“What we’ve managed to do is to bring the stones from nowhere, through the BVI company and into the Swiss company, so that we can process, present and commercialise them internationally, with the proper paperwork and a very low tax exposure. It’s about as efficient as you can get without trying to be too clever.”
He looked at his notebook again. “The current top market price is around five thousand dollars per carat for this quality. Our average sales price was about sixty-five per cent of this marker, at three thousand two hundred dollars per carat. So the hundred and fifty carats sold by Laurent produced a total revenue of four hundred and eighty thousand dollars in six months.
“Our processing costs, office and operating expenses and sales commissions were about a hundred and sixty grand. So in cash terms we have an actual operating profit today of three hundred and twenty thousand dollars. Then there’s the value of the finished stock, less the selling costs, which is about a hundred grand, net. That makes a profit to date of over four hundred and twenty thousand dollars, from just one hundred and twenty rough stones. And we still have about seven thousand of them in the vault.
“I won’t bullshit you about the future, but this means that we are way ahead of the rough diamond prices that Henriques used to get. If we can keep this up, selling two to three hundred stones a year at these prices, we can make a lot of money over the next few years.”
Nobody spoke for several moments, then Alberto started to clap his hands and continued until the others had joined in.
“That’s enough guys. This is a three man team,” Charlie responded.
“What are the chances of a fall in prices?” Alberto asked.
“I suppose it’s possible, but it seems highly unlikely for a few reasons. First, prices are actually as low as they’ve ever been in recent years. Most analysts consider that an increase in value is more likely than a fall. The market has already started to move slightly up during the last couple of months.
“Second, the war has virtually stopped the output from Angola. Henriques, God rest his soul, was right. The mines have been taken over by the rebels and official production has halted. They’ll mine and sell what they can to finance their war, but there is no more official Angolan diamond production. This probably explains the upward movement that is occurring.
“Third, our stones are the best African diamonds now available. As long as we don’t screw it up we could actually benefit from this situation.”
The mood in the conference room was ebullient. After the horrors of Portugal and Angola, they couldn’t believe their good fortune.
Charlie continued. “You’ll remember that we left a hundred thousand dollars in the Angolan Clan account. Well, I’ve made a few transactions with companies that I know well, and we’ve managed to make a profit of thirty thousand dollars. So, after Nick’s net revenues, plus these profits, plus the original float of a hundred thousand grand, we’re sitting with about four hundred and fifty thousand dollars in the account. The Angolan Clan is in good shape.
“Now,” he finished, “we haven’t talked about dividend distributions, so why don’t we agree on that, then go to the Hotel des Bergues for lunch?”
They agreed on an annual distribution of eighty percent of the cash profits from the diamond operations and investments and twenty percent retained in the partnership account for operations, emergencies and investment. The four partners would share a first dividend of over a quarter of a million dollars. As long as no one wanted to buy a yacht, they’d get by.
They had an excellent lunch. Laurent ordered a Chateau Cheval Blanc from St. Emilion and they raised their glasses to the success of the Angolan Clan. The Bordeaux wine was delicious, full bodied and fruity.
FORTY-SIX
April 25th, 2007
Geneva, Switzerland
The Angolan Clan had been in business now for over thirty years and was still going strong. The partners were once again seated around a conference table in Klein, Fellay’s offices, which had moved about ten years before to the area of Plainpalais, on the other side of the lake, where several banks had built new headquarters. Miriam Constance was no longer there. After years of waiting vainly for Nick to make a commitment, she had married an Italian client and moved to Lake Como.
Although it was still a private investment bank, Klein, Fellay had now been taken over by a multinational clearing bank which operated in most countries of the world. International business could be transacted on a twenty-four hour basis, virtually seven days a week. Charlie found this useful in his investment dealings. He had set up an Internet banking system with the bank. It was highly secure and extremely functional.
Laurent had lost his wife the previous year and they had never had children, but he kept himself busy and in good shape, either on the ski slopes or the tennis courts of the Monte-Carlo Country Club. He continued to manage the sales activities for the partnership and maintained contact with Nick and Charlie via his indispensable BlackBerry.
With his first dividend in 1976, Alberto had bought a house in Chelsea. After the Communist Party was defeated in the democratic national elections his job in Portugal was over. Cunhal no longer needed a bodyguard. He had confided to Charlie that he was totally disillusioned with the way the Soviets were raping the ex-Portuguese African colonies. He was an idealist, a believer in and a fighter for improvement. After seeing so many years of bloodshed he couldn’t stomach it any longer.
He told him, “The only difference from before is that the people getting killed are no longer Portuguese soldiers, they’re Angolan and Mozambique civilians. We haven’t fixed anything, we’ve made it worse. I wish Olivier was still alive, so I could tell him he was right all the time. I’m fifty-six now, and thanks to you, Inês and I can afford to spend our remaining years in a place of our choice and we’ve chosen London. Come and visit us when you can.”
With the passage of the years, his health deteriorated and his leg gave him more and more trouble. He was obliged to walk with a stick, which he hated. He predeceased his wife by just a few months in the millennium year, 2000. He was eighty years old.
His son, Raffael, had replaced him in the partnership in accordance with their agreement. He had left London after the death of his parents and now lived in the US. Unlike his father, whose contribution had been vital to the existence of the Angolan Clan, he didn’t actually do anything and never contacted the others. He just arrived at the annual meetings and happily accepted his dividends. The other partners didn’t know much about Raffael. He had secrets that he didn’t disclose to them and although they found his manners rather unsavoury, they never forgot the debt they owed to Alberto, the reward for which had been agreed many years before.
Nick now lived in South Beach, Miami, with the latest of several attractive, younger women. But even after all this time he’d never been able to get Rachel out of his mind. A few years before, he had enlisted the help of a private detective to find out what had happened to her. He needed to know how she was, where she was, what she was doing, who she was with.
When he examined and analysed the information he got back, he came to a breathtaking conclusion. He didn’t know how to cope with this revelation, but as a first step he asked Laurent to open up business with a promising young gem and bullion specialist who traded out of Durban, South Africa.
Charlie was fit and well. Despite losing Ellen in dreadful circumstances several years before, he was still living in their home in Marbella. He had been comforted in his loss by Leticia, a lovely Angolan-Portuguese girl who had started working for them as a housekeeper. They had a one year old son called Emilio Salvador but only Leticia’s parents and Charlie’s lawyer knew of this fact. He was not one to bare his soul to the world at his time of life.
Not even his son, Ron, knew about his half-brother and Charlie was biding his time for the right moment to disclose it to them both. The same thing went for the Angolan Clan. Ron had never been able to understand the secrecy that he maintained around
the source of his wealth. As a result, their relationship had broken down many years ago. He had gone to live in England and each year Charlie found it more difficult to pull down the barriers that he had erected to protect his family and friends but which had only served to alienate them over time.
Nick got up to make his diamond report. He kept it very short. “Our policy has always been to only process the number of stones we planned to sell in each year. On average we have produced three hundred finished stones with a weight of just over three hundred carats. We’ve always sold them at good prices, with no fuss or visibility – a very profitable, low profile business. Our annual revenues have risen to four million dollars, with average profits over seventy percent, so we’ve had a good run for our money.
“This year,” he continued, “we have decided to process all the remaining stones. The first lot is already with the processing company in Brazil that we’ve been working with for the last few years. I expect to get all of them finished within six months. Charlie will explain the reasons for our change of thinking to you now.” He sat down again, looking a little weary.
Charlie thanked Nick and Laurent for their contribution to the many years of success. The diamond market had been good to them. Nick’s “Oh my God. I have to have that” approach had been more successful than they could have foreseen.
He distributed a set of accounts and outlined the results from sales and from his management of the partnership funds for 2006. The balance on the Angolan Clan account had increased with every passing year. They were all very wealthy men.
“Now I have a couple of important points,” he continued. “The first is that Rolf Besson, our accountant, is retiring after thirty-two years. He’s sixty-nine. Even older than me! I suggest we give him a handsome farewell bonus for his retirement. We’ve hired a replacement on a consulting agreement, name of Kurt Vogel. He’s a Swiss German. Not much personality but lots of experience. He’s already started part time, to take over from Rolf next month. And Gloria Smouha, our secretary, is still with us after almost twenty years, so we’re in good shape.
“Now I’ll explain why we’re processing our remaining stock of rough diamonds.” Charlie paused, weighing his words. “First, it’s my belief that we are heading towards the end of another economic cycle. I think the next year is going to show up some serious defects in the financial markets. The world has been living on a credit binge for the last decade and it’s going to go bust sooner or later. Probably sooner, in my opinion.
“We have lived through previous recessions and we got out in good shape because we were well diversified, as we are at the moment. However, this time, everything is pointing to a general fall in values. In the markets, in property and in commodity prices. I’ve therefore asked Nick to finish our diamond processing so that we’ll have a stock of completely finished diamonds, ready to market, by the end of the year.
“Then we either continue with our distribution channels over the next few years until we liquidate our stock, or we find a buyer for the whole stock. Personally, I favour the latter, for several reasons.
“The first reason is simple economics. If we go into a recession and the shit really hits the fan it will affect our pricing. Diamond prices have increased by about four hundred per cent since the Angolan Clan was formed, so our decision to sell little and slowly has been vindicated. But I think it’s time to change that policy to avoid being caught in a falling market.
“The second reason isn’t commercial, it has to do with world opinion. We’re very fortunate that IDD has never been accused of selling conflict diamonds and become tabloid fodder. The world press has been red-hot on this since the atrocities in Sierra Leone, Liberia and Congo. We’ve remained under the radar because we operate through BVI and Switzerland and we don’t make a noise in the market. Thanks to Nick and Laurent, our processing, sales and distribution are out of the limelight.
“But now that the Kimberley Process has been globally accepted, it’s becoming more difficult to sell uncertified diamonds. Our stones are not conflict, or blood diamonds, but we can’t prove it and we don’t want to be accused of it. It’s too risky to continue like this for much longer. It’s time to get out of the business while we still have a good reputation.
“Laurent and I have talked about this and he feels that we can find a buyer for the remaining stones in a single lot. It should be about a thousand stones and Nick expects to have them ready by the end of the year.” He looked at Nick, who nodded his confirmation. “This will be one last confidential transaction, low profile, as always and we’ll be out of the game. So, I propose that we pursue that course. We’ll still sell our usual number of stones to our regular customers, but if we can sell the balance of the stones by the end of this year then we think we’ll still hit top market prices and we’ll be safe from any future controversy. If we wait, we take a substantial downside risk.”
“The last reason is a very personal one.” Charlie looked around the table at his partners, old and new. “The Angolan Clan has existed for thirty years and I think that we all agree that it has been successful beyond our wildest dreams. However, we are not getting any younger. In fact some of us are getting really old.” He paused for the inevitable laughter. “Some of you don’t have direct descendents to pass your share on to and it would be unfair if anything happened to you and you lost that share.
“For all these reasons, I propose that we should cash in all of our assets and have a last meeting next April to transfer all funds to the partners and close down the Angolan Clan. We can then go off to our retirement projects with a chunk of cash to survive on.
“Of course,” he added, “nothing prevents us from meeting every year just to enjoy a good lunch together.”
As usual, Charlie’s logical thinking and foresight convinced his partners to follow his advice. The four men agreed to close down the Angolan Clan in April 2008.
BOOK TWO
PART THREE: 2008
FORTY-SEVEN
Thursday, April 17th, 2008
Marbella, Spain
It was after eleven in the morning when Jenny and Leticia finished reading Charlie’s narrative. He had written in a diary style. Dates, people, places and a short summary of the events. But despite the factual and understated manner in which his text was written and presented, they were mentally and emotionally drained by the mass of information that he had revealed. Reading between the lines, they had lived with him through the dramatic and complicated history of the Portuguse revolution, the harrowing consequences of the relinquishing of its African colonies and his life over the last thirty-two years.
At the end of the text, Charlie had added another teaser. It was dated February 27th, 2008.
“Jenny, Leticia,
You have got this far. Well done.
Leticia has a key in her possession. It is for safety deposit box no. 328 at the Banco de Iberia in Marbella. Just follow the trail and take care.
Good luck and love to you both.
Charlie.”
They sat quietly for a moment, trying to assimilate his life story and the events he had experienced. Jenny couldn’t believe that Ron’s father, a wealthy, apparently unadventurous man who didn’t seem to care much about anyone, had lived through such chaos and mayhem and been close to so many people in Portugal and Africa. And he had managed to get out. Not just alive, but having amassed a substantial fortune in the process. For himself and for the friends who had emerged unscathed with him.
She tried vainly not to be influenced by her memories of her own father and after a while, she said, “So Charlie’s fortune was built on death and diamonds. Maybe that’s why Ron moved away from home. He must have found out and he didn’t like it. I think I’m beginning to see what happened and I would probably have agreed with him.”
Leticia shook her head, “No, I don’t think it was like that. I’m sure if my parents had a chance to leave Angola with money they would take it. You don’t know what it was like to escape w
ith nothing and have to start again. Charlie and his friends were not responsible for those deaths. Not for the revolution, not for the wars. They had a good business and it was taken from them, like everybody in Portugal and Africa. What happened was crazy politics, communism and wars and they weren’t responsible. They were victims like my family, but they were clever enough to get out with the diamonds and then to make a marvellous success.”
She took Jenny’s hand. “Ellen was right. It would be stupid to leave that fortune to be stolen by somebody. Henriques gave it to them and they were supposed to make the business together. I think Charlie was right to set up the Angolan Clan. The others would have done the same but maybe not so well. We have to think of the good things that Charlie did. Trying to save his friends and family and looking after Nick and Alberto. He was the only one who could get it done and he did it. I think Ron would understand if he read the story. His father was a good man, an honest man. Not a thief or a murderer. We should be proud of him.”
“Hmm. Perhaps.” Jenny wasn’t convinced. She didn’t trust anything to do with large amounts of money. But she didn’t want to shake Leticia’s faith in Charlie. He had been her lover and was Emilio’s father, so she had to tread carefully. “Maybe Ron didn’t understand because he didn’t know the full story. He must have been ashamed of his father and now it’s too late to explain it to him. Perhaps I was being naïve and Charlie and his friends were heroes, not villains. Anyway, I hope Emilio is proud of him when he learns this history.”
Whatever the truth behind his fortune, Jenny began to understand why Charlie had become so unsociable. He probably wasn’t always like that, she thought. He’d lost so many of his friends, then his family. He was getting old and lonely. Thank God he met Leticia, she concluded. She and Emilio were probably the only reasons he still had to enjoy life.
[African Diamonds 01.0] The Angolan Clan Page 30
