The Wu saw Pat expanding and diversifying the family business empire through his links with London, Europe and Russia. He perceived him as dynamic, audacious, and above all fortuitous, a quality appreciated by the Chinese, unlike the kind of European bankers and company men they had met before, surrounded by a coterie of lackeys and interpreters, nor was he one of those naive, penniless, fortune hunters, the kind that arrived in droves in China’s great cities in the hope of gleaning a living.
Pat was domiciled in Hong Kong, as were most of Lili’s family, a status the offered considerable advantages for both Mainland Chinese and foreigners alike. In the four years that had passed since Pat had first met Lili he had applied himself to learning Cantonese and Mandarin, becoming reasonably conversant in both dialects, that is for a foreigner. Often, to the amusement of the Wu’s who switched with ease in from one dialect to another, Pat confused the two mutually incomprehensible languages, for that’s they were. It was quite an achievement, though northern Mandarin speakers were often perplexed when Kennedy unwittingly injected Cantonese words into the conversation.
Once his Cantonese interlocutors got over their surprise, Pat found himself in a different world, a world the average non-Chinese speaking visitors did not even suspect existed.
Pat had discovered a latent talent for languages soon after he realized his chosen profession, or that chosen by his mother, accountancy, was a dull affair. After his initial period of work experience in Boston, Massachusetts, where he learnt the ropes of his trade, he had set up an accounting firm in Limerick City. There he soon found himself working with foreign companies in the Shannon Business Park. In the course of his work Pat established business relations with a Hamburg coffee franchiser he had helped set up a coffee distribution company in Ireland.
His account with the franchiser frequently brought him to Hamburg, more than perhaps would have been normally deemed necessary for business needs. Soon he was discovering Continental Europe, that is to say Germany, Holland and Belgium, and decided it would not be a bad thing to learn a little German. His thick skinned nature prevented him from feeling any embarrassment practising his pidgin German with business partners or striking up conversation with just about any friendly stranger he met on his travels.
As Pat’s German progressed and he discovered his talent he progressed to French and Spanish. Then later to Russian when the bank’s business took him to Moscow and Saint Petersburg. His natural intuition and indifference to grammatical complexities overcame all obstacles, transforming him into an accomplished though unorthodox polyglot.
The Cantonese were proud of their own specificity. They were Chinese, but different from Northerners, they had their own language, or dialect as it was mistakenly called, as different from Mandarin as Portuguese from French. The Cantonese not only spoke their own dialects, the roots of which they went far back to the original language spoken by Chinese in classical times, but were also conversant in Mandarin. This gave them a considerable advantage in business as most Northerners found Cantonese incomprehensible.
The Wu’s believed their investment in INI Hong Kong Ltd, would create new opportunities giving them access to London’s financial markets, opening new doors to Europe, Russia and its Far East. That link was consecrated when Kennedy married Lili and became part of the family.
City & Colonial on the other hand represented all that the Wu’s detested, starting with its overpoweringly arrogant presence, a hangover from the colonial past, monolithic and faceless, casting its shadow everywhere like the Chinese Communist Party. City & Colonial was essentially a British bank, with its headquarters in London, one of the world’s largest with several thousand branches and offices around the world, a behemoth, against which Pat and his friends could not and would not fight, though they would need all their skill and intelligence to avoid becoming a mere titbit in the giant’s maw.
Unlike its confrère HSBC, City & Colonial had never really been been a Hong Kong bank. It had been incorporated in the nineteenth century to finance British trading companies in East Asia, but had always maintained its headquarters in London. When the British government retroceded the Colony to Beijing the question of transferring to London, like HSBC, was never raised as City & Colonial was effectively a foreign bank and its shareholders had no reason to fear their asset would fall into Chinese hands.
*
The former head of City & Colonial, Edward Browne, stepped down in 2012, to take up a key place in David Cameron’s coalition government, and at the same time he was elevated to the peerage with the title Baron of Hazlehurst and introduced to the House of Lords, a procedure that justified his place in the government. There was nothing untoward in the method, in fact it was a very venerable disposition used by all governments for the appointment of unelected government ministers.
Thus, it could not be said the City & Colonial was without friends in Her Majesty’s government. The impartiality of the career banker, with City & Colonial since 1982, cum government minister could not be taken for granted when it came to banking affairs and opportunities. How could he not lend a sympathetic ear to the wants of former colleagues at City & Colonial, which had so munificently contributed to his pension fund, especially when it came to giving a nod and a wink to the takeover of Fitzwilliams’ London bank.
As former head of one of Britain’s largest bank, Edward Browne’s influence was considerable. That, with City & Colonial’s long rapacious history, made a momentarily enfeebled INI an easy victim to the redoubtable predator.
In the sixties and seventies the City & Colonial, after swallowing a number of smaller banks in Hong Kong, pursued its policy of expansion as China opened its doors to foreign investment, first moving into neighbouring Guangzhou, then extending its activities to other important Chinese cities.
City & Colonial did not meet with the same success in Russia, where scandals and devaluations had wreaked havoc at the end of the nineties and the financial crisis of 2008, which put an end to its venture. As a late comer to Russia, there were few if any suitable partners available, since the most important had already joined forces with foreign banks. As a result of its failure to find a suitable partner City & Colonial was forced it to close its operation in Moscow.
The sudden crisis that struck INI at the beginning of 2015, was a serendipitous windfall, as the minister put it, presenting City & Colonial with an extraordinary opportunity. The link with InterBank, notwithstanding the on-going problem with Tarasov, would give them an unhoped-for foothold in the Russia market once the crisis was resolved.
ISLAMISTS
Four days later O’Connelly was still trying to figure out what the Swiss Central Bank had done. He had received an alert from his account manager at the Zuricher Bankverein following the sudden rise of the Swiss franc on Forex markets.
He was about to call the Zuricher when his phone rang. A glance at the caller’s identity told him it was Angela, his Parisian literary agent.
“Hi Angela, Happy New Year.”
It was the custom in France to offer new year wishes all through January.
“Pat, the same to you and lots of success and royalties.”
“Thanks, I’d like that.”
“What are you working on?”
“As a matter of fact I’m struggling a bit with my new book.”
“Perhaps I can help you there.”
“Oh?”
“Yes, Hertzfeld called. He was excited about the events in Paris.”
“If you mean concerned, he’s not the only one.
“Whatever,” she said brushing him remark aside, “he’d like to talk to you. You’re a Parisian and you know what’s going on.”
“And...,” replied O’Connelly suspiciously.
“Well, he thinks you could write a bestseller about home grown Islamists.”
“I see.”
“He’d like to see you in New York. Wants something quick, before everybody forgets it.”
“Five million copies like C
harlie Hebdo?”
“Why not it could be a real money spinner. A blockbuster.”
O’Connelly did not feel flattered. First he felt the idea was in bad taste and secondly he did not like bring treated like some kind of a hack by his editor.
“Talk to him.”
After a moment of hesitation he thought why not.
“Okay Angela. When.”
“Tomorrow. I’ll book you on the Air France flight at midday.”
“Okay. Mail me the e-tickets. First class.”
“No problem. Thanks Pat.”
O’Connelly rung off. He looked at his watch, it was time to get going. He had a lunch date with Claire.
INTERBANK
Mosbank was founded late in the late 1980s soon after Mikhail Gorbachev authorized the formation of private banks. It was one of the many incorporated in the hope of grabbing a piece of the action when the Soviet Union sought to liberalized its debilitated economy. Unfortunately for Mosbank’s ambitious owners their lack of know-how and experience in market economy banking brought them to the brink of collapse following Gorbachev’s dissolution of USSR.
It was at that point in time Dermirshian’s organisation stepped in and acquired the bank as a front to launder the ill gotten gains of his booming criminal empire. However, his men were no better trained to run a bank than their predecessors, obliging the Mafiyosa to hire a trained professional.
To restructure the bank Dermirshian hired Sergei Tarasov, a brilliant and promising young banker, freshly arrived from the US. Tarasov, after graduating at the Moscow Institute of Economics and Finance, spent two years the Harvard Business School where he was recruited by Goldman Sachs.
After two years with the investment bank he responded to the call of home where the profound changes taking place offered extraordinary opportunities for an ambitious young banker of his background. The choice was huge as banks were being set-up on almost every street corner, most of which were doomed to failure. What attracted Tarasov to Mosbank was the promise of rapid promotion and the business plan of its new owners focused on property in the Federal administrative centres of Moscow and St Petersburg.
Initially hired as business development manager, Tarasov soon outstripped those around him, ridding the bank of bad debts - not without a little help of Dermirshian’s strong arm methods, and soon turned the bank around. As a reward he was appointed president, and went about creating a new image of the bank, renaming it InterBank, to the great satisfaction of its owners, notably Alyosha Dermirshian, who in lieu of a cash reward accorded the young banker with a sizeable block of shares.
At the time of Dermirshian’s timely demise in Monte Carlo, InterBank had become one of Russia’s largest investment banks and Tarasov its controlling shareholder. With its offshore entities InterBank offered a whole range of corporate and financial services to its Russian and foreign clients.
Unlike certain other Russian bankers of that time, Tarasov had a brilliant mind, though like many others he manifestly owed his success to the backing of powerful men in politics and industry as well as that of his shady mentor.
One of his outstanding achievements was the internationalisation of InterBank. Viewed from Moscow, the creation of the INI Banking Corporation in the City of London, in partnership with Michael Fitzwilliams, was seen as a masterstroke.
Tarasov was discrete about his family life. His wife Kseniya had warned him she had little in common with Moscow’s nouveaux-riches. Her mother, who came from a family of Kerry landowner’s and race horse breeders, had married into a family of wealthy Russia émigrés, lesser aristocrats, who had fled the Revolution of 1917 and established a small private bank in the City of London in the 1920s.
Fashion models, movie stars or tennis women were not Tarasov’s style, he had chosen a well-bred Irish girl who preferred horses to fast cars and Gaelic to Russian, although she was perfectly fluent in his language.
His own family the survivors of minor Russian nobility had lost their lands during the Revolution, but miraculously survived Stalin and his successive purges becoming loyal Party followers and members of the nomenclatura, patiently waiting for better days. They were rewarded when Mikhail Gorbachev arrived with perestroika and glasnost, which enabled them to send Sergei to Harvard to complete his education.
His return to Moscow coincided with momentous changes and Boris Yeltsin’s election as first president of the Commonwealth of Independent States.
Sergei’s decision to enter the small troubled Mosbank was not exactly what his father had in mind for him. But in a time of chaos and opportunity, the ambitious Harvard graduate seized the chance in the knowledge Russia with it vast resources in oil and gas would be the target of Western investors in an energy hungry world. Though he saw the bank and its then owners as crude ignorant men, he knew Mosbank would be a suitable vehicle for his success in a new capitalist Russia.
After Vladimir Putin’s election, Sergei, by deft manoeuvring became the bank’s most important shareholder through a series of interposing companies. On Dermirshian’s retirement to Monaco, on the French Riviera, once described by Somerset Maugham as ‘sunny place for shady people’, Tarasov moved the aging Mafiyosa’s shares in InterBank to a holding company he himself controlled in the Principality. With Dermirshian’s death Tarasov was left in full control with no visible presence of the Bratva, enabling him to expand his already solid interests in Yakutneft, the Russian oil and gas giant, building what was effectively his own financial empire.
After the link up with INB, in which the new London holding company, INI Banking Corporation, took a twenty five percent stake of the Moscow bank, Tarasov was left with the remaining seventy five percent.
The banker was not an innocent actor in the plunder of Russia’s wealth, where the people’s oil and gas companies were sold off at giveaway prices to quasi criminal oligarchs and corrupt officials, who used their gains to buy fabulous yachts, villas and all that they desired, even football clubs. As the world watched agog, they jetted-in world class stars for their private parties, where Shakira, George Michael, Britney Spears and Christina Agilera entertained their privileged guests in return for fabulous fees, where Champagne and vodka flowed as freely as the waters of the Moskva, where caviar was dished out in ladles, and all paid for from the profits of oil and gas exports as price rose to near record levels.
Tarasov parents had taught him to turn a blind eye to the inequalities of the Soviet system, it was a Russian thing, where graft was all pervading, where the children of the nomenclatura studied at the FSB Academy and on graduation were handed the best jobs in the administration and leading businesses, and where the sons of ministers and governors were appointed as vice presidents in oil companies and banks.
His rule had always been to look the other way, to roll with the system, avoiding the dangers engendered by the jealousy and ambition of others. He had been lucky and knew that as in casinos luck did not go on forever, which went a long way to explain why he had prepared the ground for a non-Russian future.
With the first signs the network of businessmen and leaders, allied to Putin since his days as deputy mayor of Petersburg in the 1990s, was coming apart, Tarasov set his plan in motion.
By expanding into private offshore banking he built a property empire, acquiring assets in the UK, Europe, the US and the Caribbean, moving a large part of his wealth offshore, despite Vladimir Putin’s very clear message he wanted business leaders to keep their investments at home.
A number of Tarasov’s residential developments in London had been financed by a pool that included Russian investors, led by InterBank Moscow, and certain of those investors were members of Putin’s inner circle.
M
oscow Bank
Why things went wrong was beyond Tarasov’s control. Moscow annexed the Crimea and in retaliation the British government imposed sanctions, including the sequester by the Bank of England of interests owned by members of Putin’s inner circle.
It perhaps
explained Tarasov’s plea for a negotiated settlement of the Ukrainian crisis, a plea that provoked the wrath of the Kremlin. The banker was not the only oligarch who had spoken out in favour of ending the conflict as losses mounted, and Putin, suspicious of the oligarchs motivations, retreated into an ever tighter circle of intimates, friends that went back to his days in the FSB and the state’s military and security apparatus.
Tarasov and many other Russians saw Putin’s isolationist policies leading into a blind alley, at the cost of losing all the progress gained since he came to power. But there was little the rich could do: their assets could be seized at the stroke of a pen and as a warning to others an example had to be made. The ire of the Kremlin fell on Tarasov for having voiced his opinions publicly, he who owed his wealth to the goodwill of the Kremlin would be made to pay for his perfidious acts.
His assets, more importantly InterBank, were immediately seized by order of the Ministry of Finance and put under the supervision of the Central Bank of the Russian Federation, which appointed a temporary management team including directors of the Sberbank1 to ensure the day to day functioning of the bank, preventing the transfer of funds overseas, in particular to foreign banks or businesses controlled by Tarasov and his friends.
The decision directly hit INI London. It was Moscow’s retaliation for the sanctions that had affected banks controlled by Putin’s friends who had seen hundreds of millions dollars worth of their assets frozen. They included Bank Rossiya, the bank of senior Russian officials, and the SMP Bank owned principally by two brothers, Arkady and Boris Rotenberg, childhood friends of Putin, who had amassed fortunes from rich contracts with the state and state-owned companies.
1. The Savings Bank of Russia, the country’s largest, of which the Central Bank held 51%
DAVOS SWITZERLAND
He was drawn to Thomas Mann’s ‘Magic Mountain’ by a fascination that even he had difficulty to define, perhaps it was the mystic of Switzerland, the centre par excellence of offshore banking. Davos had become a pilgrimage that Pat Kennedy had religiously made every January for the previous six or seven years.
Cornucopia Page 18
