The Money Makers (50 page)

Banderman nodded. He could imagine the conflict.

Most partners at Weinstein Lukes were divorced, or else their spouses had long since decided to remain wedded to the bonus cheques while looking elsewhere for love and sex. The relationships that worked best were those where both partners worked crazy hours for American banks and left the kids to be brought up by a succession of motherly British nannies. It screwed the kids up - but, hey, at least when they grew up they’d be able to afford the therapy.

‘What I wanted to ask you, Zack, is whether you felt able to take over Hal’s role permanently. We’ll find somebody else to take over the projects you’re doing with Amy-Lou, and you can devote yourself to tax stuff. Full-time, your show entirely.’

‘My show entirely? Gillingham’s job?’ Zack was delighted. If he had to choose between the Gillingham job and the quarter of a million bucks, he’d have chosen the tax job without a second thought. The quarter of a million was neither here nor there. The tax job was Zack’s passport to partnership and the key to his father’s fortune. ‘That’s absolutely fantastic, Dixon.’

‘D’you think you can handle it?’

‘Handle it? I’ve handled it for the last four months, haven’t I? Even when Hal was still here, I was running things. He showed up at the office, but it was me that ran the deals. Of course I can handle it.’

‘Good. In that case, I’d like you to start transferring all your remaining non-tax-related assignments to other people. I want you full-time on tax.’

‘Excluding Hatherleigh Pacific, right? I get to keep the Hatherleigh Pacific deal?’

‘Is that still alive? You were hired back in November as I remember.’

‘Yes, of course it’s alive,’ snapped Zack. ‘The company wants to wait for the price of South China to fall before going after it. They’re expecting bad news on the shipping market to depress the price.’

‘And has the price fallen?’

‘Not yet. It’s at forty-five bucks, and they want it to go to forty.’

Banderman raised an eyebrow. He didn’t believe the deal would happen. Zack breathed out through his nose and made an impatient gesture.

‘If they say it’ll go to forty, it will. These guys are very smart and they know their markets better than anyone. They’ll do the deal and they’ll do it with us.’

Banderman shrugged. He didn’t care. The Hatherleigh Pacific deal bore all the signs of an entanglement which would cost the bank a mound of work and bring in nothing at the end of it. But if Zack wanted to keep it that badly, then he could. It’d be something for him to learn from.

‘This guy Hatherleigh, he’s your father-in-law to be, right?’

‘Right.’

‘OK. Keep the deal. I wouldn’t want to spoil your family get-togethers.’

‘Thanks. There’s just one other thing,’ said Zack.

‘Yes?’

This was the moment Zack had been waiting for: the moment when Gillingham’s job was finally, definitely, irrevocably, his. Gillingham’s last great idea, the idea he’d had that sad morning when alcohol had finally mastered him, the idea that Zack had stolen with a smile before flinging its creator to the ocean floor - the idea’s time had come, with Zack secure in the knowledge that the glory would be his and his alone.

‘It’s to do with an idea I’ve had. Gillingham’s ideas were always tailored to suit each particular client. That was great for the client, but a lot of work for us. It would take us a day to think of an idea, a month to work out the details, then three months or more just to negotiate the contract. I want to get away from that. I want a tax idea which will fit everyone. I want to move from
haute couture
to ready-to-wear. I want to make a tax dodge so uniform that we just roll the contracts off the photocopier. I want the idea to be so simple that every salesman in the bank can sell it to every client.’

‘Ah! The Holy Grail, right? Hal used to talk about that too. He said there was a goldmine there, if you could only find it. Don’t spend too much time looking, Zack. Hal never found it, and he searched long and hard.’

‘Dixon, I’ve found it.’

‘You’ve what?’

‘I’ve found it, Dixon. There’s still a lot of legal work to be done, but I know it’ll work. The idea came to me in Hong Kong ...’

And Zack began to explain. The idea wasn’t his. It was Gillingham’s. It was a brilliant concept, a Holy Grail worthy of the name. But Gillingham wasn’t there to claim the glory. Gillingham had gone off on a four­month blinder, which had brought him once again to the verge of liver failure and an early grave. The threat of death had induced him to check into his old clinic, but recovery would be slow, and his stamina was less than it had been. Nobody would doubt that the idea was Zack’s.

Banderman was soon lost, but the details were immaterial. The important point was easy. Zack had found a way to let gamblers make a one-way bet. A certain type of financial bet - called a derivative - is like a bet on a horse race. If you win, you can double your money, or even more. If you lose, you lose. What Gillingham had found and Zack had stolen was a way to swing the odds in favour of the gambler. If you placed your bet through Zack’s tax loophole, your winnings would be tax-free, while if you lost, your loss could be offset against tax. Through this loophole the taxman would unwittingly subsidise gambling, and the bigger the bet, the bigger the subsidy.

Zack was talking about a completely legal tax dodge that could be sold through salesmen across the Far East to literally thousands of potential clients.

‘You got a name for this product?’

‘I call it RosEs,’ said Zack. ‘It stands for -’

‘Don’t tell me what it stands for. But I like the name.’

‘Dixon, I need you to make sure the bank throws its weight behind RosEs.’

‘Have you had the lawyers test to see if this dodge is solid?’

‘I’ve got opinions to say it’s bomb-proof in Hong Kong, Singapore, and Malaysia. I’ve got lawyers looking at the concept in six other Pacific Rim countries. So far, they’ve come up with no major objections. I expect the idea to work in every territory.’

‘Bomb-proof, huh? You send your legal opinions to our corporate lawyers in New York. If they’re happy, I’m happy. This has got to be squeaky clean, but as soon as our lawyers tell me it works, you’ll have my support. We’ll push your RosEs so hard, we’ll be growing ’em on the moon.’

Zack grinned. Banderman was the head of corporate finance in Europe. He wasn’t just a partner, he was one of the most powerful partners in the bank, and he never exaggerated. If he said the moon, you’d find RosEs on Jupiter.

‘Thank you,’ said Zack earnestly. ‘Thanks a lot, dungbrain.’

2

Another conference. Another yes decision.

This time it was a leasing company, Albion Leasing. It had borrowed a ton of money to buy equipment to lease to people, thus allowing it to borrow another ton of money to buy more equipment to lease to a whole lot more people. The game of musical chairs had been wonderful while it lasted, but one day the company’s salesmen ran short of sales, while the company’s accountants discovered that the mountain of debt had developed a nasty overhang. The inevitable happened. The debt mountain went into avalanche. Banks demanded their money. Albion couldn’t pay. Customers heard about the problems and took their business elsewhere. The trouble got worse.

Right now the Bank of England was banging heads together, trying to sort out a rescue plan. But meanwhile, true to form, the courageous banks were selling off their loans at huge discounts to anyone brave enough to buy. And, true to their form, Fiona, Ed Deane and Matthew scented a profit and were sniffing around.

There wasn’t any magic in their game plan. The Bank of England negotiations were going through a particularly fraught couple of weeks and some of the banks had lost their nerve. That’s common enough. Unlike the swashbuckling investment banks, high-street banks contain some of the world’s most timid people, the sort of people for whom adventure means a brightly coloured tie. When the going gets tough, these heroes squeak with fright and run for shelter. And, as they run, they lose all sense of proportion. They’re prepared to sell for forty pence in the pound what ought to be valued at sixty. Just because a loan’s gone bad doesn’t mean it’s worthless.

So Fiona, Ed and Matthew went mouse hunting. They called around town, seeing who squeaked loudest. They tossed out bits of cheese - letting it be known that they were interested in buying loans to Albion Leasing - and watched to see who came nibbling at their door.

Out came the mice, whiskers twitching. Different mice placed different values on the loans. Some wanted seventy pence in the pound. Others had no price in mind, they just wanted whatever they could get. Fiona, Ed and Matthew watched the rodents come and go, meanwhile conducting their own intensive research.

Right now, they needed to come to a decision. They agreed that the real value of the company loans was around fifty pence in the pound. If the Bank of England negotiations went well, the loans could be worth sixty. Meanwhile, they knew they had mice willing to sell out for between thirty-five and forty pence. The maths was simple and the team agreed without difficulty. They’d go for it. As usual, they wanted to bet big time to profit big time.

But first, Matthew had a call he needed to make, part of a well-practised routine.

‘Coffees?’

‘Great,’ said Fiona.

‘And an apple,’ said Deane. He still hadn’t forgiven Matthew for eating his last apple from his bonsai forest, and he took care to remind Matthew of it about twice a day, every day. Matthew had grovelled profusely, bought Deane a second dwarf apple tree, complete with half a dozen ripening apples, and by now considered himself entitled to ignore Deane’s grumbling.

‘You’re nuts,’ he said. ‘Isn’t he nuts, Fiona?’

‘He’s nuts ...’

‘There you go, you’re nuts ...’

‘... but you still shouldn’t have eaten his apple.’

‘You’re nuts too,’ said Matthew and went out for the coffees.

The streets were hot. Most people, like Matthew, were in shirt sleeves, their hot grey jackets, relics of a Victorian dress code, left behind them in the office. Matthew walked quickly. He came to the little alleyway and looked furtively around. He saw no one he recognised, though the streets were crowded and it was hard to tell. He ducked up the alleyway and came out into the little garden. It was nearly lunch time and the pub was already filling with people. Everywhere in the sunshine, office refugees sat on benches with sandwiches or stood round drinking under the tree.

Matthew hesitated. He preferred to be alone. How­ ever, it would be hard to find anywhere completely private and he needed to make his call fast.

He dialled the well-known number.

‘Good afternoon, James Belial speaking. How may I be of service?’

‘It’s Matthew Gradley. I want to check my account balance.’

‘Matthew, my dear fellow! One of my most fortunate clients! Truly blessed with the golden touch. Let me see.’ Matthew caught the sound of Belial hitting a few computer keys to get the right screen up. ‘Yes, indeed. Lady Luck rides with you, my friend. Your modest portfolio of sixty-eight thousand pounds has grown to a remarkable two hundred and eighty thousand in just a few months. Is it luck, or do you have a secret formula?’

Matthew ignored the obnoxious little man.

‘I want you to invest everything in Albion Leasing. Bonds not shares.’ Matthew gave a few more precise instructions. It is difficult for individuals to buy bank loans, but easy for them to buy bonds. There are a few exceptions, but generally speaking if bank loans go up in value then so do bonds. Matthew gave Belial detailed instructions. The ugly little man on the other end of the line repeated the instructions back clearly and precisely. Nobody was more disagreeable, but Matthew had to admit that his service was impeccable.

‘I must warn you, as always, that the investment you want to make carries an extremely high level of risk -’

‘I know. Just do it. I’ll call you back to confirm the trade in a couple of minutes.’

Matthew cut off Belial’s snickering voice, bought the coffees, phoned back, and got the confirmation he wanted. Switzerland International charged painfully dear commissions, but its traders seemed to be excellent and succeeded in buying whatever they needed to buy at a rate which was always fair and sometimes exceptional. This time, they seemed to have done their usual good job. Matthew barely thanked Belial and walked quickly back to the office.

‘How are our mice doing?’ he asked when he arrived.

‘No responses yet. They’re probably all out to lunch,’ said Deane.

‘You’re telling me.’

‘Now then, don’t be nasty.’

The afternoon drew on. Fiona repeated her calls. Still no answer. That was odd. Mice don’t generally take long lunch breaks, and right now there was an epidemic.

Eventually, at quarter to five, one of their chief mice called back. Fiona explained that Madison was willing to buy a substantial chunk of Albion debt at thirty-five pence in the pound. The offer, as always, was conditional on Madison having access to all the information that the existing lenders enjoyed.

From previous experience, Fiona expected to have her hand virtually nibbled off. Instead, she discovered that her mouse had turned into a tiger.