“Hey turkey brain,” Luther said and slapped Robert on the back. “Did you hear what I just said?”
The combination of Luther’s reprimand and his spanking caused Robert’s philosophical questioning to yield quickly and completely to the most powerful and basic of human instincts – job preservation and shelter for his family – in the form of a $3 million sea captain’s house on the island of Martha’s Vineyard.
“Thank you for the order,” Robert replied. “I’ll put you in the book for $250 million.”
“Now let’s go have a high-protein strawberry daiquiri,” Luther said as he rose from the sunken chair. “I want to introduce you to my new wife.”
“I’m buying,” Robert said.
“Great,” Luther said. “There’s just one little detail I forgot to mention.”
“What’s that?” Robert asked.
“The only way in Hades I will invest a single penny in Viking Tankers is if Mr. Jacobsen agrees not to take any money out of the business until I have received my entire $250 million back in the form of dividends,” Luther said. “And if Viking Tankers gets liquidated by its lenders, God forbid, I want to get paid back in full before Coco sees a nickel. Got it?”
“Hold on a minute,” Robert choked. “Are you saying you want preferred shares in Viking Tankers?”
“Of course I want preferred shares; do you think I’m some kind of doped-up dummy, Fairchild? I have no idea what this company is really worth which means my best chance of success is by putting the man in charge, Coco Jacobsen, underneath me in the cash flow waterfall. The less I understand an investment, the more I demand from it.”
And the more you demand from it, Robert thought, the less likely you are to actually get it.
“So do we have a deal?” Luther asked.
Nothing was easy in the deal business. Robert knew that Coco was going to be furious when Robert told him what Luther was demanding, but he also knew shipowners rarely turned down the offer of a huge pile of money irrespective of the terms. It was like Coco Jacobsen always said: possession was nine-tenths of the law and when it came to ships and money, shipowners possessed both.
“It’s a deal,” Robert said and shook Luther’s soft hand.
Chapter 15
The Scream
One of three known paintings of “The Scream” by Norwegian Edvard Munch was purchased in 1937 by Thomas Olsen, whose grandfather founded the shipping company Fred Olsen & Co. Thomas had known Munch through his childhood days learning to sail in Hvitsten, Norway where Munch was establishing himself as a painter. Munch even painted Olsen’s wife in the summer of 1932. When Munch’s work was labeled as degenerate by the Nazis, Thomas Olsen struck a deal with the Germans in 1937 to save seventy-one pieces of Munch’s work and hid thirty-five of his personal Munch paintings in a hay barn until the end of the war. Thomas’ son Petter Olsen has continued preserving the artist’s work and legacy and purchased Munch’s property in Hvitsten and plans to turn it into a museum.
Coco Jacobsen downed a pair of double espressos without taking his eyes off the uniformed police officers standing at the entrance of the duty free lounge in Oslo’s Gardermoen Airport.
As confident as the shipowner was in the talents of Wade Water and his army of legal eagles in London and New York, he couldn’t help but wonder if he was about to be arrested, publically lambasted – and handed a bill for $50 million to get out of jail.
“Relax, Coco,” Wade Waters said when he observed his client looking exceedingly tense. “You are safe here in the Duty Free Zone.”
“Ja, but Wade, are you absolutely certain this legal theory of yours will work,” Coco whispered with an unsteadiness that was not characteristic of the hard charging tanker tycoon. “I am too good looking to spend time in a Norwegian jail.”
“I, um, I think so,” Wade stammered.
“You what!” Coco exploded with such fury that the two officers each involuntarily reached for the most deadly weapon in their possession – their walkie-talkies. “What do you mean, you think so! You told me this plan was bulletproof!”
While experimenting with any new legal theory was stressful, the process of beta testing Coco’s groundbreaking tax mitigation strategy was downright torturous.
“Coco, we both know that nothing in this world is certain except death and…” Wade paused when he recognized his poor judgment in selecting that particular quote from Benjamin Franklin.
“…Taxes!” Coco wailed the final word of the famous sentence and threw his head onto the table. “Argh!”
Although Coco’s taxation predicament wasn’t unusual among shipowners, his strategy for dealing with it was. Although he had often overheard his mentor, Hilmar Reksten, bemoaning Norway’s tax rates – as high as 65% when you tallied-up income tax, property tax and wealth tax – Coco had never paid much attention. Taxation, even excessive taxation, didn’t matter much to a seventh-grade dropout who earned minimum wage for sweeping telexes off the floor at night.
But ten years later, after Coco had started chartering-in ships for his own account at age twenty-five and using them to fulfill the Contracts of Affreightment he’d arranged with hardscrabble oil companies in fringe nations, Coco’s fortunes changed. Coincidental political instability in Iran, Nigeria and Syria caused charter rates to soar and Coco made his first $100 million in profit almost overnight by trading the rented tankers in the blistering spot market. Without a moment’s hesitation, the Norwegian deployed the freshly minted cash by buying the eighteen-vessel fleet of the Latvian national oil company.
The bold acquisition of the Latvian fleet proved woefully ill-timed. In fact, before Coco had even accepted delivery of the final ship the charter market had cooled and tanker values had plummeted. Just as Coco was sifting through the wreckage of the deal, trying to figure out what to do with the tankers he had been forced to lay-up in the fjord near Molde, the Norwegian taxing authority presented him a bill for $50 million.
Although Coco had not reported the offshore income earned during the short-lived tanker boom, his arch-rivals at Knut Shipping in Bergen graciously had. They supplied the government with a tidy dossier of forensic evidence that documented Coco’s gains – from vessel sale and purchase reports to a list of charter fixtures on the Viking Tankers fleet.
“Ja, but this makes no sense!” Coco shrieked when he opened the certified envelope while still in the presence of the courier who handed it to him at the bar of D/S Louise. “How can I possibly owe taxes if I don’t have any money?”
Coco had been guided by the faulty, albeit reasonable, logic that reinvesting profits into more ships was the same thing as spending money on deductible business expenses. Once the relevant accounting principles had been explained to him, that items added to the balance sheet as assets could not be considered expenses, Coco found himself in an unpleasant situation shared by many shipping men: long on iron, short of cash and unable to sell ships because their value had slumped below their loan balance.
After two years of unsuccessfully attempting to collect Coco’s unpaid tax bill, the Norwegian government undertook an intense forensic investigation into the long strand of offshore “mailbox” companies that formed the DNA of Viking Tankers. The formal report presented to the country’s Parliament concluded precisely what the taxing authority had feared; Coco Jacobsen had not only replicated the spot market chartering strategy of his mentor Hilmar Reksten, he had adopted the man’s byzantine corporate structure as well.
The clarity about Coco’s opacity brought to light a dark period in the history of Norwegian taxation of shipowners. Thirty years earlier the government had charged Hilmar with eight counts of tax fraud and went to work hunting down the $500 million Kroner that they believed he had collected from British Petroleum in the form of time charter payments.
After nearly twenty years of fruitless searching the government finally made a deal with Hilmar’s estate. In exchange for sixty million Kroner in cash and the
title to a health center on the Canary Island of Lanzarote worth just twelve million Kroner the charges would be dropped. Challenging the notion that you can’t take it with you when you go, the legendary shipowner, who had amassed more wealth during his lifetime than any Norwegian in history, was declared bankrupt after his death – leaving behind more buried treasure than Captain Kidd.
Loath to repeat the embarrassing Reksten Incident the Norwegian taxman made Coco Jacobsen an offer he literally couldn’t afford to refuse; the constitutional monarchy agreed to forgive the $50 million unpaid tax bill provided that Coco agreed to publicly renounce his citizenship. The Norwegians were sorry to lose the revenue but almost everyone agreed it was a small price to pay for ridding their mostly peaceful, oil-rich kingdom of an economic de-stabilizer like Coco Jacobsen.
That Coco’s subsequent success would cause him to become one of the single largest employers of Norwegian people, and account for a whopping 5% of Norway’s GDP, was an irony that went unnoticed by almost everyone, including Coco.
The major only problem with Coco’s devil’s bargain was that he was permitted to spend no more than sixty days in-country or be subject to the unpaid tax – and sixty days wasn’t enough time to satisfy his love of country. He longed to spend time in the lovely port town of Bergen where he had first worked for Hilmar. He dreamed of being back in the mountains of Geilo where his mother had taught him to cross-country ski under the light of the full moon and ached to return to the west coast village of Ostervold where he had said goodbye to his papa when he set out on that ill-fated pelagic fishing trip. He also loved the beautiful village of Oslo, which was still one of the best places in the world from which to run an oil tanker empire thanks to a robust community of highly talented shipping professionals. The $50 million tax bill hung over Coco’s head like the Sword of Damocles, suspended by a single strand of horse hair.
Never to be vanquished, Coco mushed Wade Water and his legion of lawyers like a team of sled dogs to locate a loophole in his plea bargain that would allow him to be present in Norway for more than sixty days without being liable for tax. Working around the clock for weeks, his legal team reached an elegant if unproven solution; if Coco were to conduct his business meetings in the Duty Free area of the Oslo International Airport, the Norwegian customs officials wouldn’t stamp his passport. If the Norwegian customs officials didn’t stamp his passport, his counselors advised, Coco couldn’t officially be deemed to have been in-country. Voila.
Coco was now one hour into testing out the novel legal theory and so far things were going to plan. When the Twitter message went out that Coco’s G-5, an aircraft festooned with an image of Norwegian explorer Thor Heyerdahl, was approaching Oslo more than one hundred shipping professionals had shuffled into the Centrum station and boarded the Flytoget train to the airport clutching budget tickets to Stockholm they would never use; they bought the tickets purely so they could pass through passport control and enter the lounge in which Coco would be doing his wheeling and dealing.
Just when Coco thought his stress level couldn’t get any higher one of his tiny cell phones began chirping and flashing the name “Kraken” as it sat among the dozens of tiny espresso cups and empty bottles of Ringnes lager. Rocky DuBois was calling Coco directly for the first time in a decade and the tanker boss didn’t need to answer the phone to know he was about to get royally hosed.
As he stared at the phone with eyes bulging and mouth agape, neither Coco nor any of the advisors that fed off him like pilot fish on a whale failed to recognize his resemblance to the most famous of Norwegian paintings, The Scream by Edvard Munch. And while thoughts of fine art might have been soothing to some the thought only stoked Coco’s fury as he recalled the evening a decade earlier when another Norwegian (a twenty-five-year-old supply boat princeling from Ålesund, no less!) had outbid him for the particular painting at a Sotheby’s auction.
Before Coco had reached for his cell phone, Magnus Magnusen quickly refilled the tanker king’s aquavit and Peder Hansen pushed a bottle of Ringnes toward him as a chaser. It was the work of an experienced triage team and the moment the magnate refused to take a sip of either beverage the men exchanged the shared concern of medical professionals faced with a grim prognosis. Something must be seriously wrong with the patient.
“Rocky, my friend,” Coco cried out with false enthusiasm and a psychotically exaggerated smile. “How are you?”
“Call me Mr. DuBois,” Rocky said into the speakerphone as he collapsed onto the Italian leather bucket seat of his new navy blue Mercedes sedan and closed his eyes – a vehicle with the license plate IGOTGAS.
The CEO of American Refining Corporation had enjoyed two Mt. Gay and tonics at lunch and was feeling nicely buzzed. Consuming hard alcohol during the day was an indulgence he rarely allowed himself, but Rocky figured it was time to start easing into the rituals that would become so important in his upcoming retirement. He had five decades’ worth of unwinding to do.
“What do you want?” Coco snarled at the Houstonian.
“Looks like you got yourself between a Rocky and a hard place,” the Texan laughed over the sound of “My Way,” the Frank Sinatra anthem to self-reliance drifting from the network of twenty-eight German speakers.
“Don’t frack with me,” Coco replied.
“Good one,” Rocky said. “But we got a real problem.”
“There’s no such thing as a problem, only an opportunity,” Coco replied through grinding teeth even though he knew exactly what the oilman was referring to; Rocky was losing his shirt on the ten ships he time chartered from Robert Fairchild now that the tanker party was over.
“I’m afraid it’s not that simple, son,” Rocky said.
“Of course it is,” Coco said. “Shipping is a very simple business and my vessels are all performing to the specifications in the time charter agreements.”
“Yeah, well I’m afraid we’re going to have to frustrate those charters,” Rocky said as he adjusted several air-conditioner vents to cool the sunburn he’d gotten on the back nine at River Oaks.
“You can’t just walk away from the charters,” Coco said.
Coco’s already dark face ripened to the color of a plum while he listened to Rocky. First the man had tried to cheat him out of $64,000 of charter hire in Nigeria. Then he’d falsely accused him of crimes that prevented him from entering America. Now he was mugging him again! If Rocky defaulted on the ten time charters not only would Coco have forfeited the earnings he would have made during the tanker party, his IPO would be dead and he wouldn’t have the $500 million he needed to give the Greek.
“And why’s that, son?” Rocky laughed.
“Because those are legal obligations,” Coco said.
“Ha,” Rocky snorted. “Since when are you so concerned about the law?”
“Since you put me on the run from it,” Coco replied.
“You’re right, boy, those ten time charters are legal contracts but the only problem is that ART is very close to running out of money,” Rocky explained. “I don’t even know if ART has enough cash to make the next charter hire payment to you.”
“ART? Who is ART?” Coco asked and looked around but the team of advisors orbiting around him just shrugged their shoulders and exchanged puzzled glances. “And why does it matter if he’s running out of money; American Refining Corporation is an investment-grade company,” Coco said, repeating Robert Fairchild’s words even though he didn’t know exactly what they meant. “You’re a member of the Poor Standard!”
“Let’s be clear on something right now,” Rocky said. “American Refining Corporation is an investment-grade company and it is a proud member of the Standard & Poor’s 500 but the guarantor on your little time charters isn’t ARC…its ART.”
“Then get him on the phone!” Coco screamed. “I want to talk to ART!”
“I’m afraid that’s not possible,” Rocky said.
“Why?”
“W
ell, because ART doesn’t have any employees,” Rocky laughed. “ART stands for American Refining Transportation and it’s just one of those mailbox companies with no assets. It’s domiciled on some crazy little Caribbean island called St. Christopher. You ever even heard of that place?”
“No,” Coco said.
“Surely Mr. Fairchild analyzed the risk associated with having a counter party such as American Refining Transportation,” Rocky said. “Everyone knows I never offer a full corporate guarantee on shipping deals; there’s too much risk.”
“Mr. Fairchild did not mention that,” Coco said. He had assumed Robert Fairchild was smart enough to make sure the time charters were guaranteed by the same legal entity that held title to ARC’s assets; it was an exercise even a kindergartner would have known to perform and Fairchild missed it.
“Then it looks like I gotcha,” Rocky said.
“That’s just not right, Rocky,” Coco said, shaking his head back and forth. Like most people who made their living from the business of transacting, the Norwegian had a highly developed sense of what was fair. “You can’t just walk away from a deal without having a real reason.”
“Oh, I have plenty reasons,” Rocky said.
“Like what?” Coco challenged.
“Like the fact that my superintendent said the oil water separator on the Viking Alexandra has been disabled. And he said the engine room on that ship has more flashing lights than Las Vegas.”
“That’s not true!” Coco wailed like a wounded animal.
“My man said the Alexandra is real a pig,” Rocky added.
In a fit of love-struck bravado six months earlier, Coco had changed the name of his newest vessel to Viking Alexandra. It was the first time he’d ever broken the pattern of naming ships after characters in Homer’s Odyssey – an arrangement he and the Greek had dreamed up one night in Monaco – and he had clearly jinxed the ship.
Viking Raid Page 13
