Objectively Pavel accepted he would have to abandon it all when he brought the financial centres tumbling down, like flimsy houses in an earthquake. He’d regret returning to the dullness of the Soviet Union. But the regret would be overwhelmed by what he, personally, was going to achieve, proving himself better than any of the so-called financial experts in the West. It couldn’t be long now before the order came from Moscow. He was surprised they had been able to afford to go on as long as they had, despite all he’d done to buttress their losses by the way he’d traded.
*
Ian Sinclair had been taught that mathematics proceed according to rigidly logical rules and he decided to utilize the principle. There had to be a denominator, a clue, he’d overlooked or failed properly to comprehend. Some link, a chain he could follow that might make things clearer to him. He sat for a long time in his office at the Factory, assembling a fact sheet by physically writing down everything of which he was sure. And when he thought he’d listed everything he studied all the computer print-outs, searching for what had so far eluded him. Fact: banks throughout the world had regained confidence in the debtor countries’ ability to pay and were happy to lend more. Fact: that confidence came from promptly met interest payments and debt settlement. Fact: none of the new loans were refinancing the old. Sinclair actually had his pen against the paper, to record another fact, when he stopped, angry with himself. It had been here all along – he’d even talked about it during the initial meeting with the Director General – and he hadn’t observed the mathematical rule of logical thinking! If the debtor countries hadn’t got their repayment money from existing banks, which he knew they hadn’t, where had it come from? And how? What possible security could hopelessly insolvent borrowers offer to get any financial facility to underwrite interest payments that, between all the involved countries, had to run to hundreds of millions of dollars?
Sinclair went back to his computer print-outs again, isolating the traded commodities from the Latin American debtors and growing more excited by discovering that a great many appeared to have switched trading partners over the preceding year. Abruptly another pattern of dates started to emerge. From the time of the repayment dates becoming regular (inconceivably regular, he remembered telling the Director General) so the trading outlets had changed. Sinclair’s excitement increased even more when he began analysing those outlets, country by country. Venezuela seemed to have switched practically all its oil sales to a company called MOS. Mexico, too, depended extensively on MOS for its oil exports. MOS appeared again doing oil business on behalf of Brazil and, searching through their other exporters, Sinclair came upon another company, INNSCO, which emerged in dealings with both Mexico and Venezuela.
Back at his computer terminal again Sinclair accessed international trading directories and found listings for both, although disappointingly brief. Both were owned by a third company, LOSMAR, based in the Cayman Islands. Any information about LOSMAR was initially protected by the island’s bank secrecy laws but Sinclair knew how they could be breached.
Two of the world’s tax haven countries agree to lift their strict secrecy regulations in the pursuit of narcotic trafficking profits. One is the Caymans. By coincidence the other is Switzerland. Sinclair created an entirely fictitious drug smuggling inquiry and in a week penetrated the LOSMAR incorporation, which led back to its Liechtenstein and Swiss ownership, which Sinclair also broke into using the drug smuggling subterfuge. All but one of the named directors were professional nominees, locally based and entirely unwitting lawyers. The only man who was not local and who seemed to hold an ownership amount of shares was Yuri Pavel. The Basle bank records created another pattern. There were two sources of incoming funds each month, the smaller of which Sinclair could not trace but which clearly paid the interest on the larger income, which arrived directly from those eagerly lending Western banks with which he was by now so familiar. Those Western-supplied loans balanced out almost identically with the amounts necessary for the Latin American countries to make their original interest payments and by so doing become creditworthy again. Pavel had loaned to all the Latin American countries at an average of seven per cent, less than half of the usual international rate.
‘Banking gone mad,’ said Sinclair, talking to himself. ‘But brilliant. Absolutely brilliant.’
Brilliant was a word he used again when he was admitted once more to the office of the Director General.
Samuel Bell did not speak for several moments after Sinclair had finished talking. At last, incredulously, the Director General said: ‘Are you telling me that Western banks have been tricked into twice making money available to meet interest demands? And having done so, double-fooled themselves into lending even more to Latin America?’
Sinclair nodded. ‘It’s the only explanation, and the facts support it. I would guess Russia, but I’m not sure. Obviously communist. Any moment they choose to bring everything crashing down, we’re all destroyed.’
‘Explain it from the beginning,’ insisted Bell. He badly wanted a drink but wouldn’t have one in front of the other man.
‘That’s when it starts, right at the beginning, way back in the early 1980s,’ said Sinclair. ‘Nothing’s actually changed since then. The debtor countries are still insolvent but can’t be allowed to default because all the banks would collapse with them. It’s a stalemate, no losers, no winners. An uneven balance. So someone in the communist bloc decided to affect that balance, to make it unbearable. A financial genius – maybe it’s a committee – established an incredibly complicated banking scenario. It began with the setting up of a concealed but quite legal privately owned bank in Basle. That bank approached, gradually as it built up its credibility, financiers in England, America, Europe, Japan and Hong Kong, to borrow sufficient money which, in turn, it advanced to Latin America for them to meet their already existing interest payments. Money to finance the Basle bank’s borrowing came from some source in Eastern Europe but I can’t discover where. But everyone is happy. The Western banks are getting their interest on time, Latin America is paying its interest on time. And Latin America is especially happy because Basle is lending to them at the ridiculously low rate of seven per cent, half of what it should be. That’s preposterous, of course, if the bank were operating normally. But it wasn’t. All it wanted to do was corner the interest-lending market in Latin America, which it has succeeded in doing. And it wasn’t concerned with making a profit at this stage anyway: that’s why the funding came in every month. I’d estimate it was operating at a loss of maybe fifty million dollars a year: as well as setting up the Basle bank there are quite a few trading firms which took over the commodity business in Latin America and made a profit, so some money at least came back.’
‘Any moment they choose to bring everything crashing down, we’re all destroyed,’ reminded the Director General. ‘That’s what you said. Isn’t there anything we can do? We just can’t wait for it to happen! We’ve got to find this man Pavel, who seems to be the motivator. Do something! Whatever!’
‘It would be a waste of time trying to find him,’ said Sinclair. ‘I also said it was a question of balance. We’ve got to create another set of balances: restore the equilibrium.’
‘For God’s sake, man, how?’
‘Why don’t we think of other debtor nations?’ invited Sinclair. ‘Every country in the East is in debt to Western banks, although not to the degree of Latin America and the Third World. Even Russia: I’d guess the more so now – privately – because of what it’s had to advance over the past two years to fund this operation.’
‘That sounds good,’ accepted Bell, smiling slightly.
‘And for the communist bloc it’s not just finance. There’s tremendous pressure for proper democracy in Poland. Hungary, too. And great opposition to the reforms of Mikhail Gorbachev in the Soviet Union itself. None of them – the bloc as a whole – could withstand any sort of external pressure.’
‘Like what?’ demanded Bell.
<
br /> ‘Like all the Western banks to which they are in debt calling in their loans, in one concerted move. The banks could afford to do that, supported perhaps by the International Monetary Fund: certainly it’s a minuscule risk of mass bankruptcy, compared to how it would be if it happened the other way around.’
‘An international game of poker?’ reflected Bell.
‘Not really,’ argued Sinclair. ‘At this moment – but only at this moment – we have the winning hand.’
‘It couldn’t be done openly, because there’s still public confidence to maintain and the banks have shown themselves to be pretty stupid again, like they were the first time,’ said Bell, on further reflection. ‘That’s unfortunate: it would have been good to expose the plot for what it was.’
‘It would be a luxury and we can’t afford luxuries,’ warned Sinclair. ‘The only escape we’ve got is to make the threat before they pull the plug on us. If they do that, we’ve lost.’
There was a frantic flurry of activity. Finance ministers from all the industrialized countries met in Washington, not because America was orchestrating the event but because the US capital was the headquarters of the International Monetary Fund and it was agreed in advance that the Fund, composed of all the involved countries, was the appropriate body to confront Russia, in turn the controlling nation in the Eastern bloc over all the countries concerned.
The Director General attended, with Sinclair, and insisted that his operative earn the deserved recognition for discovering what had been intended. Sinclair’s explanation was greeted with stunned, disbelieving silence until the computer and bank access details were produced. The acceptance was still begrudging, because the financial naïvety of all the member countries was exposed.
At the conclusion of the meeting, however, there was acknowledgement of Ian Sinclair as the superior expert.
Every finance minister who attended the Washington conference travelled to Vienna for a meeting with officials of the Russian Finance Ministry. As the current chairman, René Lebre was the spokesman. He was very brief, making no accusations. He set out the details of Yuri Pavel’s Swiss bank and traced its no longer hidden path to Latin America and its borrowing from Western financial institutions. He said the discovery created a crisis of confidence between East and West and regretted having to warn that difficulty in Latin America would lead to demands that every member country of the communist bloc meet in full its absolute repayment of every Western loan. Failure to comply within thirty days would mean that country being declared in default. Then, without allowing any opportunity for discussion, the IMF team stood up and stalked from the room.
Yuri Pavel, who had hoped for so much, was never to learn of the complete failure of the plot he had so carefully manufactured, because the KGB are never interested in explanations, only in fully satisfactory results. Pavel’s apartment was on the most prestigious residential development in the Cayman Islands, known as Seven Mile Beach. There is a road running parallel to that beach and as was his known habit the fitness-conscious Pavel was running its entire length at his usual time, at dusk when it was cool, when the car hit him. It was expertly driven by the KGB assassin, guaranteeing that Pavel’s spine was shattered.
No one witnessed the fatal accident. There was no arrest of the hit-and-run driver. No country in Latin America ever attempted to renege on its recently acquired and increased debts.
There had been no penalties on those they had already incurred and largely ignored, after all.
8
The Terrorist Route
When the IRA bomb exploded in Belfast it killed four women and two children. One of the women was pregnant. Forensic tests disclosed that the Middle East fanatic who assassinated an exiled Iranian in Amsterdam used a Czech-made gun. Scientists, called in after the bombing of a Pan-Am jet over France had killed three hundred people, discovered metal shards from a grenade or bomb that had again been manufactured in Czechoslovakia. A junior British minister died in the Pan-Am bombing.
At the Factory, Samuel Bell made the decision to penetrate the pipeline conveying East European weaponry to terrorist and fanatical groups.
‘What do I do if I uncover it?’ asked Henry Millington, the Arab-speaking intelligence officer.
‘Destroy it, of course,’ said the Director General.
Millington used his finger to stir more diluting water into his arak, the fierce Middle Eastern drink distilled from the date fruit, and decided it had been a wasted journey. Maybe the entire assignment would turn out to be wasted, another mistake to add to so many others recently made by a Director General who regarded a whisky bottle as his best friend. Not quite true, corrected Millington. Bell’s best and very intimate friend appeared to be his personal assistant, which was a further reason for the neglect that was eroding and endangering the former efficiency of the Factory.
At least, for the moment, he was out of it. But frustratingly wasting his time. Beirut had seemed an obvious place to begin his search, although not immediately because Cyprus was where all the Lebanese entrepreneurs had fled during the civil war that ripped their country literally apart, and Millington hoped the guidance would come from there. He’d spent a fortnight in Cyprus among the smugglers and men who boasted intelligence connections Millington knew they didn’t have and others who claimed to be able to get anything, for a price. And learned nothing worthwhile.
So he’d crossed the narrow stretch of the Mediterranean by ferry, which was the only way to reach Beirut because the airport was in the east of the city, controlled by the Arab fanatics and warring gangs. And sat around for another fruitless fortnight. Something else that was not quite true. He hadn’t actually sat around. He’d tracked down all the addresses and leads he’d picked up in Cyprus and found every one to be a dead end. And then, although his specific department usually distanced itself at all times from anything official, he’d approached the resident intelligence chief at the British embassy. He had got some more addresses and four names of possible contacts and the warning that if any of them discovered his true identity and purpose he would be killed. But not quickly: tortured to death, very slowly, so that in the end he’d probably go insane which would be a relief because maybe he wouldn’t feel the pain so much. Millington hadn’t believed the warning, not completely. The man had existed for more than a year in a virtual war zone: it was natural that he would dramatize and exaggerate.
Millington, who was slight and dark-skinned and with his language ability easily able to pass for an Arab, sighed and looked at his watch. Then he gazed from the West Beirut hotel verandah where he was sitting across in the direction of the dividing line which cut the city in half, towards the area from which today’s contact was supposed to be coming. Already almost an hour late, Millington calculated. Perhaps he wouldn’t come at all now: wasted effort upon wasted effort.
The agreed identification was that Millington sit with a copy of an Arab newspaper looped through the carrying strap of a camera at this particular table. He’d already been there for more than the delayed hour, drunk three glasses of arak and didn’t want any more and was tempted to remove the newspaper, to occupy himself by reading it. Five minutes later he was glad he hadn’t.
The man didn’t come from the direction Millington anticipated but from behind, from the hotel itself. There was no noise of an approach: just the awareness of a presence behind him.
‘I am told you are a businessman seeking things to buy,’ said the man, using the agreed introduction.
‘At the right price,’ said Millington, completing the passwords.
The man smiled, sat down and said: ‘We always try to fix the right price.’
Samuel Bell acknowledged, as he’d acknowledged emptily before, that he’d let things – everything – drift on long enough. It had to stop. Now. He had to do something decisive about his marriage and his relationship with Ann. And take some more positive action to trace within the department the leak that was ruining so many of their operations: risk
ing their very existence. If he couldn’t then he would finally have to call in the external investigation branch, despite the likely personal cost. The Factory, its survival, was more important than the embarrassment of his drinking and of his affair being discovered and of his being invited to resign the Director Generalship. His difficulty was determining what that positive action should be, beyond the unsuccessful traps and snares he’d already laid. He knew what to do about his marriage, though.
Bell was glad Pamela was there when he got to their north London home: they already led virtually separate lives, never bothering to tell each other where they would be.
‘I’ll have one, too,’ she said as Bell went immediately to the drinks tray. She didn’t bother to look up from her magazine.
Bell returned with her whisky, which she reached out to take still without looking away from what she was reading. He remained standing in front of her and said: ‘I’ve decided I want a divorce.’
‘What!’ Pamela came up at last, smiling at him in disbelief. She was a blonde, brightly pretty woman, always perfectly dressed, made up and coiffured.
‘We’ve talked about it enough!’ said Bell impatiently. ‘We might as well get it over with.’
‘But I’ve got the money,’ she reminded him. The cars and the London house and the apartment in France were all provided and maintained from Pamela’s trust-fund inheritance.
‘What’s that got to do with it?’ asked Bell curiously.
‘I don’t want a divorce,’ announced Pamela. ‘I like things the way they are. I don’t want to go through all the legal nonsense and I certainly don’t like any of the men with whom I’m sleeping sufficiently well to marry them. So we’ll stay as we are.’
‘As the law stands I don’t need your agreement,’ said Bell. ‘I can go ahead and begin proceedings on the grounds that the marriage has irreparably broken down. And God knows, it’s certainly done that!’
The Factory Page 11
