H
oughton Hall
During the years of the Blair-Brown tandem, more than two million immigrants entered Britain, transforming the country as it had never been transformed since Julius Caesar had disembarked on England’s shores. The Roman invasion had brought Latin civilisation, the Viking invasions their Germanic language, the Norman conquest the French language, all of which fused into modern English, spoken by five hundred million people across the planet and studied by three times that number.
Whatever the new multicultural society would bring it was still in the making. The change had not been created by force, but by transient politicians, laissez-faire policies, stealth and complicity, whilst the majority of voters had closed their eyes, the awakening would be rude, the face of Britain changed forever, without debate, without the least democratic process, or consideration for the effect it would have on the life of its citizens and institutions, the life they had been led to believe they had fought for in two world wars, the idea of the stalwart island fortress that had been drummed into each and every Briton since early childhood in stories and legends, before they opened the first pages of their history books.
Kings and Queens of England had repulsed papists forces by sword and fire over the course of more than four centuries, then, suddenly, for no reason, without the least protestation, the floodgates were thrown open to an entirely new population, many bringing with them a new and demanding religion with its conflictual precepts.
Tony Blair and his spin doctor had gotten filthy rich all right, according to the Spectator. It was in line with New Labour’s infatuation with wealth: curious for a former member of the Young Communist League, since become a Lord of the Realm, owner of a multimillion loud four-storey Gothic Revival property, with its wine cellar and two-storey atrium.
CANTON
Weekends at their home on Shamian Island in Canton and the proximity of China’s teeming millions were fraying Pat’s nerves. Every time he went beyond one of Shamian’s bridges he was confronted by a sea of humanity. From the market to the main shopping precinct the mass of bobbing, uniform, black heads activated his latent agoraphobia. It was not the Chinese as such, but the fear that some new kind of deadly contagious flu was lurking in their midst. Word of a new virus in Shanghai had got him nervous, more than one hundred and thirty people and been infected and the mortality rate was twenty five percent.
For weekends in Canton, Pat, in contrast to Lili who preferred the high speed train, opted for his powerful motor yacht. Fridays, after his day in the office was complete, he headed for Queen’s Pier where the boat was waiting. The journey from Hong Kong to Shamian took a couple of hours, during which he transformed himself into weekend skipper, steering the yacht, under the attentive eye of his professional captain, past merchant ships lying at anchor, around Lantau Island and up the Pearl River, passing sampans, fishing boats, freighters and ferries.
In June sunset at seven in Hong Kong and as darkness fell the lights of the river twinkled, becoming denser as he headed upstream, then as he approached Canton the darkness gave way to the bright lights of the vast teeming city. It was a great moment of pleasure, freeing his mind from the week’s pressures and business concerns.
At first their moments of matrimonial bliss at Shamian elated him. The colonial house on the historic island, set amongst the elegant late nineteenth early twentieth century mansions, had become their weekend get away. It had been a gift from Lili’s parents in the hope their daughter would remain close to home.
Pat was devoted to Lili and perfectly at ease with her family, but what bugged him, as he put it, was the proximity of the street markets beyond the bridges. His fear was accentuated by the media scare that announced chickens and ducks were carriers of H7N9, a new form of bird flu, which it seemed could jump from one species to another.
Strangely, Hong Kong with its dense population, never worried him as he felt more assured in his ascepticized penthouse high above the city or in the glass and concrete office tower of his office in Jardine House.
Lili tried to comfort him with the news that only people in direct contact with poultry had been infected, but Pat was not convinced. The idea of an infectious disease on the loose set his fertile imagination in motion. Pandemics begin small, he told Lili, as he imagined thousands and millions infected by H7N9, a coronovirus. Each morning Pat nervously scrutinised the pages of Xinhua, struggling to decipher the characters in the news headlines on the newspaper’s Internet site, searching for details and statistics on the latest outbreak. Donning his mask whenever he left the house, shuddering at the thought of the throngs of Cantonese on the streets and its underground with a coronovirus on the rampage.
*
Back home in Hong Kong, Kennedy turned his attention to a literary event with the arrival of his friend Pat O’Connelly, in town on a leg of his latest book tour. A press conference and cocktail was being held in the Peninsula for the launch his latest book, printed in traditional Chinese characters Kennedy had remarked, for Hong Kong and Taiwan, a fact that had escaped O’Connelly’s attention.
“What do you think of Dan Brown’s new book?” he asked O’Connelly.
“Very entertaining, a real page turner.”
“I heard the translators were holed up in an underground bunker in Italy.”
“Yes, all eleven of them, for two months.”
“Does he make that all up?”
“Well a lot of research goes into a book like that.”
“A bit far fetched to my mind,” said Kennedy, a wayward Catholic, to whom the idea of Jesus being married to Mary Magdalene was vaguely blasphemous.
“Maybe, but I like his sales figures.”
“I read more than two hundred million books.”
“So it seems.”
“You’ve done pretty well for yourself.”
“I’ve sold a few million, but I’ve got a lot of catching up to do on Dan Brown.”
“I imagine the Vatican is not too happy with him.”
“Yes, you’ve got to be careful about what you write. I got quite a piece of flak when my book about the Temple of Jerusalem was published.”
“I enjoyed that, I don’t see why anyone should be offended.”
“Well you’re not a Jew, or a Muslim.”
“No,” said Pat shrugging, “but I don’t think too many people will be worried about a story of Dante’s Inferno.”
“No, not unless you’re a banker.”
Pat frowned, but before he could reply Angus MacPherson appeared, his face beaming with pleasure.
“Angus! You’re looking happy.”
“Yes, it’s a day to celebrate. The Footsie is steaming ahead. At this rate it’ll close above 6600 points, the first time since October 2007.”
“Excellent. We’re off to London in a couple of days. Some shopping for Lili and I’ll be with Michael.”
CANTONESE
Pat Kennedy’s fortuitous meeting with Lili provided him with a mine of information on China, its peoples and its history. He discovered how those who bore the same surname supposed they shared a common origin, an idea that was patently absurd, but nevertheless tenacious in the Chinese mind. The existence of Chinese same surname associations were widespread especially amongst overseas Chinese.
Lili’s father had recounted the story of how all Chinese believed they were descended from Huang Ti, the Yellow Emperor, whose fourteen of his sons were given different surnames, from which every Chinese family was supposedly derived. Every Chinese could therefore pretend to a link to Huang Ti, however tenuous. The reality was a large part of China’s population was of mixed ancestry, descended from Mongol tribes, Miaos, Yaos, Qiangs and Tartars.
Ancestor worship went with genealogy and wealthy families like that of Lili’s, maintained ancestral temples or clan halls, where the achievements of their illustrious forbearers were recorded for the edification of their descendants.
The Chinese were firm believers in race. Beside Huang
Ti there was Yen Ti, who according to tradition was the founder of Chinese medicine. Every Chinese schoolchild recognised Huang Ti or Yen Ti. When they spoke of the descendants of the Yellow Emperor or Sons and Grandsons of Huang Ti and Yen Ti, they spoke of the Chinese race.
Canton was far from north China and in terms of Chinese history the Cantonese were, relatively speaking, newcomers to the Middle Kingdom. Until the tenth century, today’s Province of Canton was Nan-yueh, or Nam-viet in Vietnamese, and its peoples were not Chinese. In terms of blood lines the southern Chinese were more closely related to the Vietnamese, Laotian and Cambodian peoples than those of the north.
Lili’s family, who was Cantonese, descended from families of high officials of the imperial court, according to her father, known in the West as mandarins. Cantonese, the language they spoke, distinguished them from the north where Mandarin was spoken. The City of Canton, Guangzhou, or the City of Five Goats, was the third largest in China, with its people and nearby neighbours speaking Cantonese, Hakka, Teochew, Leizhou Min, Tuhua, Mandarin, Zhuanga and hodgepodge of other local dialects, often mutually incomprehensible.
The Cantonese, that is the people of Guangdong Province, were convinced of their own uniqueness, pretending they were more Chinese than their cousins of the north, who had been tainted by the blood of the Mongol and Manchu invaders.
*
Though Pat Kennedy, like many visitors, found Hainan Island a tropical paradise, it had not always been so. In the past it had been a place of exile, a tropical hell, reputed to have been filled with poisonous snakes and savages. Lili had insisted on spending the Spring Festival, known to Westerners as the Chinese New Year, in Sanya, on the south coast of the island, where other Wu family members were gathered for China’s most important annual holiday.
Flying into Sanya on a scheduled flight from Hong Kong, Pat commented on the fine weather as Lili gave him a I-told-you-so look. Hong Kong had been cold and windy in contrast to the semi-tropical warmth of the colourful modern city that overlooked the South China Sea.
S
hamian Island – Canton
Passing by Dadonghai beach they were dropped off at the Mandarin Oriental, one of the best on the island, which to Pat’s regret resembled so many others he had seen elsewhere. After getting out of his city attire and leaving Lili to find her family, Pat set off to explore. It was a ten minute walk to the main beach in the centre of the bay where he saw a steady flow of expensive cars, some chauffeur driven, dropping guests and visitors at beach front hotels, which he figured catered for wealthy upper middle class Chinese tourists.
The sea front was lined with restaurants, their terraces prepared for diner, large round tables elegantly set out for groups of ten or twelve diners. He was surprised to see stages with musical instruments and microphones ready for an evening’s entertainment at many of the restaurants
The idea that it resembled Biarritz or a Mediterranean beach resort on a bright summer’s day struck him. It was stylish with crowds of well dressed tourists out for a late afternoon stroll. With few exceptions they were all Chinese and prosperous at that. It stood to reason, the resort was way beyond the means of ninety nine percent of all Chinese families, especially for the New Year Festival when traditionally prices went sky high.
His mobile buzzed. It was Lili. Glancing at his watch Pat turned back. They had a diner date at the hotel with Lili’s cousins.
THE FOUR HORSEMEN
In the early summer of 2013, Michael Fitzwilliams secretly met with a group of lawyers, headed by James Herring, at the offices of a Luxembourg bank. Their task was to monitor the transfer in real time of nearly six billion dollars from a bank account owned by Rosneft, the state-owned Russian oil and gas company, to one owned by Sergei Tarasov, in payment for his twenty percent share in Yakutneft, one of Russia’s major oil producers.
It was part of Vladimir Putin’s plan to concentrate the control of the Russian oil and gas industry in the hands of the Kremlin and at the same time reduce the power of certain oligarchs in a vital industry, one that supplied the lifeblood of Russia.
Luxembourg, one of Europe’s centres for offshore banking, had been selected as a neutral location where the electronic transfer of funds into an escrow account could be verified in real time.
The transaction was a follow-on of a deal made three months earlier with four other oligarchs: Fridman, Vekselberg, Blavatnik and Khan, in which Rosneft acquired their fifty percent holding in TNK-BP for twenty eight billion dollars. The timing could not have been better for the oligarchs as the price of oil approached the one hundred dollar mark.
The story began in 1995 and 1996, when Russia found itself in dire economic straits and many large state-owned industrial businesses were privatized in a ‘Loans for shares’ programme in which the shares of major state owned enterprises were offered as guarantees.
The sales were carried out in public auctions organised by Russian banks during which bidding was rigged in favour of the banks and business controlled by powerful men with strong political connections.
These were members of Russia’s post-Communist nouveaux-riches who had appeared in the late eighties, making their fortunes in banking and commodity exports as Mikhail Gorbachev pursued his policy of perestroika. In this way state enterprises fell into the hands of these influential men, soon known as oligarchs, at prices far below than their real market value. These oligarchs held immense power and dominated the Russian business and political scene until the arrival of Vladimir Putin.
The most conspicuous example was that of Mikhail Khodorkovsky, who grabbed control of Yukos, a company created in 1993, when the Russian government of the time ordered the break up of the oil and gas industry for privatisation. Khodorkovsky, then only thirty two years old, acquired through his bank, Menatep, nearly eighty percent of the ownership in Yukos in 1995, then worth an estimated five billion dollars, for a mere three hundred million.
Another was that of Sibneft, acquired by Boris Berezovsky, for about one hundred million dollars, when its real value was estimated at three billion.
As Khodorkovsky himself explained: ‘In those days everyone in Russia was engaged in the primary accumulation of capital. Even when laws existed, they were not very rigorously followed. Therefore, if you conducted yourself too much in a Western manner, you were simply torn to pieces and forgotten.’
In a similar manner Sergei Tarasov, through loans put together by InterBank, acquired together with Aquitania, a controlling share of Yakutneft, a major East Siberian producer of oil and gas.
When Vladimir Putin came to power in 1999, almost all of the country’s oil production lay in private hands. In the eight years since the dissolution of the Soviet Union the country’s energy sector had been sold off at knockdown prices to a handful of oligarchs.
Putin’s plan was to rebuild Russia into a powerful state, an ambition impossible to realize while the country was run by a gang of oligarchs that pulled the Kremlin’s strings. At the end of 2000, the newly elected president commenced by issuing a warning to the oligarchs: Stay out of politics and business is yours.
It was his first move to stabilise the nation and end the Robber Barons’ reign of anarchy by retaking control of Russia’s vital raw material resources.
His plan included new investment in the energy industry bringing new oil and gas fields in eastern Siberia into production and in February 2003, and under his impulsion a group of oligarchs joined with British oil company BP to form TNK-BP, a fifty-fifty joint venture formed to develop resources in the region.
However, soon after that deal, Mikhail Khodorkovsky, the CEO of Yukos Oil, the country’s richest man, publicly criticized Putin for the state owned oil company Rosneft’s opaque dealings, worse still, he openly displayed his personal political ambitions by funding the opposition.
Khodorkovsky was arrested on charges of fraud and tax evasion said to total twenty seven billion dollars. His assets, principally Yukos Oil, were seized and its different divi
sions were auctioned off in a forced sale to a front company owned by Rosneft, and the hapless Khodorkovsky sentenced to eight years in a Siberian prison.
Then trouble trouble between BP and its partners in TNK-BP, who considered that BP treated TNK-BP as a foreign subsidiary, investing rather than paying better dividends. The result was BP decided to cut its losses and sell its stake in the joint venture to Rosneft, which borrowed forty billion dollars in cash from a group of leading international banks; one of which was INI Moscow, for the acquisition.
Rosneft, thus became one of Russia’s largest oil companies, acquiring TNK-BP in a transaction worth fifty five billion dollars, where BP for its fifty percent received twenty percent of Rosneft shares plus more than twelve billion dollars in cash. The other fifty percent owned by the oligarchs: Mikhail Fridman, German Khan, Viktor Vekselberg and Len Blavatnik was acquired for near twenty eight billion in cash in a cloak and dagger deal that took place in Frankfurt in March 2013, where the sellers were able to verify the transfer of cash and stock certificates into an escrow account they controlled.
INI’s problems started a little more than a year later, in the wake of Putin’s invasion of Crimea. The billions of foreign currency-denominated loans accorded to Rosneft and Gazprom, due by at the end of 2014, could not be rolled-over due to the sanctions imposed by the US and EU.
PART FOUR 2014
RUSSIANS
Tarasov’s compatriots hid their hot money in the Mediterranean: in Cyprus, Malta and of course Israel where more than one million Russian Jews lived. And as always the flow of hot money had ended up burning the fingers of the imprudent.
Such small countries had been conveniently near offshore banking havens for many Russians. Before the crash it was estimated that more than a half of all bank deposits in Cyprus were Russian. Those claiming Jewish origin banked their money in Israel, taking advantage of dual or multiple nationality status. With Israeli citizenship they had freedom to travel to the EU and North America without visas.
Cornucopia Page 6
