But it’s a classic case of rubbish in, rubbish out. The best-paid people in the firm – and therefore the smartest, hungriest and greediest – are the traders. In order to do the trades they want, they need to present what they’re planning to do to some of the worst-paid people – the Risk Management department – and get their sign-off. No smart, hungry, ambitious investment banker ever voluntarily went into risk management. So when they come up against each other, guess who wins.
The real reason for having a Risk Management department is window dressing to keep the regulators away. We don’t want anyone thinking we’re not running a sensibly organised, prudent and properly controlled financial institution. Luckily the regulators are paid even less than Risk Management, so guess who wins that one.
Harden clears his throat. He’s late forties, balding, overweight, has a couple of kids halfway through school and a large mortgage on his dream home in the country. He has a lot to lose, and unless he says something spectacular in the next thirty seconds the guy is toast. He knows it, I know it, and everyone else in the room knows it.
‘I … it wasn’t a normal situation …’
‘You can fucking say that again.’ I growl the words at him, my nostrils flaring, my rage barely under control. Actually, part of me wants to laugh out loud at the whole absurd situation. Billions. We think we’ve lost billions. And it’s not as if this motherfucker actually stole it. He bet it – repeatedly – trying to be a hero, lost it – repeatedly – and covered it up. How stupid is that?
Well, on reflection, it’s probably quite clever. Maybe he should be head of Risk Management. He can obviously work the systems. That’s what comes of appointing someone from the back office.
Naturally I want to kill the motherfucker.
Harden clears his throat for the second time, summoning up courage, leaning forward to try to cover the sweat stains spreading across his shirt so fast they’re soon going to meet in the middle.
‘If we were talking normal risk positions, we’d have had alarm bells going off the moment he went over his usual risk limits.’ He stares across the table at another middle-aged Brit, Norman Sanders, head of the trading desk. Put on your body armour, Norman. ‘From a systems standpoint, I have total confidence in the integrity of the processes we followed.’
He’s still looking at Norman, who sits back in his seat and fixes John Harden with an icy stare. I feel like shouting ‘Incoming!’ but I know I don’t need to.
Harden goes on: ‘This is really a management issue. The systems worked. The management didn’t.’ Ouch. The little man bites back. The head of Risk Management is going for the jugular of the head of a major trading desk. Luxembourg invades France (bad example: they’d probably win). Cuba invades America. Georgia invades Russia.
I love this stuff. I lean forward, my anger morphing spectacularly into curiosity. ‘What do you mean?’
‘I mean that bogus trading accounts were set up with so-called investing institutions – whom the head of the desk should have known, given the size of their trades – and massive volumes of business were done. Improbably huge volumes. Sometimes these new accounts were half the market. One day last week one of these new accounts did more volume than Hardman Stoney, Schleppenheim and Princes combined. Hello? Didn’t anyone wake up and smell the coffee?’
‘Well, certainly not you, you bastard.’ It may be 2 a.m., but Norman Sanders is wide awake. ‘You wouldn’t know a bogus trade if it bit you on the arse. You and your fucking bean counters contribute nothing, control nothing and know nothing. The people at the sharp end …’ He looks around to the other senior traders, as if expecting support. Naturally they stare at the papers on the table in front of them. ‘The people at the sharp end understand that in a high-pressure environment, with markets moving, huge volumes going through and the action unfolding second by second, you trust your team and you trust the systems. Like I said. We’re at the sharp end. Risk Management have the luxury of standing back and taking stock. That’s what they’re for. That’s what they’re meant to do and we count on them. And when they don’t sound the alarm bells, we trust them.’ He stares belligerently at Harden and clenches his fists. ‘What else are they for?’
Harden tenses and looks around like a cornered beast. He’s breathing heavily and his brow is glossy with perspiration. It’s time for me to intervene before it gets physical. For once I’m actually interested. Involved. Thank you, God. This definitely is not boring.
‘Gentlemen …’ I love that opening. It suggests a degree of maturity, calmness and detachment that someone as shallow, impatient and greedy as me could never truly muster, and at the same time imposes a kind of temporary order on the people gathered round the table – as if labelling them as gentlemen briefly creates a behavioural constraint on whatever it is they might otherwise do. Particularly to Harden.
‘Gentlemen, there is not going to be an official scapegoat from tonight’s meeting.’ Harden almost collapses in relief. ‘This motherfucker created bogus client accounts, ran real trades through them and, when they went wrong, created more bogus client accounts and ran fake counter-balancing trades through them, so the books balanced and we never noticed what was happening, and for weeks – months, in fact – he ran rings around us. To my mind there’s only one thing to do.’
They all stare at me, looking for The Answer. Christ, these guys are unimpressive.
‘Meet him.’ I smile around the room. ‘I don’t even know the guy. I want to meet him, and then I want to bury him. Along with whoever else is responsible for this mess.’
Now they’re really scared.
JEAN-MICHEL Caudalie is tall. I’m relatively short. This is a problem. Not for me, but for him.
Because it means I’m going to make him cry.
He’s sitting in a meeting room, facing me across a large glass-topped conference table. His boss, Norman Sanders, and John Harden, the head of Risk Management, are flanking me. Paul Ryan is sitting at the end of the table. We’re all staring at the tall guy, oozing hostility and resentment. He might have single-handedly wiped out the entire bonus pool for the coming year. He might have brought the entire firm down – we don’t even know yet, because we haven’t begun to unwind some of the more exotic derivative trades he put on to hide his tracks and we need his help to do so. Which means he’s in an unusually strong position.
He looks exhausted, as well he might after living with the burden of what he was doing for weeks on end as the losses multiplied and he had to keep rolling the dice for ever larger stakes.
I’ve got his personnel records in front of me. He comes from a small town near Lyon, has a mediocre academic record but an English mother, and so he was raised bilingually. That got him a ticket to London and a job in Grossbank’s French equity settlement team. His enthusiasm, positive attitude and a rare rapport with a supportive boss got him his big break and a trial period on a trading desk, where I’ll bet his imposing height and Gallic charm helped swing things his way. At least up to now.
As far as I’m concerned he’s not just guilty of potentially bringing down the firm – my firm – but he’s also tall and French, and that’s a problem.
He’s insisting he won’t say a word until his lawyer arrives. Fuck that. I’ve come prepared for this piece of shit.
I have my briefcase on the floor beside my chair. I reach down for it and place it on the table in front of me, opening it so that he can’t see inside. I turn to the others.
‘Leave the room, please. You know what to do.’
They’re taken aback – they have no idea what to do – but nod and leave silently, still staring malevolently at our nemesis.
When the door closes behind them, I place a sachet of white powder on the glass table. His eyes widen. I pour out a couple of lines, then take a fifty-pound note from my wallet, roll it up and use it to take a loud, long snort up each nostril.
He points at the remaining powder on the glass tabletop. ‘I-is that cocaine?’
‘No. I’m a hay fever sufferer. It’s prescription medicine. And don’t ever say cocaine. You can say “C” or Charlie, or white, or blow. OK?’
‘OK.’
I relax back in my seat. ‘Aaaaaah … I needed that.’ I nod at the remaining powder. A tremor runs through me and I know from experience that my pupils are massively dilated. ‘You want some? Go ahead. It’ll help your hay fever.’
He shrugs. ‘I … I …’ He looks helpless, unsure what to do – which is when I reach into my briefcase and pull out a snub-nosed .38 revolver and place it on the table in front of me. He gasps and looks as if he’s about to leap up and run from the room.
I nod towards the door. ‘Locked. I told them to.’
‘Th–they …?’
‘This is between you and me. Your career and mine. Your life and mine.’ I speak very slowly, almost absent-mindedly, as if my thoughts are elsewhere and I really don’t care what’s going on here. I pick up the revolver and turn the chamber leisurely, making a show of looking inside. He’s staring, his face sticky with perspiration. I look up and face him again. ‘One round.’ I close the chamber and spin it. ‘You’ve brought down the entire fucking bank. Did you know that?’
‘I … it can’t be true. Honestly. The trades I did … many of them were hedged. Really.’
I pause before replying, and when I do answer I speak in a tired, languid voice, so quiet that he has to strain to hear me.
‘I’m not sure I even care any more. Do you know how empty my life is? How meaningless?’
He shrugs his shoulders, unsure what to say. I guess this may be the first time in his life he’s been left alone in a locked room with a suicidal whacko armed with a revolver.
I point at my heart. ‘Deep inside me, in my heart, my mind, my soul, there’s just darkness. A great big fucking hole.’ I lift the revolver and his eyes fix on it. ‘And then there’s you.’
‘Me?’
‘I think you may have finally released me.’
‘Released you?’
I nod. ‘By what you did. Ending it all.’
‘B-but I haven’t ended it. Really, you must trust me. There’s no need to –’
I cut him off. ‘How do we know when you won’t talk to us? When you say you won’t cooperate without indemnity from the bank and a legal agreement? I can’t believe you. I don’t want to believe you. In fact I want to thank you. You’ve helped to bring it all to an end for me. It’s very close to being over.’ I wave my hands around at the conference room with its splendid corporate art, its wood-panelled walls, its plush carpets. ‘Everything. All over …’
I raise the revolver, place it next to my head and squeeze the trigger. He screams ‘Nooooo …!’ but there’s just an empty click.
I sigh, half disappointed. ‘One down. Five to go. Your turn.’ Before he can say anything I turn the gun on him and squeeze the trigger.
‘NOOOOO …!’ Too late, he dives sideways, landing in a heap on the floor, and tries to scramble under the glass-topped table, knocking over his chair.
Another click.
I wait, enjoying the sound of his breathless panting. ‘Y-you’re mad. Please, don’t do this.’
I’m smiling now. ‘Jean-Michel – do you mind if I call you Jean-Michel? Do you know what? I’m really not bored any more. This is better than drugs … better even than sex. We’re alive, Jean-Michel, and it feels real.’ I whisper the words hoarsely, and he looks utterly terrified.
‘S-so let’s both live. We can. I can tell you all about the trades I did, the passwords, the account names, everything. And then we can both live.’ He’s almost tripping over the words in his haste, peering up from the floor, looking at me anxiously with only the thick glass of the tabletop separating us.
I shake my head. ‘Nah.’ I raise the revolver, place it at my temple and squeeze the trigger. I hear a sharp intake of breath from beneath the table and he closes his eyes.
Click.
‘Oh God, no, please no, please don’t do this.’
I stare at him, puzzled, and slowly point the revolver towards him. ‘Why not?’
‘Because I’ll help you. I have a disc. All the trades. The bogus ones. I can work with you to unwind the positions. I know where everything is. It’s crazy, it runs to billions, but it won’t break the bank. It isn’t worth either of us dying for …’ He’s got tears in his eyes now. I love tears. Especially from really big guys. Big guys cry easily and that’s important for us little guys to know. Anyway, he really doesn’t want to die.
Neither do I. I slump forward in my chair, shaking my head as if lost in thought. I take the rolled-up fifty and snort another line from the table. ‘Aaaaah …’ Without looking up, I point the revolver at my temple again. ‘OK, I’ll take this shot for you.’ I squeeze.
‘NOOOOO!’
Click.
He’s sobbing now, tears running freely down his cheeks. I look down at him and our eyes meet. ‘Two rounds left. Strictly speaking they’re both yours.’
‘I’LL TELL YOU EVERYTHING!’
I slump further in my chair. I’m starting to get bored. I lower the revolver and place it back in my briefcase. I can feel a slow trickle of blood coming from one of my much-abused nostrils. Strange, that. I’ve started getting it a lot lately. I touch the blood and stare at it on my fingertip. My eyes flicker briefly down at him. ‘No lawyers?’
He shakes his head. ‘No lawyers.’
‘Full confidentiality, lifetime-binding, our terms?’
He nods.
‘Full cooperation and your resignation letter on my desk the moment we’ve sorted the mess?’
‘Anything you want.’ He finally loses it altogether and starts blubbing hopelessly, curling up into a ball on the carpet, great heaving sobs and snot running from his nose. About bloody time.
I dab my bleeding nostril carefully with my handkerchief, then sweep up my bits and pieces from the table, click my briefcase shut and stand up. He gets up nervously from under the table, picks up his chair and sits on it, his hands shaking. I pause and wipe my bloody nose again.
‘I’m leaving now. I’ll send in the others. You’d better mean what you said. The last two rounds are yours. You understand that, don’t you?’
‘I … I do.’ He’d probably give me a blow job now if I asked him to. I go to the door and he stares as I open it without needing to knock for it to be unlocked. Outside, the team are waiting, curious about the noises they were hearing.
I gesture back inside, where Caudalie is leaning forward over the table, his head in his hands, weeping.
‘He’ll tell you everything you need to know. Trades, accounts, passwords – everything. And he’ll do whatever we require. He’s got a master disc too. Make sure he hands it over tonight. Forget about his lawyer. When you know the size of the damage, call me.’
Even Paul Ryan looks impressed as I head off into the night. I like the night. The darkness waiting for me outside the office has the right kind of feel to it. I have the numbers of a couple of interesting French girls. I’m feeling in a French mood. Remarkable what you can do with an empty gun. At least I think it was empty.
I’M SITTING at my desk, smoking a cigar and blowing smoke rings at the ceiling. We operate a strict no-smoking rule – as the law now requires – but I take the view that gods should be exempt.
Paul Ryan is sitting opposite me, a sheaf of papers on his lap. My heads of department are gathered for an emergency summit in the conference room next door, waiting for the news. It’s taken weeks to get there, but we finally know how much this spawn of the devil has cost us.
‘So? What’s the final tab?’
He looks vaguely anxious, not sure how I’ll react. Messengers still get shot in the City. ‘Six and a half billion euros.’
‘Damn. That’s real money.’
There’s nothing more to be said. We get up, put our jackets on – it’s always a sign that something serious is afoot when you put your jacket on for an internal meeti
ng – and we head off to the conference room.
When they hear the number, they slump in their chairs. The new homes, the holidays, the yachts, the supercars all fade back into unreality and they want blood. Losses like this will have to be disclosed. There will be no bonus – the bonus will be still having a job – and a whole long year of everyone’s life will be wasted.
Obviously Jean-Michel Caudalie has been fired. So has his boss. And his boss’s boss. The whole senior tier of people in Risk Management are clearing their desks, while our headhunters raid the opposition for replacements, triggering a hugely expensive and wasteful chain reaction of musical chairs around all the Risk Management departments in the City. As each firm is raided and loses key people, it hires its own headhunters to find replacements from elsewhere, triggering even more activity until eventually, after a few months and hundreds of thousands of pounds in headhunters’ fees plus millions of pounds in guaranteed packages, everyone settles down at their new firms and the music stops. I think of it as wealth redistribution and I’ve been a happy beneficiary of it myself in the past. Meanwhile, expensive consultants and members of the management committee – the top people in the firm led by Paul Ryan himself – mind the shop.
The real problem is that when we disclose the size of our losses, the market – which is to say our major institutional shareholders – will expect top management to take responsibility. That means me. They might even expect me to fall on my sword. I’m not a falling-on-my-sword type. Why should I? I genuinely have very little understanding of anything that goes on here, so why expect me to take responsibility for it? I look around the room. No one will meet my glance. They know. And I know too. My head’s on the block and I’d better do something fast.
Which of course I do, as I’m left with no choice. The City of London is ninety-per-cent form and only ten-per-cent substance. I know all about the substances, but it’s the form I need help with. So I take out my mobile, scroll down to ‘S’ and call the Silver Fox. I stare around the room. Pathetic. They are all so lucky I’m here. I’m Dave Hart, and in a crisis I’m indestructible.
Dave Hart Omnibus II Page 3
