Bastrykin, responsible for the investigation of serious crime, favoured the criminalisation of denial of the Crimea’s annexation, and he saw Tarasov, a partisan of a negotiated settlement, as a traitor, who should be given short shrift.
Tarasov did not take the Newbury exit, but continued west along the M4. Four hours later they arrived in the small port of Fishguard situated on the Welsh coast, where he booked a passage on the next ferry for Rosslare in Ireland. He registered as Henri Pijselman, a Belgian national resident in the Republic of Ireland. At immigration he presented Belgian passports for his family and was waved through without any further formality.
His flight had been carefully planned. Early on in his career, Tarasov’s now defunct protégé, Nikolai Yakovlevich Dermirshian, a brutal gangster, had warned him of the dangers that stalked men in his position and the unquestioning need of a plan B, an échappatoire, which could be instantly put into effect in case of imminent danger.
At the first hint Vladimir Putin’s rule hardening, Tarasov had quietly set about establishing an offshore safe haven for his family. If things ever went badly wrong in Russia, or if a confrontation such as with the Ukraine got out of hand he had much to lose.
Thus in 2011, after a quiet visit to Ireland, in the company of his close friend, Steve Howard, in whom he had an implicit trust, he bought a large country house on the banks of the Shannon to the west of Limerick City, registered in the name of an offshore company based in Panama. Apart from serving as a very private retreat for breaks with his family and very close friends, it was a safe house, equipped with all essential needs, on permanent standby, for an extended family stay.
1. Powerful former members of the state’s security apparatus, KGB, GRU, FSB and SVR.
SHALE
Barton was not an advocate of Paul Samuelson, Nobel Prize winner for economics in 1970, who had said: Investing is like watching paint dry or grass grow. If you want excitement go to Las Vegas. Investing for Barton was a fast moving game, though he never saw it as gambling. It was an art of considerable skill where the pros and cons were carefully weighed, and the moves fast.
However, before getting into shale oil and gas he had hesitated. The risk of a bubble was definitely there, but after discovering China he knew alternatives to conventional oil had to be developed and the only one of real promise to an individual investor like himself was in unconventional sources. His investment of a quarter of a million dollars in a US shale oil and gas producer had doubled in value in a little under a year in an almost incredible reversal of American fortunes.
The US, already one of the world’s leading producers, was on the point of becoming a net exporter of oil and gas, releasing it from the trap of Middle East energy suppliers. High oil prices had stimulated the development of new extraction technologies, which increased its exploitable oil reserves almost overnight.
On the negative side was the real possibility of an oil glut as markets sought to develop alternatives sources of supply. Geopolitical risks were on the increase and energy independence became primordial. The Arab Spring instead of bringing peace and democracy had transformed the Middle East and North Africa into a bloody war zone. Libya had become dysfunctional state of warring factions, Egypt had fallen under the control of a new military strongman, whilst Iraq, Syria and the Yemen burnt.
Barton could not have been described as a novice in investing. But he was, or had become, a risk taker. It was however untrue to imagine he had decamped because of recent losses: not only were they modest, but he could afford them. His decision was more to do with his disgust after the debacle at INI, as well as the ensuing media attention which had troubled him.
It was not the first time he had dropped everything and cut loose, which was not, contrary to what could be imagined, the simplest response to the ambient problems, but it was expedient. It took a certain amount of audacity, and money, to drop everything and set out to in search of a different world, for that’s what it was. Beyond that Tom Barton realized deep down he had a certain predilection for adventure.
A
merican shale oil rig
But life did not only consist of adventure, there were obligations and a certain number of those he had admittedly left in suspense.
Having bet on shale oil and on Russia, his winning streak had come to an abrupt end, in the same way as it had for those he had often disdained as being naive, those who had taken out unreal mortgages, who had spent extravagantly on consumer goods and luxuries: the ‘chaves’, as they were frequently described. Was he not one of them now? He felt the need for purification, a fresh page, financed of course from his rainy day accounts beyond the reach of the taxman and society’s other distasteful executors.
Perhaps he was a prudent man, a contradiction in terms, considering he was about to plunge into the unknown.
His ideas were vague. He knew next to nothing about Colombia, beside its infamous reputation as a producer of cocaine, its battle against the Farc guerillas and its all pervading violence.
From there he would perhaps go north to Central America, or perhaps head south to Peru or Brazil. But first, he would to see what Colombia held.
*
“Fired!” Lili exclaimed incredulously.
Pat pointed to the TV and turned up the volume.
The same Bloomberg anchorman was in duplex with a political journalist reporting from the steps of Bank of England, a stone’s throw from the INI’s headquarters in the Gould Tower. The anchorman was interrupted by a news flash from the pressroom at 11, Downing Street, where the Chancellor of the Exchequer was reading a statement:
As of today February 23, 2015, City & Colonial, in accordance with a decision of Her Majesty’s Government, the Governors of the Bank of England and the Financial Services Authority, a plan has been approved to inject fresh capital into the INI Banking Corporation plc, to put it on a sound footing following the difficulties it has recently encountered, notably loan defaults in Russia, and the changes implemented by the Russian government relative to the management of the INI Holding’s partner bank in Moscow.
The Chairman of Europa Bank Holding plc, has tendered his resignation and that of his board of directors, which is effective forthwith. As of today the INI Banking Corporation and its holding, are merged with City & Colonial Holdings plc.
INI will continue its everyday business as normal, functioning as a subsidiary unit of City & Colonial. The interests of INI’s clients will be assured one hundred percent. The same goes for its personnel.
The Chancellor went on to commended Michael Fitzwilliams for his cooperation with the financial authorities, which permitted the Bank of England to take the measures necessary to protect the interests of the UK banking sector as a whole.
A flurry of questions followed as reporters pressed forward. To their disappointment the Chancellor simply added a dry: “Thank you gentlemen.” Then wearing his usual enigmatic smile added: “Good morning.”
By magic the press-room door behind the Chancellor opened and he was gone.
It was in effect a takeover and Michael, his fucking friend, had left him in the lurch.
Lili’s eyes filled with tears as she tried to console her husband.
‘What will you do Pat? I mean is it legal?”
Lili as a lawyer and was trying to fathom the meaning of the news in professional terms.
“The first thing is to see how it affects us here,” said Pat angrily. “That stuck-up feeker from City & Colonial told me not to come in, but the bank here is only owned in part by INI London, the rest belongs to us … your family and myself.”
“You’re right Pat. I’ll call my brother.”
“Then there’s Tarasov.”
“Tarasov?”
“Yes, the Russian bank is an independent entity, separate from London. The Chancellor said something about the Russian government? In any case there’s some cross holding, but I can’t remember the exact details. We’ve been screwed .... Is Fitz part of this feekin
set-up?”
Lili dabbed her eyes.
“Right. Let’s go.”
It was a short drive from the Peak down to Central and the Jardine Tower, where their driver dropped them off. Once inside the cavernous lobby of marble and stainless steel Kennedy spotted a group of reporters at one end of the long range of the security turnstiles on the look out for news.
Using their magnetic cards the couple slipped through unnoticed on the furthest side.
They took a lift to the 38th floor, where they were forced to push through a crowd gathered before the double doors leading to the bank’s suites. Once inside they were met by an anxious receptionist who pointed them to the main conference room.
“There are two men from City & Colonial here,” she warned them. “They’re with Brian Leung.”
“Where’s Angus?”
“He left for Shanghai on an early flight.”
“Shit.”
Pat, his face set in a grim expression, pushed open the doors and strode in unannounced.
“Good morning gentlemen, I’m Pat Kennedy, how can I help you?”
Two Brits in banking style attire looked up from the papers spread out before them their faces evidently startled by Kennedy’s brusk manner.
The older of the two, in a blue pinstripe, stood up and pompously announced he was from City & Colonial.
“We’re here to facilitate the transition Mr Kennedy.”
“I don’t care where you’ve feekin come from. I want you out now or I’ll have security throw you out.”
“But … but …’
‘There’s no ifs or buts. Out!’ shouted Kennedy pointing to the door and nodding to the security guards to show them to the lift.
The pinstripes were not about to get into a brawl. With an abashed look they hurriedly shuffled the papers before them together.
“I’ll take those,” said Kennedy pointing to the door.
“We’ll be back,” threatened the older pinstripe.
“Over my dead body. Out!”
Pat then ushered the bank’s own administrative staff out whilst waving Brian Leung, the assistant director, to remain and closed the doors.
“So Brian,” he said softly, “what did those two clowns want?”
Leung was shaken, in a sweat. “They said we’re now part of City & Colonial.”
“Did they have any identification?”
“The younger of the two was from the City & Colonial legal department. He said they had instructions from London to coordinate organisation and management changes.”
“I see, in their pig shit ignorance they jumped the feekin gun,” Kennedy said half talking to himself.
“Okay Brien, don’t worry, they won’t be back in a hurry. Lili call Gordon Cheung at Applebys, tell him it’s urgent we need him over here at once. Then try to get Angus MacPherson on the phone.”
*
It had been a bumper year for the INI Group1, 2014 had produced record profits, which quite naturally went hand in hand with hugely generous rewards for its directors and staff. The same went for the bank’s property funds which were riding on all time highs in London’s prime and super-prime property markets. Never had the capital seen such a boom as commercial and residential property developments sprouted like mushrooms along the banks of the Thames.
The New Year celebrations continued as the bank’s heads: Michael Fitzwilliams, Sergei Tarasov and Pat Kennedy were showered with rewards. Shareholders saw a rise in dividends and share prices rose with the stock market. Hedge fund managers like Tom Barton hit the jackpot. Young up-and-coming faces like Liam Clancy pocketed mind bogglingly bonuses.
All in all INI, in spite of the problems brewing in Moscow, had never had it so good. In its short existence it had become a shinning star among the one hundred and fifty banks in the City’s financial cosmos, which included the five large retail banks, private banks, investment banks or trusts of different kinds, as well as small Punjabi, Turkish or Chinese banks. Beyond those there were many more structures present, but which were incorporated outside the European Economic area, and authorized, or not, to accept deposits.
To the masses of ordinary commuters that poured into Liverpool Street, Fenchurch Street and London Bridge railway stations every morning on the way to their desks in the City’s vast financial machine, the men who ruled over them were gods, all but invisible, that is apart from photos in brochures and company magazines, and the rewards bestowed on them were fit for gods, akin to the treasures of heaven.
Those at the summit, the Fitzwilliams’ and Tarasovs, counted their gains in tens of millions, paid for by speculative investment in property, commodities, the rise and fall of markets, Forex dealings, gold, and of course the management of wealth funds designed to further enrich the already fabulously rich individuals who controlled the companies that pumped oil, mined gold, diamonds, copper, iron ore, bauxite and other minerals, or failing that pumped their respective countries and fellow citizens for all they were worth.
L
ondon
In the pantheon of winners stood Tom Barton, who banked over ten million a year, a prodigious sum of money, guaranteed by the terms of his generous earnings related contract as head of the very successful Europa Property Fund. Even junior managers such as Liam Clancy, the young protégé of Pat Kennedy, pocketed a cool half a million pounds a year.
1. Irish Netherlands InterBank
*
In his Knightsbridge home, Michael Fitzwilliams slept in an armchair before the TV. He had spent the best part of the previous twenty four hours trying to save his bank. Over the course of nearly a century his family had built the institution from an almost insignificant provincial Irish savings bank to a worldwide multinational banking corporation.
The bank, known as the Irish Union Bank at its outset, had survived the Troubles and the Second World War. In 2000, Michael Fitzwilliams succeeded his uncle David Castlemain as the bank’s CEO, who was lost with his yacht in a hurricane off the coast of Cuba. Over the fifteen years that followed, Fitzwilliams successfully guided the bank through a series of financial crises: the dotcom crash, the Lehman Brothers collapse and the UK banking debacle. Now, suddenly, in the space of twenty four hours, all his work had come to nothing. Almost inexplicably he had lost control of the family bank.
What seemed certain however, was that Kennedy had a lot to answer for, as it was he who had engineered the tie with the Russians.
Fitzwilliams woke with a start. It was a new day. Theoretically at fifty five he still had many good days and years ahead of him, but doing what? It would take some time to untangle himself from INI, but first was his so called compensation package. He had at least ensured the promises made the previous day were put down in black and white and signed by the chairman of City & Colonial, approved by the Governor of the Bank of England and the Chancellor; the result of hours of negotiation, a rearguard action to avoid the humiliation of finding himself in his socks on the steps of Her Majesty’s Treasury on Whitehall late on a Sunday evening.
In the space of a few days the bank had taken two devastating hits. First, the Russian oil giant, Yakutneft, had violated covenants on a five hundred million dollar bond by defaulting on its payment. That in itself could have been resolved by renegotiating the conditions of the loan, the trouble was that Yakutneft was not alone. Second, the InterBank Corporation, the Russian arm of the INI Banking Corporation’s holding, was shaken by the seizure of Sergei Tarasov’s interests by the Russian Ministry of Finance amidst accusations of fraud and corruption.
InterBank’s situation had been fragilised when it was forced to convert part of its dollar receipts into roubles to support Russia’s troubled currency. Then, when the Minister of Finance decreed the bank participate in a bond issue to compensate for the state’s shrinking revenues, Tarasov refused, pointing to the losses engendered by Yakutneft’s default.
His enemies retaliated by citing his considerable offshore assets, which he was summed to repatriate. H
is refusal was not only seen as unpatriotic, it was nothing short of treason. The FSB responded by accusing Tarasov of tax evasion and misappropriation of the bank’s funds for his personal gain.
In London the Financial Services Authority had been closely monitoring the situation after being informed of the Yakutneft default by INI’s compliance officer, a standard procedure, in accordance with statutory regulations.
Earlier the same week, at a Kremlin reception for the Orthodox New Year, the British ambassador was discretely informed of the risks Tarasov faced relative to accusations being formulated by the Ministry of Finance. Late that same evening a coded dispatch was sent by the British Embassy in Moscow to the Foreign Office in London and the following morning, the Minister of Foreign Affairs personally informed the Chancellor of the news, who in turn passed it on to the FSA in the City.
Events were accelerated when the Chancellor was handed an urgent dispatch at breakfast time the following Saturday morning, informing him charges against Tarasov had been formalised in Moscow.
The immediate risk was of a chain reaction and major losses in the City. INI had become too big to fail and the Chancellor deemed an intervention by the Bank of England necessary. After a series of rapid discussions with the Economic Secretary of the Treasury and Bank of England officials, a merger with a larger group was seen as a solution, thus avoiding the risk of a serious banking crisis at a critical moment in the political calender.
With a general election only five months off, the Chancellor consulted the Prime Minister, who instructed him to take prompt pre-emptive measures. A shotgun marriage dressed up as a City deal was decided in the best interests of Her Majesty’s Government and the City.
Cornucopia Page 15
