The Traitor (The Carnivia Trilogy) (20 page)

“But the reason credit swaps are seen as controversial is that there’s no need to hold any of the actual debt you’re insuring against. It’s a bit like buying fire insurance on your neighbour’s house: when does it turn into a gamble that his house really will burn down? There was a point where holding a few swaps as insurance turned into something quite different – a massive bet that Italy
would
default and the euro would plummet. The IOR weren’t alone in thinking that, of course. Many of the world’s largest hedge funds were betting the same way. Behind closed doors, Berlusconi was saying that debt default hadn’t been so very terrible for the Greeks, given what they’d been able to screw out of the rest of Europe in return. If he’d stayed in power, the value of the Vatican’s swaps would almost certainly have continued to rise. Instead of which, he was convicted of paying an underage belly dancer for sex and driven from office.”

Kat nodded. Few would forget the scenes during Berlusconi’s resignation, when jubilant crowds had sung the Hallelujah Chorus outside his office. An austerity package had been passed within a month.

“So then the Vatican was left holding what bankers call a ‘toxic asset’,” Speicher continued. “Something listed on the books as massively valuable, but which in reality had become a huge, open-ended liability. Technically, they were probably bankrupt. In similar situations, of course, European governments have created so-called ‘bad banks’ to hold the assets, to keep them from dragging down the rest of the company. But that was hardly an option for the Vatican. So they did the next best thing – they looked for someone to offload the swaps onto.”

“You?” Flavio said.

Speicher nodded.

“But why would your bank want these assets, if they’re so toxic?” Kat said, puzzled.

“We wouldn’t,” Speicher said. “But we –
I
– knew nothing about it. Only Cassandre, the Vatican’s link man, knew what was going on. He formed a shell company, owned fifty-fifty by the IOR and ourselves, to which the IOR sold whatever swaps they couldn’t close. That company, which was based in Liechtenstein, then sold them to another shell company in a different tax haven, this time owned forty per cent by the IOR and sixty per cent by us. And so it went on… Multiple transactions later, the assets were wholly in our name, and off the IOR’s balance sheet.”

“And in return?” Flavio asked, his pen moving at speed across his pad. “I assume there must have been something in it for Cassandre.”

“In return, the IOR invested in another set of shell companies controlled by Cassandre personally. A payoff, in other words.”

“Is the money still there?”

Speicher shook his head. “Cassandre used the funds to make highly speculative investments. Unfortunately, he wasn’t nearly as good an investment manager as he was a crook. He lost the lot.”

“How did you discover all this?” Kat asked.

“As part of these manoeuvres, Cassandre opened thousands of proxy accounts within the bank.” Speicher frowned. “I still don’t know why, to be honest. Each account has been numbered and issued with overdraft facilities, chequebooks and so on. But they’ve not been used. Anyway, one of the assistants in our back office realised something irregular was happening and drew it to my attention. When I looked into it, it became clear that Cassandre had been bypassing the bank’s usual processes for years. When I had the evidence, I called him to my office and confronted him.”

“What was his reaction?”

“He tried to bluster it out. Said the swaps were all part of some complicated financial strategy that would pay huge dividends to the bank very soon. I told him that was nonsense. Europe has turned the corner now. Only a very few cranks and doom-mongers are still betting the opposite way.” He sighed. “I knew I had to fire him. But I also knew that it would almost certainly mean the end of the bank. You can’t just sit on something like this – you’re required to tell the regulators, who would conduct an investigation. That in turn would spook our institutional depositors. Inevitably, we would end up being swallowed by some larger bank, one better able to accommodate the risk. It would be the end of everything I’ve worked for. That was what Cassandre was betting on, I think – that these assets were
so
toxic, I’d have no choice but to hush up their existence.”

“And?” Flavio said. “Did you?”

Speicher shook his head. “I told Cassandre he was suspended, and called an emergency board meeting.”

“That was the board meeting you mentioned to me,” Kat recalled. “The last time you saw Cassandre alive.”

The banker nodded. “But not actually the last time I spoke to him. I phoned him next morning to tell him the board’s decision – that he had to go immediately. By that time he was in a state of high panic. He told me he had a plan. That he now had protection on both sides, whatever that meant; that whatever happened, the bank was safe. He wanted more time, just a few more weeks, and then it would all come good. I told him he was raving and terminated the conversation. Frankly, the man disgusted me. He didn’t even have the decency to face up to what he’d done.”

Kat looked back through her notes, trying to get her head round all this. “So your shareholders – the board – must have been furious. Will they lose money, if the bank goes under?” She glanced at Flavio. “That could give one of them a motive to have Cassandre killed, couldn’t it?”

“The bank isn’t going under,” Speicher said.

Kat frowned. “I thought you said…”

“I said it would almost certainly bring down the bank. I didn’t say it was a foregone conclusion. The reason I called the board meeting was in the hope that one of our existing shareholders might offer us a rescue package.”

“And that’s what happened?” Flavio asked. “You have a white knight?”

Speicher nodded. “One of our shareholders, Count Tignelli, has agreed to inject over half a billion euros – enough to cover all our liabilities, should the worst happen. In effect, he’s buying us up.”

So Tignelli was involved with Cassandre and the bank after all. She’d been certain of it, but at this confirmation she’d been right, Kat felt a familiar throb of excitement. “You didn’t mention this when I asked you about him before,” she said accusingly.

Speicher looked shamefaced. “Forgive me, Captain, but I was put on the spot and I wasn’t sure how much I should tell you. Tignelli had made a verbal agreement to put up the necessary capital, but it seemed to me that the deal could easily be derailed by a scandal and a police investigation.”

“You called him,” Kat realised. “That’s how he knew I was coming to La Grazia. Because you’d warned him.”

“I had to tell him Cassandre was dead. Naturally I also told him that the Carabinieri were treating it as murder.”

“How did he react?” Flavio asked.

Speicher frowned. “I was phoning to reassure him, you see. I thought I could break the news about Cassandre in such a way that it would seem like a problem that had fortuitously been solved, rather than one that was being created.”

“And?”

Speicher said slowly, “Tignelli’s reply was, ‘Well, that’s one less loose end to be dealt with, isn’t it?’ Almost as if he were the one reassuring
me
.”

Flavio and Kat exchanged glances.

“Is there a possibility that this was a scheme cooked up by Cassandre and Tignelli between them?” Kat asked. “We’re almost certain they were members of the same illegal Masonic lodge. Could Cassandre have deliberately lowered the value of the bank, so that Tignelli could buy it up cheap? And that Cassandre was disposed of, when he’d outlived his usefulness?”

“It’s crossed my mind,” Speicher said. “But the obvious objection to that is, Tignelli
hasn’t
got it cheap. He’s pouring a huge amount of money into an institution burdened with worthless liabilities. Why on earth would he do that, if he didn’t have to?”

“An honourable man,” Flavio said when Speicher had left them.

Kat nodded. “It’s easy to forget, isn’t it, that not all money men are crooks. For every Cassandre there are probably a dozen Speichers.”

She got to her feet and crossed to the window. Below her a
topa
, a “rat”, a flat-bottomed delivery boat, chugged along the
rio
, its deck stacked high with groceries: tins of Bassano asparagus and San Marzano tomatoes, nappies, and the phosphate-free detergents that were supposed to protect the fragile ecology of the lagoon. The man at the tiller steered it one-handed, with the deftness of a Venetian who had spent all his life manoeuvring these crowded waterways.

“Speicher clearly didn’t know about Cassandre’s links with the intelligence services,” she said. “I wonder if that was the escape plan Cassandre was talking about – a desperate attempt to sell out whatever it was the Masons in the black lodge were up to, and buy himself protection that way?”

“He was clearly a man without loyalties, that’s for sure.” Flavio came and stood next to her. His arm brushed hers, and she felt the tiny surge of emotion and endorphins that his physical proximity always engendered: a swell of affection, a tiny wriggle of lust. “Just as Tignelli is clearly a man without scruples.”

“Is there any way this could relate to the military training Holly saw?” Kat asked.

Flavio turned back to the room, frowning. “I can just about buy that Tignelli’s got some complicated scheme that involves taking over Speicher’s bank. I can even buy that Cassandre tried to sell him out, and got himself killed as a result. But military training? Plots dating back to the Cold War? Your friend’s grasping at shadows. Our own investigation is complicated enough, without trying to link it to fantasies.”

Kat said nothing. It disturbed her that, far from becoming immediate friends and allies, Flavio and Holly seemed to have taken an instant dislike to each other. For his part, Flavio clearly thought that Holly was hysterical. He’d told her bluntly that they’d discuss her theories only when she had some evidence, in a tone which made it apparent he thought that was unlikely to happen any time soon.

Kat had waited until her friend had gone before patiently pointing out that Holly was just beginning to entertain a possibility that shattered her entire world view; one that meant re-examining every loyalty and principle she had.

Holly, meanwhile, had been startled to realise how serious the relationship with Flavio was. “What is it with you and sleeping with your bosses?” she’d said incredulously when she’d called Kat later. “I go away for a while and when I come back you’re at it again. As if that one mistake with Aldo Piola wasn’t enough.”

“I’m not actually sleeping with my boss this time,” Kat had pointed out. She couldn’t help being a little irked at the implication that she was prioritising a selfish relationship with Flavio over loyalty to her friend – not least because there was more than a grain of truth in it.

“Only your prosecutor,” Holly had retorted. “How’s that going to look in court? It’ll undermine our whole case.”

“‘Our’ case? We don’t even have a case yet. What do you want me to do? Drop him? That’ll hardly help you to find out what happened to your father.”

“I just think you might be blinded by your feelings, that’s all,” Holly said darkly.

And you’re not?
Kat had thought. But she’d said only, “Give Flavio a chance, will you?”

To Flavio she said, “Give Holly the benefit of the doubt, won’t you? At least for a little while. Even if she doesn’t come up with anything, we’ve lost nothing by listening to her.”

“For your sake, my love. But you’ve already got me chasing after one wild conspiracy. Can we try not to add another to the list?”

“Of course. Anyway, now that we’ve got confirmation that Tignelli was involved with Cassandre and the bank, I think it’s time to increase the pressure. Make him think we know more than we do, and that we’re closing in. I read that he’s one of the sponsors of the grand reopening of the Imperial Apartments at the Ala Napoleonica. I’m going to go along and try to rattle his cage.”

T
HE
WOMEN
’
S
PRISON
in the small town of Rovigo was a grim, high-walled building in a run-down suburb beyond the train station. The walls were made so high, Holly had read, after an episode in 1982 when four women awaiting trial on terrorist offences had escaped. Accomplices blasted a hole in the wall, tossed machine guns to the women inside, and kept the guards at bay with automatic fire. Three had later been recaptured, though in one case it had taken over ten years.

That was Carole Tataro, the woman she was there to visit. The same woman who had been part of the Red Brigades gang that kidnapped Daniele Barbo.

Many of Tataro’s former comrades had since turned
pentito
and incriminated others in return for lighter sentences. But either because Carole had been amongst the last to be captured, or because she still held firm to the ideology of her youth, she hadn’t been one of them. According to what Holly had read online, Tataro had trained in prison as a paralegal and now campaigned against overcrowding within the penal system.

Inside, the place stank of disinfectant and institutional food, and the corridors had the cavernous, echoey quality of a busy train station. Holly was taken to a small visitors’ room, itself little bigger than a cell.

The woman who was shown in a few minutes later was surprisingly petite. Next to the overweight female guard, she seemed frail and almost childlike. It was hard to believe she had once fired an Uzi or hurled petrol bombs at policemen.

“Thank you for seeing me,” Holly said, extending her hand.

Carole Tataro sat down without shaking it. “I never refuse a meeting. Talking to outsiders keeps my brain sharp. But I have to tell you that if I did refuse anyone, American army officers would be high on my list.”

“May I ask why?”

The other woman shrugged. “There are over a hundred US military installations in Italy – more per capita than almost any other country in the world. And Italy pays more towards their upkeep than any other country. Over thirty per cent of the running costs, plus generous tax breaks and provisions to pay for so-called ‘improvements’ should you ever leave. You’re like leeches on our economy.” She considered. “No, not leeches. Leeches can be burnt off with a cigarette. You’re more like a cancer.” She spoke calmly, her dark eyes fixed on the wall behind Holly’s head. It struck Holly that her speech patterns were not unlike Daniele’s – strangely uninflected and monotonous.