Crude Deception

by Gordon Zuckerman

  It had been four days since the night he was supposed to have arrived at the San Francisco airport. Perhaps I should call Pan American operations and give them his name and flight information, she thought. They might have some record of him.

  When she called, a ticket agent in Caracas remembered a Mr. Stone checking in at the ticket counter and then walking toward the gate. Further checking revealed there were no unclaimed bags at the lost and found either in Caracas or San Francisco. “Judging from our records,” said the agent, “we have no reason to believe he didn’t complete his flight as planned.”

  After saying she was sorry that they couldn’t be of more assistance, the representative paused and added almost as an afterthought, “It’s strange, but you are the second person today who has called to inquire about Mr. Stone.”

  An alarm went off in Cecelia’s mind. “What was that? Did I understand you correctly? Another person was checking on Mr. Stone? Do you have his name?”

  “I’m sorry, but the man didn’t give his name.”

  “I see. Thank you anyway,” she said as she hung up.

  If she was concerned before, now Cecelia was really scared. She was startled out of her thoughts by the ringing of her telephone. She snatched it off its cradle, hoping it would be Mike. Instead, she recognized Pete Ferrari’s gravelly voice. “Cecelia, excuse me for bothering you, but I was wondering, could you join me for an early lunch in my private dining room?”

  Why would the president of the bank be inviting me to lunch? she wondered. Could it have something to do with Mike?

  Stepping out of the elevator on the eighth floor, she was greeted by Mr. Ferrari’s personal secretary. “Good morning, Miss Chang. I’ve been asked to escort you to the boss’s private dining room.”

  As they entered the small but elegant room, Pete Ferrari and Bill Dean rose to greet her. “Good morning, Cecelia. Thank you for coming right up. I think you know William Dean.” He gestured to the man standing next to him.

  Now her mind was really racing. Why would her boss and Mike’s boss both want to see her? Something must have happened to Mike. Get ahold of yourself, girl, she said to herself. Don’t let them see how scared you are.

  As soon as they were seated at the table, Bill Dean handed her an envelope. “Cecelia, Mike asked me to give this to you. He’s deeply sorry he couldn’t call you. I left him yesterday and I can assure you that he’s fine, and not in any immediate danger. Pete and I will excuse ourselves for a few minutes to give you some privacy while you read what’s inside the packet. When you’re done, we can all have a pleasant lunch and enjoy some of Pete’s best wine.”

  Shaken but nonetheless relieved to know Mike was alive and safe, Cecelia thanked Bill and began trying to open the letter as the men left the room. She had considerable trouble unsealing the envelope. Maybe I don’t want to know what it says, she thought.

  She laid it on the table as if it had burned her hand. After staring at the envelope for several minutes, she used one of the knives from the table to slit open one of its ends. She shook the letter out of the envelope, allowing the folded paper to fall on the table. Leaving it there, she lowered herself into the nearest seat and continued to watch it. What am I afraid of? What’s stopping me from seeing what it says?

  Holding it by the edges, pinched between the forefingers of each hand, she began to read, the dread building inside her.

  My dearest Cecelia,

  I,m concerned that by the time you receive this note my unexplained absence will have scared you half to death. I’m so sorry for any worry that I may have caused you. My actions were necessary to protect Señor Perez, his family, and myself. As you predicted, things got a bit sticky in Caracas. Thanks to Bill Dean, my dad, and Roger Malone, I was able to rescue Perez and his family before Samson could catch up with us.

  There’s no longer any question that our old enemies are after me, and if they know about me, they know about you and the rest of the Sentinels. Roger has already asked the Secret Service to provide 24-hour protection for each of us. I don,t want to alarm you any more than necessary, but I think it’s extremely important that you not try to contact me or any of the others, no matter how important you might think it is.

  I am sure a full court press is being applied to find Perez and recover his files. In trying to find us, they are probably watching everyone we might contact, monitoring all calls and communications, and checking all public transportation.

  For the time being, I think you are all quite safe. Samson needs you free to lead them to us. The best thing you and the other Sentinels can do is continue with the normal, everyday activity of your lives.

  Unfortunately, I can,t tell you where I am or how long it will be before I can return. Maybe the time has come for you to take that long-overdue trip to Hong Kong. It’s been more than ten years since you’ve seen your family. I’m sure they would love to see you. By the way, you might consider talking to your father about us. I love you very much and I still hope we can someday be married.

  Please don,t worry, Cecelia. I’m perfectly safe.

  Love,

  Mike

  When Bill and Pete knocked and reentered the dining room a few minutes later, they could immediately see that Cecelia had been moved by the contents of the letter. She had paled, her eyes were watering, and her lips were trembling.

  “Cecelia, are you all right?” Ferrari asked gently. “Shall we continue with lunch, or would you prefer to be excused? We can continue our discussion at some other time.”

  “No, thank you,” she replied. “I’ll be all right. I just need a minute to collect myself.”

  The waiter was called in and food orders were placed. Pete and Bill kept the conversation light until the main course was served.

  “Cecelia, there is something else besides news of Mike we need to talk about,” Ferrari said. “Now that the war is over, things in the Orient are beginning to change. It’s not just a question of the countries that were occupied by the Japanese returning to their prewar status. There are issues of local desires to achieve sovereign independence being challenged by the recolonization efforts of certain European governments. Protection of prior investment interests is being translated into the need to reestablish political control. There is a nasty political revolution being resumed in China. Communist and Nationalist Chinese forces are no longer united in their common defense of China against the Japanese.

  “Reports from our best experts indicate that, contingent upon receiving assistance from America, many of these Asian countries will start positioning themselves to participate in the postwar economic explosion that is expected to occur. These countries are beginning to formulate strong feelings regarding their future independence.

  “We need you to help us develop an understanding of what is happening. As you know better than most,” Ferrari continued, “a lot of personal and national wealth was put beyond the reach of the Japanese before and during the outbreak of hostilities. These monies will start flowing back into their countries of origin. When that occurs, new and modern systems of banking services are going to be needed.

  “American West National Bank is desirous of becoming involved in this process. Correspondingly, the bank has decided to form a new operating division, Asian Banking, and we want you to be in charge, Cecelia, you are both the first female vice president of the bank and—should you accept—its first female president of an operating division. Both Bill and I couldn’t be more pleased.”

  Caught completely by surprise, all Cecelia could do was stare at the two men. Her mind was seven thousand miles away. I only wish my father could be here, she thought. He would be so proud.

  Taking Cecelia’s broad smile as an acceptance of the promotion, Ferrari eagerly continued. “As a first step, we would appreciate it if you would organize an extended trip to the Orient. We think it would be a good idea for you to meet the new players, introduce the bank, and learn more about their regional banking needs. You remember Ted Lee, the form
er head of the Bank of Hong Kong’s operations here in San Francisco? Ted has been transferred back to Hong Kong to assume the responsibility of running the entire bank. I’ve talked to Ted and he is eager to meet with you, and to personally introduce you to his friends and clients.”

  About the same time, three thousand miles to the east, Jacques was back in his New York office, wondering how Claudine’s trip was progressing. A knock on the door broke his train of thought. “Mr. Roth, a messenger from Christie’s has just given us a special-delivery package for you,” a delivery boy said. Opening the large envelope, which displayed no return address, Jacques saw that there was a second package inside that had been opened and resealed. The address on the smaller package read:

  From: Mr. Mickey. P.O. Box 2302, Dallas, Texas

  To: F. Time. C/o Christie’s Auction House,

  20 Rockefeller Center, New York, New York

  This has to be from Mike, Jacques thought to himself. He recognized “Mr. Mickey” as the nickname Cecelia used when she wanted Mike’s undivided attention. F. Time, a.k.a. Father Time, was the nickname they had affectionately used when they referred to Ian Meyer, their fellow Sentinel. Even as a student, Ian wore both belts and suspenders, drove old cars, and was fascinated by anything old.

  “Ian Meyer,” Jacques said to himself. I’ve always regretted that he felt it necessary to retire from active participation in our Sentinel activities. How can the original forger of a hundred million dollars’ worth of duplicated gold bearer bonds be fully absorbed by his daily art auction activities? Ah, well, Mike must have deliberately sent this package to Ian at Christie’s to confuse anyone who might be watching me.

  Opening the package, Jacques saw several sheets of notes and calculations and two one-page letters, with a handwritten note attached by a paper clip.

  He immediately recognized Ian’s almost illegible handwriting on the note: “Jacques, it looks like Mike may have hit the jackpot.”

  The first letter was a copy of the note Mike had sent to Cecelia. The second letter was addressed to him.

  Jacques,

  You need to contact my Dad, show him these briefs, and ask him to send attorneys “Smith” and “Jones” to Dallas. He’ll know whom I’m talking about. We need them to talk with Perez, review his files, and determine if we can develop this information into the kind of evidence needed to produce the ironclad case required to challenge the big oil companies either directly or in court.

  Don,t try to call me or attempt to locate us. Just have those lawyers at Union Station on the morning of July 12th. I’ll check the schedule and be there to meet them when they arrive.

  Mike

  Chapter 10

  BREAKING THE CODE

  Each morning after breakfast, Mike and Juan Pablo would excuse themselves, walk across the ranch compound, and enter an old deserted warehouse. Taking time out only for lunch, they would remain there all day, studying the contents of the oil minister’s files, which contained thousands of invoices, revenue receipts, market reports, bills of lading, transport schedules, and refining reports. They involved shipments over a span of five years from Venezuela, Mexico, and the United States to customers located throughout the Allied world.

  By themselves, the thousands of individual pieces of paper meant nothing. Somehow, the two men had to discover some pattern that would enable them to understand what had actually happened and prove their conclusions in a court of law. The work was detailed and time-consuming. It quickly became obvious that weeks, not days, were going to be required before they would finish their task.

  Mike and Juan Pablo first focused on the revenue receipts for oil purchased from Venezuela, sorting them chronologically and laying them out on the floor in a long line. Invoices for oil purchased from suppliers affiliated with the Oil Club were sorted by date and placed in a second line parallel to the first. The bills of lading for oil purchased from the nationalized Mexican sources were similarly sorted and placed by date in a third line.

  The two men would walk around the warehouse and study the information, intently looking for some pattern that might solve the puzzle. One afternoon Juan Pablo decided to randomly select same-date invoices and compare their gross selling prices, refining charges, and transportation costs. The gross selling prices paid per barrel of oil purchased from each of the three sources, when adjusted for sulfur and British Thermal Unit content, coincided with published market data.

  He did notice, however, that refining expenses appeared to vary. Comparing these costs was complicated. Different sources of oil contained varying levels of sulfur content, viscosity, wax, and BTUs. To make matters even more complicated, Juan Pablo explained to Mike that oil was not always “cracked” into the same mix of distillated products.

  Based on the variations in refining expenses, they re-sorted all the invoices by mix of distillates. By working backward from the distillated end products, they began to see a relationship emerge between the identifiable distillates and charges made for refining. To test their theory, they began to apply their provisional formula against oil of similar mix from the same sources and different customers. The formula withstood the test. Extra charges of twelve to eighteen cents per barrel were routinely charged against the oil shipped from Venezuela and Mexico by their two Oil Club partners.

  Next, they started looking for variations in transportation charges. Once again they re-sorted the invoices. As with refining charges, it took a good deal of detailed analysis before they could begin to understand the differing transportation costs charged by shipping lines on oil purchased in Mexico and Venezuela. Once they understood the formula, they could calculate the loss to the oil-producing countries. Over the previous five years, the variation was again remarkably consistent: an overcharge of ten to twenty cents per barrel by the two major oil companies.

  When added to the refining charges, the total averaged overcharges amounted to about thirty cents per barrel. The formula was so precise and the amounts so consistent that there was no doubt as to the premeditated nature of the swindle.

  To calculate the loss in revenue, Mike and Juan Pablo began to add up the total volume for just the Venezuelan shipments over the previous five years. It totaled 1.8 billion barrels. At thirty cents per barrel, the overcharges amounted to $540 million.

  Letting out a low whistle, Mike said, “That’s a lot of lost revenue, particularly when you multiply it by a factor of three to take into account the awarding of treble punitive damages. Add interest and penalty fees and we’re talking about a total exposure of approximately three billion dollars! Juan Pablo, what do you think the Venezuelan government is going to say when you give them this information?”

  Smiling, Juan Pablo replied, “I think they are going to tell the oil companies that they owe Venezuela a lot of money, and that material changes need to be made in our agreements if they expect us to extend their contracts. I’m sure the Mexican government will follow suit once they hear about this.”

  “And if the oil companies don’t agree?”

  “It appears that they are going to have to make a choice,” said Juan Pablo. “It will be my pleasure to inform them they can accede to our terms or face the possibility that we will not renew our contracts and sue them in court, but not before we have made full disclosure of the bad faith practices to the press. It will be very interesting to determine what Venezuela’s production value is on the open market.”

  Mike couldn’t help but express his excitement. “Juan Pablo, you are truly a lovely, crazy man. I know you’ve been primarily trying to improve Venezuela’s leverage in your negotiations, but do you have any idea what kind of problems this evidence could create for the major oil companies on an international basis? You may have just provided the lever we need to pry open the Oil Club’s grip on the oil-rich nations.”

  For the next three days, the two men spent their time summarizing their data, explaining how they were able to arrive at their conclusions, and calculating damages. Finally, when they
were finished, Juan Pablo asked, “Now that we have confirmation, what are we going to do with it?”

  “Despite the fact that we have been able to organize all these little pieces of data into a mosaic that clearly supports our conclusion,” said Mike, “the information only becomes useful once it is converted into the appropriate legal format. When the information is in the form needed to satisfy the requirements of the court and can be used for negotiation purposes, we’re in business.”

  Mike looked off into the distance as he thought something over. “Somehow, I need to get word to my father,” he said. “Perhaps we need to talk to Steve Connors. He should be able to get a package out for us without attracting too much attention.”

  Chapter 11

  THE CORK LOOSENS

  New York Times, June 20, 1946

  SHOULD THE AMERICAN TAXPAYER

  SUBSIDIZE THE PRODUCTION OF

  FOREIGN OIL?

  By Walter Matthews

  In the 1930s, an obscure bill was passed into law providing American oil companies the privilege of offsetting any royalties paid on the production of foreign oil against taxes due on profits generated from the refining, distribution, and sale of the same oil in the United States.

  Historically, the United States has been a self-sufficient producer of its own energy needs and a net exporter of oil. Experts are now forecasting that by the year 1950, the combination of level domestic production and increasing consumption will convert our country into a net importer of oil.

  By that time, the “foreign profits tax” provision of the Internal Revenue Service tax code established by this bill is expected to have become a material burden on the American taxpayer. Preliminary estimates indicated that over the ten years following 1950, the tax relief offered the largest oil companies could be approximately $5 billion annually.