Cornucopia

by John Kinsella

  “Well they shouldn’t be,” said Pat. “There’s risk of a default, a disaster for the UK given the massive loans British banks like RBS and Lloyds have ladled out to Ireland.”

  “It would provoke another round of bank failures in the UK,” Francis told them. “It’s why the City sees Ireland’s difficulties in a different light, making Dublin’s needs a special case.”

  “Hey, we’re not here to talk about business,” said Sophie filling their glasses. “I hear you’ve been back to Russia,” she added with a twinkle in her eyes.

  Francis took off his glasses and wiped them with his napkin. It was impossible to keep a secret.

  H

  endaye – France

  “Yes, I suppose they told you.”

  They all laughed. His relationship with Ekaterina was an open secret. They had met at the Pushkin Museum in Moscow - the inauguration of an exhibition of Mid-Twentieth Century Contemporary Art, where he along with Pat Kennedy and Tom Barton had been invited.

  “What’s her name?” enquired Sophie brushing aside his embarrassment.

  At that moment the noise of a jet approaching San Sebastian Airport on the other side of the bay turned their attention.

  Francis dodged the question as Pat came to his aid.

  “What we’re worried about is that contagion could spread to Italy. All the signs are there with markets urging governments to spend money they haven’t got.”

  John Francis, quickly picked-up the thread, speaking of an idea that was making the rounds: a parallel between the on-going economic turmoil and situation that had led to WWI.

  Peace in Europe had reigned for seventy years and in spite of serious regional wars, the great powers had somehow, at least for the time being, managed avoided the spread of conflicts.

  To Francis, who adhered to the belief that human history was composed of cycles, any idea that humanity could shape its future was nothing more than a myth maintained by political and cultural establishments. Civilisations were as ephemeral as animal species invented by nature, their existence limited by the force of change, the rest was nothing more than an illusion to pacify the masses. Of course the actors changed, as did the settings, but life and death as well as the perpetual struggle for power and influence followed as surely as did the seasons.

  In the past rulers had justified their divine authority by pointing to their supposed exclusive communication with a god, who demanded, come what may, unconditional obedience. The ideas of long dead leaders, who went to war with god at their side, were obsolete. Kaisers, czars, emperors, kings, princes, tyrants, fuhrers and caudillos, or whatever they chose to call themselves, had been successively ditched by their gods. All of which made Vladimir Putin's overtures to the Russian Orthodox Church strike Francis as all the more astonishing.

  His visit to Ekaterina’s grandparents in their picturesque village to the south of Moscow, showed how religion could serve as a unifying cement - just as it had in Ireland during its difficult times, a guide, a rhythm with its traditional festivals that brought families, friends and neighbours together, a reminder of their past joys and trials, and a comfort in death and suffering, but not as a banner under which their men were forced to march to war.

  Russians had little illusions about Communism and its invention of Stakhanovism - collective lies, perpetrated by both leaders and workers movements, where Russians paid lip service to Communism’s mythology under the threat of the Gulag. Lenin, Stalin and their successors had destroyed the tissue of the traditional life of Russian peasants, persecuted the kulaks - better off peasants, starved millions of Ukrainians to death by forced collectivisation, condemned millions to Gulags and murdered dissidents by the tens of thousands.

  The temptation that drew Putin to authoritarianism was ingrained into the Russian psyche. To the East, China, Russia’s one time protégé, had emerged as a giant, a future leader, an ascendant civilization, compared to which Russia was a failed power, an empty space.

  The giant had awoken and had begun to flex its muscles, projecting its military power into the South China Sea. Where would it turn next? Perhaps Eastern Siberia? The dangers of riding the Chinese dragon were too great even for Mr Putin.

  To the west, Europe was distracted by a titillating comic opera: François Hollande gallivanting around on a scooter for his midnight trysts with an actress girlfriend, a short fat Romeo in an oversized crash helmet. A buffoon, a poor man’s version of Il Cavaliere, Silvio Berlusconi, whose clowneries and scandalous bunga parties with teenage call girls had amused the gallery for years, when Italy tottered towards the brink of disaster, one of Europe’s largest economies, the default of which would reduce Greece’s difficulties to nothing more than a bagatelle.

  “This afternoon its San Sebastian and no politics,” announced Sophie, in an effort to steer them away from business and geopolitics.

  A BUBBLE

  In 2011, Kennedy, still making his first steps in China, had been warned by Lili that its most dynamic domestic motor of growth: real estate, both residential and commercial, was seriously over heating; threatening the stability of the country’s entire economy. She explained how every middle-class Chinese family had invested their savings in residential property. It was an indisputable fact, wherever Pat looked new apartment blocks were springing up, and many were empty. Lili told him buyers saw their investment as money in the bank, growing by leaps and bounds, year in year out, earning greater returns than the interest paid by any bank and with little or no risk, up to that point.

  Whereas many Chinese home buyers made large cash deposits, most of the purchase price was paid through a bank mortgage, thus the boom in residential construction meant that almost twenty percent of all bank lending in China was property linked.

  It was a paradoxical situation considering the average Chinese family, at least those Pat had observed in his travels, could not even dream of owning one of the splendidly equipped homes advertised in glossy promotional brochures handed out in shopping malls.

  Who were the buyers and what would happen if the bubble burst? he asked Lili recalling the still painful memories of the property crash back home.

  Her reply was a shrug of the shoulders.

  The Chinese property market was beginning to resemble a re-run of Spain in 2007. After growing at more than twenty percent, double the rate of its GDP, for more than a decade, demand was falling for a number of reasons including changing family demographics.

  China was riding a tiger. Property growth consumed credit, services, raw materials: steel and concrete, as well as electrical and mechanical goods, domestic appliances and furnishings. Any serious slowdown would automatically drag down those other sectors and the slowdown in construction would inevitably force the Chinese government to re-think the country’s long running growth model.

  This, explained Lili, was the source of all the perils that faced China. The question was not if the property bubble burst, but when. In the words of John Francis, China supplied the world with manufactured goods and the world supplied China with the money needed to inflate its property bubble.

  Over the course of 2014, little by little, Lili’s predictions were confirmed. Of course she had not been alone, but as far as Pat was concerned his confidence in her was total; she was Chinese; from a banking and business family, one that had deep roots in China and Hong Kong. The economic slowdown almost certainly explained the reasons for the frenzied actions of certain Chinese businessmen and leaders: a headlong rush into overseas investment.

  HIGH STAKES

  Pat felt he had made the right choice, Hong Kong was safer than Russia from all points of view. Perhaps he was getting older and wiser. Certain businesses were best avoided, losing money was one thing, but ending up behind bars, or on a mortuary slab, was another.

  The news that Thierry Leyne, an associate of Dominique Strauss-Kahn, had jumped off Tel-Aviv’s highest building, a tower where he rented an eight hundred square metre appartment, just a couple of days after
Christophe de Margery, the president of the French oil giant Totale, died in equally strange circumstances, unnerved Kennedy. Christophe de Margery’s Falcon inexplicably crashed into a snow plough on take-off at Moscow’s Vnukovo Airport.

  The ex-IMF president’s company LSK (Leyne Strauss-Kahn), had been mixed in a series of nebulous deals linked to suspected money-laundering. Strauss-Kahn had resurfaced as an arranger for a number of very doubtful clients, more especially the National Credit Bank of South Sudan, in a country ranked 163 by Transparency International, reputed to be centre for illegal banking and black market currency dealings, and where corruption was rife.

  Strauss-Kahn’s dealing could have been considered an unfortunate incident had it not been for the fact he had also been appointed to the board of the Russian Regional Development Bank, by Igor Sechin, Rosneft’s chief executive, and was a board member of the Russian Direct Investment Fund. On top of that Strauss-Kahn was appointed chief executive of Credit Dnepr by the Ukraine billionaire Viktor Pinchuk.

  It was a strange and dangerous hotchpotch of affairs to say the least, and one that could have provoked the death of his partner.

  Accidents and suicide had always been a favoured method of eliminating business enemies, those who obstructed ambition, or were inconvenient witnesses. It was as old as time, going back to ancient civilizations where poisoning and other dirty tricks were best-loved means of settling succession. It was very effective; after all it was very final.

  In the case of INI the stakes were huge. The subsidiaries and emanations of Michael Fitzwilliams’ bank in: Hong Kong, Ireland, Amsterdam, Moscow and the Caribbean were worth billions. City & Colonial had got its hands on the heart of the bank, but the structure of INI’s overseas affiliates was such that a large part of its holdings escaped the ambitions of the predatory giant.

  Perhaps he was being paranoid, but Pat Kennedy, with reason, figured his sudden demise would facilitate any plan to seize the whole group. The initial danger had passed and perhaps it was the moment to take a break and leave the bank in the capable hands of Angus MacPherson, together with the Wu’s, a family that had survived the upheavals and transformations that had changed the face of China.

  If City & Colonial was a house of secrets with friends in high places to protect, it was the Russians that Pat feared most. Those who had never met the likes of Dermirshian, to whom human life meant nothing, would have had difficulty in imagining the lengths such men would go to protect their and their friends interests.

  Lili had not been joking when she told him he needed a personal bodyguard, an old Chinese tradition for the rich.

  *

  The Kremlin and the FSB with its predecessors had never hesitated to use the Mafiya for their dirty work, notably criminal operations and politically motivated assassinations.

  Sergei Tarasov for one was familiar with the murky links that existed between the Kremlin and the Mafiya and no one was better positioned than he to understand the fragility of wealth, especially that which sprung from the discrete patronage of those two institutions, where the dividing line between individual interests and matters of state was sometimes blurred.

  On the one hand Tarasov was the head of a powerful Moscow based banking group obeying the laws of the Russian universe, and on the other he was an international businessman living in London conforming to the rules and regulations of British society and the City.

  His connection with the Kremlin was other than that of a City banker, taking, on occasions, cues from Downing Street, much more. As for his dealings in Moscow, they often took place behind by a heavily veiled façade of respectability that hid dark secrets, financial arrangements between the inner circle of Russian power and the Mafiya underworld, a tradition that could never be understood in London, one that Tarasov exercised with the very greatest discretion.

  He had seen so many of his class eliminated after falling foul of political interference: imprisoned, forced into exile and even assassinated. It was endemic in all authoritarian regimes. Tarasov remembered men like Saïf Gaddafi, whom he had met on occasions in London, Montenegro and Greece. The son of the Libyan dictator, who had been fêted by Western businessmen, flattered by British politicians and praised by London academics. Then, with the downfall and death of his infamous father, Saïf was condemned to rot in a Libyan prison, accused, amongst other things, of threatening his country’s national security and insulting its new national flag.

  Tarasov was different from other oligarchs. Unknown to his partners, with perhaps the exception of Pat Kennedy, he had been the chosen protégé of Alyosha Dermirshian, the late lamented head of a powerful branch of the tentacular Russian Mafiya, a vast, clandestine, system of crime syndicates that penetrated every corner of the country’s political and business system, as it always had; under the czars, the Soviet Union and their successors.

  Different groups, all part of the Братва, or brotherhood, cooperated or shared services when it suited them. The Красная мафия, Red Mafiya, which had flourished in the black market of the Soviet era, then during the period of chaos following the dissolution of the USSR, had since diversified and expanded its interests.

  Dermirshian’s corrupt business grew at an exponential pace once the Russian property boom started, he had enlarged his empire by seizing control of weaker gang’s by force and political manoeuvring. He was aided by former Communist officials and the new class of business leaders that emerged from the ruins of the Soviet economy.

  His empire had created a façade of respectability through the acquisition of a small bank, Mosbank, which at the outset was nothing more than a tool to launder money from its serendipitously acquired property empire in St Petersburg and Moscow.

  This enabled Dermirshian to enter the opaque post-Soviet world of Russian politics as well as reinforce ties with other crime syndicates, running groups within and outside of Russia, transforming his operations into a global business. He traded in everything legal and illegal: commodities, casinos; night clubs, arms, drugs, alcohol, prostitution, immigration, diamonds and money-laundering.

  Wisely Dermirshian retired to Monte-Carlo, whilst those less intelligent killed or were killed in the fight for power, money, territory and supremacy. During this time Sergei Tarasov transformed Mosbank into InterBank, distancing it from its Mafiya roots, building it into a powerful business institution that reached out to the City of London, where, after joining forces with Michael Fitzwilliams’ crisis hit bank, the INI Banking Corporation was born.

  *

  At the outset Dermirshian's Mosbank was in reality nothing more than a conduit to launder the vast sums of money that his criminal empire generated during the Yeltsin years, when Russia resembled the Wild West and huge fortunes were made. Each week suitcases filled with millions of dollars left Moscow, via the bank’s newly acquired jet, destination Belgrade, the capital of Yugoslavia, a country on the brink of disintegration, embroiled in a vicious civil war as its component republics fought for their independence.

  The money was transported to Montenegro where it was discretely loaded on board a yacht: that of the Mosbank’s new and dynamic youthful head, Sergei Tarasov: destination Cyprus or Monte-Carlo.

  Since that time, Russian organized crime had taken a foothold on the French Riviera and Spain, pumping money in stalled property developments. At the other end of the Mediterranean, backed by one million Russian Jews, it created a powerful base in Israel, controlling Tel-Aviv’s diamond and financial markets.

  Dermirshian’s men had eliminated uncooperative leaders such as Aslan Usoyan, who was shot dead in January 2013 by a sniper’s bullet as he left a Moscow restaurant just one mile from the Kremlin. Usoyan, a Yezidi Kurd born in Soviet Georgia in the 1937, was one of the old guard Mafiya bosses.

  Usoyan’s clan had been embroiled in a long turf war with rival groups from Chechnya and Dagestan for the control of casinos and night clubs with gangland style executions. One of the reason’s for Dermirshian’s ire was Usoyan’s
entry into the hotel and property business, the kind of presence feared by legitimate hoteliers and real estate businesses.

  Times had changed and Mosbank was a distant memory. Well before the retirement and demise of the old Mafiyosa in Monte-Carlo, Interbank and INI Moscow had become respected institutions, though they still banked nebulous funds from even more nebulous clients.

  *

  At the heart of INI’s international network was INI Private Bank in Dublin, which, via complex operations and companies incorporated on Caribbean islands, offered safe havens for its rich clients: Russians, Chinese, Middle Easterners along with a pot-pourri of dictators and leaders of banana republics.

  It could have seemed normal if the list ended there, but it didn’t. INI Private Bank offered its services to a serious number of Britons and Europeans who were actively hiding their money from tax authorities and prying eyes.

  The unsuspecting public in London or Dublin would have never dreamt that the hidden fortunes of that mixed bag of dictators, gangsters and fraudsters were hidden offshore by the Irish bank, it offices visible to any passer-by, situated on a street like any other in Dublin’s financial district. Fortunes managed through a nebulous screen of companies, trusts, investment funds and accounts of every imaginable description, structures in constant metamorphosis, scattered across what was know in the offshore banking world as the Bermuda Triangle, situated between Panama, the Bahamas and the British Virgin Islands.

  EU directives of 2001 and 2005, applying to interest paid to individuals resident in an EU Member State, other than the one where the interest is paid, implemented a system of cross border reporting so that all citizens paid taxes due on all their savings income.

  D

  ublin Financial District

  There was however a loophole, the directives were applied to individuals only, not companies, which was a boon to Ireland. To avoid taxes, all that was needed was the creation of a screen company and an account in its name, in a suitable offshore tax haven. A procedure that was child’s play to INI Private Bank Ltd., Dublin.