bring him up to speed with yesterday's extraordinary events.

Once Bill is fully clued-up the pair begin to prepare their notes for today's interviews. Normally they'd prefer the questioning to take place back at the station, but Alexis's personal assistant had made a strong and persuasive request that the meeting should take place at Kronos's Lombard Street office to enable Mr Vasilakos to stick to his busy schedule.

John would have much preferred for the fixture to be on home turf but saw nothing to be gained in protesting the issue. Completing their preparations ahead of schedule Bill lumbers off to the kitchen area to arrange the ‘chink-chink' (getting the coffees made) during which time John succumbs to his insatiable curiosity and he hits the internet to see what else can be discovered about the address they're about to visit.

Prior to being Kronos's London office, 60 Lombard Street had formerly been the headquarters for the People's Savings Bank (or the ‘PSB' as it was commonly known). Founded in 1820, the PSB was a British financial institution specialising in accepting savings deposits from the poor. Chuckling to himself, John wonders if anyone else had ever noticed the irony, -no longer a place that helped the poor to scrimp and save, it now housed a hedge fund that tirelessly operates to make the rich even richer.

In 1995 the PSB merged with a major high street bank, at which point they vacated the cramped Lombard Street offices to make a new home in a purpose built glass and steel edifice less than a mile to the west in 26 Cresham Street. Though old and relatively small, the building at 60 Lombard Street nevertheless might still be very impressive if the pictures on the webpage are to be believed. John clicks from link to link, pausing to examine the pictures of the stunning entrance hall, full of ornate columns and fancy ceiling things and walls covered in dark old paintings. Having discovered a few facts about the location, DS Gibson now feels a bit more prepared for where they're going. It looks nice, perhaps a bit old fashioned and stuffy, but nice. John reflects quietly to himself ‘What a shame such a beautiful old building is now owned by a piece of work like Vasilakos.'

Returning with mugs of steaming coffee in hand, Bill is curious to know what's so interesting about the website John's so engrossed in. Looking over his young colleague's shoulder, Bills shakes his head in disbelief. “No way,
not again!”

This reaction is unexpected, and John insists on an explanation from his grizzled partner. Bill takes a deep breath and begins to recount, “One of my first jobs when I turned CID some twenty years ago was to go over to that place. In those days the ground floor was a working bank whilst the upper floors served as the headquarters for the PSB.” He pauses momentarily to remember the details. “Yeah, that's right…a criminal gang had tunnelled underneath the vault from the cellar of a pub across the road. Lombard Street is quite narrow you see, so the gang only had to tunnel about 50 ft. We found all the rubble they'd excavated piled-up in the pub's cellar. They used a thermic lance to cut upwards through the 3ft of reinforced concrete that made up the vault floor. The bank's security team had taken the precaution to wire-up the steel reinforcement within the concrete to an alarm system and fortunately for the PSB, the Bank Manager was in that morning and heard the alarm go off. He put in a call to Bishopsgate nick and we got there before they'd managed to cut a hole in the floor large enough to get through.

With nothing stolen, the manager dithered and fretted. He seemed more interested in getting assurances from us that they'd be no publicity rather than wanting to see the villains caught. So anyway, on the understanding that police discretion was assured he then wasted more of our valuable time by insisting we mustn't go round to any of the neighbouring buildings in an attempt to find out where the tunnel had come in from, fearing the consequences should news of an attempted bank raid leak out. So me and my mate had no other choice than to sweat it out with an angle grinder and a sledge hammer to open the hole up large enough for me to squeeze down so I could discover where it led. Only by doing that did we find, like I said, that they'd come in from the cellar of the pub across the road. We went through everything they'd left behind and asked a few discrete questions of the brewery manager and eventually discovered all of the gang's identities. By that time though, they'd managed to flee to Spain.”

Bill continues reminiscently, enjoying his chance to spin a yarn, “Of course nobody tunnels into bank vaults nowadays…organised crime, well, we now know the names of most of today's professional criminals…modern policing makes it easy for us to keep tabs on ‘em all.

Gone are the good old days of vaults being stuffed with diamonds and gold bullion. Serious crime is all drugs and fraud now, not like in my day when you had proper villains…. Did I ever tell you I almost joined the Met to do a stint with The Sweeney?” John grits his teeth and rolls his eyes up to the ceiling…Yes, Bill had mentioned this once or twice in the past. (‘The Sweeney' is a nickname derived from ‘Sweeney Todd'.) The Flying Squad being an elite branch of the police that specialises in working on armed bank robbery cases, often covertly. These guys are the best of the best, they're the SAS of the police world and take pride in being both respected and feared.

Having gone 10:40am, it's time for the banter and stories of old to stop. John and Bill get their jackets and since they've only got to go half a mile's worth of ground to cover they exit the station on foot, finishing their conversation en-route, “So tell us how it all ended up then?”

Bill recounts nonchalantly: “It was all kept very quiet; the PSB didn't want to spread any concern to their customers you see…The vault manufacturer was brought in; they stuck a load of reinforced concrete down the hole, and welded an enormous toughened steel patch over the floor and then dressed it over with a skim of concrete so no one would be the wiser. The vault people had a vested interest in keeping it quiet because they too didn't want any bad press. The tunnel leading from the pub cellar was filled-in with as much earth as they could and then it was bricked back up again. The brewery boss kept his mouth shut too, embarrassed by the fact that he'd been duped into letting out his premises to a bunch of criminals.”

With the story-telling over, they walk the rest of the way down Gracechurch Street in silence.

John finds himself looking around at the smartly suited people passing through the heart of The Square Mile. Good coppers are always people watching. It's something automatic that they can't turn off even when they're not on duty.

It's the people who work here that makes the City seem such a strange place. They're all so similar to one another, smartly dressed 20-40 year olds, the vast majority of them men. There's a complete absence of children or old people, laughter or smiles. Unlike when he first started in the police it's now rare to see any overweight middle-aged businessmen. Most city-types seem exceptionally young, smart and healthy. Even the joggers and cyclists in this part of London seem super-fit looking and are immaculately turned out. John rationalises that it's got to be down to the struggle to survive in the City these days. You've got to be young, fit and full of energy. Once you've lost that, once you're too weak, too old or just too tired you get cast out and are replaced by the next generation being sucked into the global centre for the financial services industry.

Arriving with a few minutes to spare, they stop momentarily to take a quick look up Birchin Lane before stepping inside the building's modest corner entrance.

Within seconds of coming through the door, a burly suit approaches them. John doesn't need to glance at the guy's lapel badge to know he's a security guard. In a deep and polite voice he asks the two CID men if he can be of assistance. John tries to ignore the hairs on the back of his neck bristling as he introduces Bill and himself, then with flash from their warrant badges, they nonchalantly brush past him and move towards the pretty girl behind the reception desk.

The external aspect of the building had been modestly understated and if he hadn't of already seen pictures of the foyer John would have had been unprepared for the grandness of its interior. Exquisite plaster mouldings adorn the high ceiling whilst a multitude of classical marble columns stand guard around the outer walls. Several enormous brass chandeliers throw out warm light against the cream walls to compensate for the inadequate amount of daylight making it through the tall arched windows. Wherever space permits there hangs an antique oil painting, all grand and imposing, set in deep gilt frames.

The pleasant young woman with a welcoming smile behind the front desk is dressed in an expensive looking jacket. Whilst Bill explains their business, John's keen eyes sweep the room. In the back left corner, behind the reception desk is a door. It attracts his attention because of its peculiarity. It's a plain metallic looking door without a handle, and just to the side is what looks very much like an iris scanner.

Whilst the receptionist is checking her computer screen John nudges Bill and indicates for him to look over at the door. They exchange between them a puzzled glance; each wondering what valuable secrets must lie beyond, then, with a gleaming smile the pretty girl looks up and walks around the desk, cordially inviting the two City of London policemen to follow her. They are taken deeper into the building along a wide, well-lit corridor. She stops and turns, extending her arm to show them where they're to go. Stepping through they find themselves at the back of a crowded conference room.

This isn't exactly what either of them had been expecting. Finding themselves at the back of a large group of seated people, John can see many of the men in front of him are holding Dictaphones and note-pads. Several cameras have been set up on tripods, all pointing towards the front of the room. Clearly, a press announcement is just about to begin, but with every seat taken, the two policemen simply stand at the back and wait. Within moments, a short, fat businessman with deeply tanned skin and dark wavy hair enters from the front. He makes a point of acknowledging the crowd before sitting down behind the row of microphones positioned on a desk. Though the reporters are polite enough to remain seated, each strains to catch clear sight of the man who now holds stage at the front of the room, a man who must also be the person they're here to interview, Mr Alexis Vasilakos.

Lifting his hand, the room falls silent. After clearing his throat, Vasilakos begins to speak. “As many of you know, a very serious incident occurred just outside this building yesterday morning. I've asked you all here so I can make a short statement about what happened, thus preventing the need for speculation or inaccuracy.” Alexis holds their attention like someone conducting an orchestra. His authority seems unquestionable. “It would appear that there was an attempt to either assassinate me or kidnap me, I'm not sure which.” He pauses theatrically. “A well planned trap was set, blocking my vehicle into a very confined space in the narrow road just to the side of this building. Without warning, my car…-driven by my personal bodyguard, was fired on at close quarters, multiple times, by unknown criminals. If it hadn't of been for the quick thinking of my driver I would probably not be here speaking to you today.

I expect you have some things you wish to ask me, however I only have a short amount of time available, so please make each of your questions count gentlemen.” Alexis dabs his sweaty brow with a white, silk handkerchief. Only once he's put it away does he look up, and raising his bushy eyebrows he selects someone near the front to ask the first question.

“Nigel Templeton, BBC News” a familiar looking face announces. “Did you receive any warnings before the incident, -anything that might explain who might have wanted to carry out such an attack?”

“I have no idea why such a cowardly personal attack was orchestrated against me.” Alexis seems to be forgetting that his driver had also been shot at. He pauses and then says as earnestly as he can. “I am a respected businessman. I have no idea why someone would want to cause me harm.” John can't help thinking that his acting and delivery in front of the camera is similar to that of a statesman, it's clearly something he practices, but in trying too hard and by overplaying his lines it all ends up being nauseatingly false.

Hands go up again, and Alexis points out another individual. “William McCormack, Daily Telegraph -How did your car manage to remain driveable after being hit by so bullets?”

“Despite my initial protestations, my security advisor insisted on me using a car that was capable of offering me the protection afforded to people of similar status.” –John could plainly see that Vasilakos was inferring that he was a man in the same league as presidents and heads of state. He's most definitely using the opportunity to ‘big himself up' to the captive audience. “I am very grateful now that I had the wisdom to listen to that advice.”

“Phil Austin, Sky News -Has this been the first time you have been involved in a life threatening situation of this kind?”

“This is the first time, and I am sure it will be the last time…that anyone will try to endanger my life.” John muses, -Alexis has tried to make it sound as if he is mystified why anyone would wish to harm him, when in all probability there is every chance he knows exactly how many enemies he has and which one of them is behind the shooting.