Fitzwilliams, whatever his state of mind, was, whether he liked it or not, one of them. He had not gone to Eton, he was a Harrovian, like seven British prime minsters. Cameron’s school formed nineteen prime minsters: Old Etonians, who formed a class destined to rule, once described as a magic circle. Just eight PMs had attended state schools amongst them John Major and Gordon Brown, not forgetting Margaret Thatcher, who had grown up in a flat above her father’s grocer’s shop on North Parade, near the railway line in Grantham, Lincolnshire. The Iron Lady attended grammar school and a not particularly distinguished Oxford college, a university that was later to snub her by refusing an honorary degree.
It was as if British society had returned to the early twentieth century, when toffs ruled a deferential society and latter day labourite trade unionists formed an opposition that had scant hope of winning power. Gone was the brave new world of Tony Blair, who it now seemed had joined the toffs.
The upwardly mobile society had stalled as industry shrank, as new populations were prepared to work for less, dragging down wages and aspirations. Working people were entertained by footy and TV shows like Top Gear and Strictly Come Dancing, whilst the wealthy privileged classes ruled, and their marionettes: rich well-meaning superannuated rock stars, sports and television personalities, paid lip service to humanitarian services, offering temporary lodging in their extravagant, but empty, second and third homes to refugees after ignoring the plight of those already living in the UK and their own distressed compatriots.
The establishment members were unaffected by the effects of immigration, unemployment, failing health services and poor schooling. Their wealth isolated them from events and changes that impacted the average man. From their comfortable nexus they were incapable of making the decisions necessary to protect their voters, advance the interests of their nation and its future.
The Cameron family had a long history in the City of London as stockbrokers. In the nineteenth century one of them, Sir Ewen Cameron, was with the Hong Kong and Shanghai Banking Corporation, where, amongst other things he sold Japanese war bonds for the Rothschilds to finance the war between Russia and Japan, which led to the formers humiliating defeat in 1905.
The Cotswolds had long been the weekend escape for the rich and powerful who arrived by helicopter. Witney, the Prime Minister’s constituency, was one of their watering holes where members of the gilded circle could discretely let their hair down in secluded manor houses, farms and the stately homes of their friends far from the common folk.
Fitzwilliams, was nevertheless a snob, a paid-up member of his class. He carefully avoided mimicking those of the wealthy upper classes who had become inverted snobs, who liked to slum it from time to time, rubbing shoulders with footballers, working class idols and media personalities, snorting cocaine and joining binge drinking parties whenever the occasion arose, which was certainly was more exciting than drinking tea with the Archbishop of Canterbury or the Queen, but a world where descent into Edwin Drood like depths was never far away.
The class system had not ceased to exist it had simply become more insidious. Economic inequalities had grown as wealth and power were concentrated in the hands of the few. As for the masses their world had become more uncertain, especially for the working classes as security of real employment faded and wages stagnated.
Certain members upper classes did not however hesitate to identify themselves with the nouveaux-riches by quixotically justifying their wealth as part of a just system based on meritocracy and contributing to the well being of the people. And logically working class idols, mimicked the rich by domiciling themselves in exotic tax havens, hiding their newly found wealth from the taxman.
Government ministers naturally kept a low profile, it was not good to be seen quaffing Champagne with bankers and rich wrinkling rockstars chatting about their villas in Tuscany, Provence, Marrakesh or Jamaica. From their backgrounds of privilege and impeccable connections Tory ministers assiduously avoided any overt association with the London in-crowd, preferring the privileged rural life of the Cotswolds where tight lips and respect of the gentry ensured their privacy.
Michael Fitzwilliams agreed with at least one thing said about politicians: they and scorpions had much in common.
REGULATORS
Foremost in Fitzwilliams mind was the fear that City regulators would be brought in to scrutinize the movement of funds at INI, now under City & Colonial control, made on behalf of Tarasov and friends. The sanctions imposed on certain Russian oligarchs by the EU and US could attract the attention of investigators leading them to scrutinise accounts in search of illegal transfers.
In the meantime evidence of transfers relating to certain of the bank’s clients, suspected of tax avoidance or money laundering via shell companies in the Caribbean and Hong Kong, if discovered by City & Colonial, could be used by Hainsworth to bring pressure to bear on Fitzwilliams buying his silence and pre-empting action by his lawyers to render their takeover illegal.
Fitzwilliams could depend on his loyal inside contacts to keep him informed City & Colonial’s moves, even if it was unethical or even unlawful. Brendan Flaherty, would be the first to know about any investigations into suspected irregularities. He had joined the bank as a young man in Dublin and had worked his way up to the position of risk and compliance officer. He and his family had been a loyal servitors to the Fitzwilliams family for three generations and owed the banker this service.
As to what information Tarasov could provide was entirely conjectural. The Russian, until recently holed up in his Irish home in Kerry, had been judged in absentia by a Moscow court for offences relating to tax evasion, fraud and siphoning money from InterBank to his personal offshore accounts.
He had been sentenced to two years imprisonment, his assets frozen and an international warrant issued for his arrest. At the same time the Moscow court demanded that his assets in Ireland and the UK, estimated at more than one billion pounds sterling, be frozen pending further investigations.
*
When the news was announced that Swiss prosecutors had searched offices of the Geneva subsidiary of the City & Colonial, in an inquiry into alleged money-laundering, it brought a certain relief to Michael Fitzwilliams.
It would be very difficult for Hainsworth to stir up problems at INI whilst his own bank was under siege, suspected of aggravated money laundering at its Swiss private bank and its offshore branches. On top of that American tax authorities were pursuing investigations of tax evasion by its citizens via City & Colonial’s offshore branches.
Fitzwilliams was only too well aware of the arrangements, it was a long standing part of the British establishment’s banking traditions. Friends, and friends of friends, had offshore accounts where they illegally hid undeclared money from the taxman. What banker would refuse a government appointment or peer-hood for services rendered to powerful politicians and their families, or highly placed establishment figures, including royalty. Fitzwilliams was not complaining about that, what was eating into him was the political conniving that had cost him his position as CEO of INI, and he was not going to let that pass. With the elections coming up he still had some cards to play.
He called James Herring, whose advice had the effect of a cold shower. The lawyer explained his role could not be confounded with that of a victim if untoward actions were discovered, if anything he was an accomplice and could be charged in a criminal investigation for fraud and tax evasion, since at that time, as the legal head of bank he would be considered as an accomplice, guilty of aiding and abetting unlawful tax evasion.
However, political pressure could be brought to bear on City & Colonial, which was also facing criminal investigations in other countries, notably the US, France, Belgium and Argentina, though for some strange reason not in the UK, which pointed to the probability of a cover-up at the highest levels, where offshore accounts proliferated, which as such were not illegal, though tax evasion was.
RUSSIA
Fitz
williams had totally misread the risk of getting involved in Russia, and he knew it. It was not the fault of Sergei Tarasov, or anybody else for that matter. Western leaders had misunderstood the intentions of the man in the Kremlin, and even some of those close to him had gotten it horribly wrong.
The banker was not the only one who had listened to the encouragement of politicians and advisors who imagined economic ties could be exchanged for political compromise. It was not the first time leaders had made the same mistake. Putin’s was not discouraged by the potential loss of trade relations with the EU, when it came to his Eurasian Economic Union ambitions, especially when he was selling oil at over one hundred dollars a barrel.
In measuring the mood of the Kremlin, London and Brussels had catastrophically miscalculated. They had not realized that the Kremlin saw the Ukraine as being historically speaking part of their nation, it was not another Poland or Hungary.
As usual the Foreign Office, to which MI6 reported, had made cuts, paring back on intelligence resources and analysis, not through their own fault, but rather that of transient politicians and their vote winning policies: politicians who had imagined Russia could become a democratic partner. Nothing was further from reality. All Russia’s long history had been one of authoritarian rule, even if Alexander III and Nikolai II had introduced reforms. As for Joseph Stalin many of his despotic ideas were still alive and kicking.
Were politicians and businessmen warned? Probably not, in any case men like John Francis knew from long experience it didn’t pay to tell the truth to those who did not want to hear it.
Moreover, what could Blair, Cameron or Sarkozy possibly know about Russia. Angela Merkel on the other hand knew quite a bit. She had grown up under Communist rule in the Democratic Republic of Germany, where Russian presence was all pervading. Not only that, her communications with Vladimir Putin were unhindered by linguistic and political cultural barriers, he had been a KGB agent in Germany and had a perfect command of German, she had learned to speak Russian fluently at school, winning prizes for her proficiency in the language.
What would Putin pull out of the bag next? The Baltic states held sizeable minorities and pressure could be put on discordant EU members with little effort. Whilst Nato generals wanted to send strong signals to the Kremlin, Nato would never sanction a war on Europe’s doorstep, and Putin knew it.
But even Putin miscalculated. In 2013, the price of Russian Urals crude oil: a mix of heavy and high grade oil from the Urals and Volga regions with West Siberian light, had oscillated around one hundred or so dollars a barrel.
At that time most so called experts had estimated the average annual price of Urals crude would steadily increase, reaching an average of one hundred and sixteen dollars a barrel by 2016. No one had imagined that by early 2015, prices would plunge to less than forty dollars a barrel.
The significance of this was that up to that point in time oil had played an almost overwhelming role in Russia’s economy with fifty percent of its federal budget revenues coming from mineral extraction taxes and export duties on oil and natural gas.
The effect was catastrophic: for every drop of one dollar in the price of Urals crude, Russia lost about two billion dollars in revenue.
If Putin, whose duty as president of the Russian Federation was to have his finger on the pulse of the planet, had been caught unaware by geopolitical issues, then Fitzwilliams could be excused, at least in part, for his failings to do so as CEO of INI. To his everlasting regret, such issues had been of little interest to him. Profits, growth and international expansion had been his driving interest, and now it seemed his downfall.
*
In July 2013, the Russian lawyer, Sergei Magnitsky, was convicted by a Moscow of tax evasion. His real crime, if there was one, was uncovering a two hundred million dollar tax fraud, involving members of the Russian government, whilst working for William Browder, an American investor.
The only problem was Magnitsky was not in the court to hear the verdict. He was dead, murdered four years earlier in Moscow’s Butyrka prison, the result of severe beatings and the lack of medical care.
The post mortem conviction was not just an example of the capricious nature of the Russian legal system; it was an insight into how Rosfinmonitoring, the Federal Financial Monitoring Service of the Russian Federation, was used by the Kremlin to control dissenters.
The much publicised deoffshorisation campaign launched by Vladimir Putin was not only aimed at repatriating assets, but also fighting corruption and capital flight. The campaign was launched after it was revealed that Russia was losing billions overseas every year. It seemed that anybody of importance in the higher ranks of the country’s administration, from the heads of security agencies to the Chair of the Russian Duma’s ethics committee, owned significant overseas assets. This included accounts in offshore tax havens in Europe and the Caribbean.
The campaign was designed to coerce the Russian elite to hold their money inside the country. As one member of the Duma put it: This law is about political, and not legal, control. It will be applied selectively and subjectively.
Corruption was part of Putin’s reward system to guaranty the loyalty of his entourage and as a weapon against enemies. With it he could control the powerful oligarchy and thus reinforce his political base. Men like Tarasov were held on a tight leash by the ever present threat of reprisal, prison and the seizure of their assets if they failed to toe the Kremlin’s line.
From time to time examples were made, Mikhail Khodorkovsky was one, the head of the now defunct energy giant Yukos, was jailed on accusations of money laundering and fraud, though his real crime was to have politically challenged Putin.
The message was plain: follow the rules or face the wrath of Russian justice. These rules were enforced by the selective application of the laws relating to finance by Rosfinmonitoring. Dissenters were pursued by the courts, whilst those who pledged loyalty to the system, by forgoing all personal political ambitions, were allowed pursue their financial goals.
G
eorge Town – Cayman Islands
Wealthy Russians, fearing the hand of the Kremlin, had stashed their money away in safe havens such as Cyprus, Luxembourg and Israel, but whenever possible their preferred choice was the City of London with its conduits to British Overseas Territories in the Caribbean, where their assets were theoretically beyond Putin’s reach.
Curiously the legislation against money laundering in Russia was enacted at the instigation of the West in its fight against international crime. Thus the Kremlin could be seen to legitimately pursue the guilty, but more especially opposition figures and disloyal oligarchs on charges of tax evasion, embezzlement and other financial crimes. Nearly all were convicted, giving an appearance of credibility to Putin’s crackdown.
Sergei Magnitsky was proof that Putin’s reach went beyond the grave, giving the whistle blowing lawyer the doubtful fame of becoming the first person in Russian history to be tried and convicted posthumously.
Putin’s trusted friends, that is until proven otherwise, were the hundred or so oligarchs who controlled a very large part of the country’s wealth, giving credibility to the slogan: For my friends, anything. For my enemies, the law!
PANAMA CITY
Whilst Liam Clancy was discovering the charm of Bocas del Toro, Tom Barton listened to Don Pedro a few hundred miles to the south at the family hacienda in Barichara. The Colombian proned his government’s investment policy, casting aside the shadow of the country’s violent and drug-fuelled past.
“Tell your friends confidence is growing in Colombia, Tom, even though there’s still a lot of progress to be made. A great transformation has taken place over the past decade.”
Barton nodded, it was not just hype, he had seen for himself how Colombian was moving forward, even if the image of a narco trafficker’s paradise still lingered.
“Here personal relationships are what everything is about. We spend a lot of time building and maintaining these
.”
“It’s like that in Asia.”
“Perhaps, but here we have corazon.”
“Yes, I can understand that.”
“That’s why things take time, a little difficult for North Americans to understand,” he said, then adding with a laugh, “and mortifying for our Asian friends.
“Colombia is situated strategically between the North and South. We have turned a page, the days of Escobar are long past and the conflict with the Farc will soon be settled for good. Today we say: Colombia, el riesgo es que te quieras quedar.”
Barton nodded with a smile that said everything.
“Our president, Juan Manuel Santos, has the approach needed to get us out of the impasse that prevented us from moving forward. You know ten years have changed a lot in Colombia. Our middle class has grown to over thirty percent of our population, and at the same time poverty, though its still common, has dropped.
“Nearly all our major cities are prosperous, just look around and you can see names like Cartier, Louis Vuitton, Armani, Zara and Disigual everywhere. Things are looking good for business with our growth rate, five percent and an acceptable rate of inflation. Today we offer a lot opportunities for investors. It’s a much better place for doing business than it was before, better than our neighbours, better even than some of your European countries, including Belgium and Italy,” he added with an apologetic smile.
Barton agreed, what he had seen confirmed the old man’s words.
“Last year your future king visited us.”
Cornucopia Page 28
