Cobra in the Bath

by Miles Morland

  ‘So whaddya like, Miles?’ Barton did not do small talk.

  ‘Well, I’ve been doing work on African and Middle Eastern markets – been visiting companies, talking to the locals.’

  ‘Jesus, they have markets in those countries? Do any of them work?’

  ‘Yup. I mean they’re not exactly Bangkok or Hong Kong, but things are stirring. There’s no one, but no one, out there doing research apart from me, so a lot of these stocks are selling at the wrong price. Some are ridiculously expensive relative to their earnings but most are absurdly cheap. You can buy any stock you like in Ghana for three times earnings.* It’s absurd. It’s money sitting on the table waiting to be picked up.’

  ‘So what are the companies? All mining companies?’

  ‘No. Banks, breweries, consumer companies, the normal stuff. Barton, I was rather hoping I could sign Morgan Stanley up as a consulting client. From time to time I’m going to come across some money-making ideas in my area and I’ll pass these on to my consulting clients.’

  ‘Well, we’re sure as hell not going to dick around in the Côte d’Ivoire or Ghana ourselves so why don’t you dick around for us and tell us what you find? Sure, we’ll sign up.’

  ‘Thanks, Barton.’

  Thanks, indeed. I had my first client. Could this be a new career?

  It was the dick-around factor that gave me my new business. My second client was the Soros group, not George Soros himself, but someone universally known as the Prince of Darkness, who worked for him at the time. A few months later I had fifteen consulting clients, including many of the big hedge funds and leading emerging-market investors of those days, for whom I was happily dicking around in the Côte d’Ivoire and elsewhere. I was not only making a reasonable living out of the consulting fees they paid me – enough so we now had a little more money coming in than going out every month – but I was having more fun than I ever had in the days when I worked for others.

  Many of these flea-bite markets were keen to develop but did not know how. Some asked my advice as I had now watched a number of markets move from embryo to a functioning state and was happy to share this knowledge with stock market people in places like Tunisia and Ghana. In 1993 Euromoney magazine called me the ‘father of the Casablanca bourse’. This title would have been as big a surprise to the Moroccans as it did to me, but to be fair I had been the first person to get anglophone foreigners to invest in that market.

  My first visit to the Casablanca bourse had been in 1991. Half a dozen men in suits drank tea, read the Casablanca papers and told jokes in front of whiteboards with a few numbers and names scrawled on them. There was no trading that I could see. The chef de bourse ushered me into his office with grave courtesy. He spoke no English; my French was good for reading a menu but not a balance sheet. I asked him how many stocks were traded on the bourse and what the volume of trading was. He rose slowly to his feet and shuffled over to a pile of leather-bound ledgers on a table. He bent slowly down and blew dust off the top one. When he was satisfied it was dust-free he picked it up and handed the heavy book to me. ‘Regardez, monsieur.’ Inside, inscribed in blue ink, were details of recent trades. Judging from how faded the ink was when I turned to the previous page, it was a long time between trades.

  I revisited the Casablanca bourse several times and went to see companies. Getting to talk to the managements of these companies was not easy. In London or New York companies have departments to deal with actual and potential investors. Moroccan companies had no investor relations departments in those days and saw no reason to share information with a nosy foreigner whose motives were unclear. An Iranian woman friend of mine in London had a gay Moroccan friend, Abbas, in the fashion business who came from a grand family. Most Moroccan companies at that time were owned and managed by members of such families, and Abbas was related to many of them. He was puzzled as to why I wanted to see his cousins – the boring ones in business. Most of the Europeans he knew wanted to experience the louche side of Moroccan life, but he took me literally by the hand and trotted me in to see chief executives and government ministers. He was related to most of those too.

  I asked them questions in schoolboy French. Their natural good manners prevented them from telling me to mind my own business but it was obvious they thought I had no business enquiring as to how sales were going or what profits they might report. I wrote a long research report for my consulting clients on ONA, the Moroccan conglomerate that dominated the local business scene and whose largest shareholder was the King. Guesswork led me to suggest in the report that the company was far more profitable than it let on as its accounts did not include the results of many of its subsidiaries. I recommended to my consulting clients that they buy shares in it. Some of them did. They were the first foreign investors in the Moroccan market. The chief executive of ONA, when I next went to see him, was not pleased.

  ‘Where did you get the information in your report? Who told you?’

  It had not occurred to him that even the most amateurish of analysts, and few analysts were more amateur than I, did not need an insider leaking information to work out that the profits from a number of ONA’s connected companies were not showing up in the accounts. However, the effect of foreigners buying into ONA was to push the stock price sharply up, thereby enriching the chief executive and indeed the King. Next time I went to visit I was more warmly received. And a year later ONA began to report consolidated earnings.

  *A price: earnings ratio is a common way of assessing the value of a stock; other things being equal, ten to fifteen times earnings might be considered normal. Three is a steal.

  19

  No Dinner in Bucharest

  Visiting Moroccan and other African companies had yet to become a full-time job, but the wanderlust generated by twenty-two years chained to a desk was growing. I wanted to see everything and to go to all the places I had never been. While I had been gathering information on African and Middle Eastern companies the world was blowing up. Poland in mid-1989 had already abandoned communism, but the Russians, led now by Mr Gorbachev, instead of sending in the tanks – as they had done in Hungary in 1956 and Czechoslovakia in 1968 – had stood by with their hands in their pockets whistling. East Germany was in a ferment. Every Monday in October there was a riot in Leipzig. The first one had been 5,000 people, then 10,000. Erich Honecker, the hard-faced leader of East Germany, was reported to be talking about shooting rioters, but still the numbers of demonstrators mounted. By mid-October there were 100,000 people, then 300,000. Dresden was rioting too. East Berlin was a powder keg. But no one was shot or arrested. This was a new script. Communism was crumbling as we watched.

  I love a good riot. I’ve been heckled by fascists on the Aldermaston march, arrested in Oxford at the time of the Cuban missile crisis, tear-gassed in Washington with a million other people after Nixon bombed Cambodia; I’ve narrowly avoided having my head split open by hard hats supporting the Vietnam War on Wall Street, thrown ball bearings under police horses’ hooves in Grosvenor Square, come out against the invasion of Iraq in Hyde Park, and chucked tomatoes at Dubya in London. Well, actually I didn’t chuck any tomatoes because the police wouldn’t let anyone get within tomato-chucking range, but I gave it a try.

  I have always liked being a witness to history; I want to see things first hand. Here was one of the biggest events in the history of the twentieth century going on in Europe, and I wanted to go and have a look for myself. How to go and where to go? In 1946 Ernie Bevin, the foreign secretary in the Labour government that had just ousted Churchill’s Tories, is reported to have said, ‘I dream of the day when a man can go to Victoria Station and buy himself a ticket to anywhere in the world.’ At that time almost all borders were closed to non-official travel and if you wanted to travel you took the train.

  That is what I would do: I would go to Victoria Station and buy myself a ticket to Eastern Europe. I would see the riots first hand and with any luck be part of them. Travelling by train I would me
et people. There is nothing like sharing your sausage with someone in a long-distance train compartment to bridge a language barrier.

  Everyone was going to East Germany. It was all over every newspaper. The rest of Eastern Europe might as well not have existed. Nothing appeared about Czechoslovakia, Romania and Bulgaria, all three still communist states. No riots were being reported in these countries. The secret police appeared to have everyone there firmly under control. I decided to bypass East Germany. I had a feeling that by the time I got there the Berlin Wall might have come down and I would have missed the fun, so I would go and have a look at the places where the fun was just beginning.

  I bought myself a train ticket from London to Paris via the cross-Channel ferry and then from Paris to Prague, changing in Cologne, stopping off in Prague for a few days, and then on to Budapest for another stopover, and finally on to Romania and Bucharest. I would fly back from Bucharest in a couple of weeks. I then scurried off to the Czech, Hungarian and Romanian embassies to get tourist visas. There were no queues. No one else was asking for tourist visas.

  Czechoslovakia and Hungary seemed to be functioning normally whereas Romania was functioning not at all. Nicolae Ceausescu was the most hard line of the Eastern European rulers. His rule was absolute but the Romanian economy was in ruins. The local currency, the leu, was now useful only to stuff pillows, but using foreign money was an offence that would get you ten years in a Romanian jail. The parallel currency, the guidebook told me, was Kent cigarettes. A packet of Kent bought you a favour or paid for a meal; a carton would buy you a village. It had to be Kent; it was no use proffering Marlboro or Winston. No one wanted those. Kent had become the Romanian currency. No one ever smoked a Kent; it was like setting fire to a fiver. I bought two cartons of Kent and tucked them in the bottom of my luggage. I was now a Romanian millionaire.

  I had a couple of hours between the boat train getting into the Gare du Nord on the night of Wednesday 8 November 1989 and the night train leaving the same station at 11.30 p.m. for Cologne. I found a brasserie outside the station, had oysters, coq au vin and a pichet of Beaujolais, lit a Marlboro, and sat back with a feeling of great well-being combined with excitement. I had no idea what to expect but I knew I would have an adventure. I felt I was in a film watching myself. Very Graham Greene.

  Some time in the small hours we chunkled into Cologne station, where I needed to change for the train to Prague in half an hour. I had expected the station to be empty at this time in the morning. The opposite was true. The Bahnhof was electric with noise and tumult. Hordes of singing young people linked arms and waved banners. The announcement boards showed that special trains were being put on for Berlin. Everyone was laughing and smiling and everyone was everyone’s friend. People were hugging each other and crying. I had no way of knowing what the news was and spoke no German. I tried stopping a couple of people and asking what was going on. They laughed, waved their cans of beer and chanted, ‘Berlin, Berlin.’ Maybe I should buy a ticket to Berlin and join them? I almost did but instead boarded my train to Prague. This train would avoid East Germany, taking a southern route through Frankfurt and Nuremberg, and cross into Czechoslovakia in the early afternoon.

  When we got to the border we sailed through the German side without doing anything other than showing our passports. Several kilometres later we stopped at the Czech customs post. This was the Iron Curtain. The track had run through a barbed-wire corridor all the way from the German side. Blue-uniformed officers flooded on to the train. My compartment had two other people in it, both Czech, one of whom spoke a little English. We had become sausage friends. My spicy Cologne station salami was better than his Czech donkey sausage. He had asked me what the purpose of my trip was, and when I told him I was just going along to see what was happening he looked at me with bafflement.

  The officers came into our compartment and examined our documents, mine in particular. They were polite and efficient. They asked me where I was going in Czech and my sausage friend translated: ‘Praha.’ ‘Purpose your visit?’ ‘Tourist.’ The officers looked at each other and shrugged.

  Twenty minutes later the train moved on. The scenery in communist Czech Bohemia did not look that different to the countryside of the capitalist German Bavaria we had just left, although to my surprise the fields were smaller; I had assumed that with collectivisation the fields would be enormous. There were more chickens, ponies, cows and dogs running around free. The houses were smaller. This appeared to be a holiday district as there were rows of tiny A-frame wooden houses with little vegetable plots around them, maybe dachas for junior members of the nomenklatura.

  At about five o’clock in the evening we pulled into Prague station. According to the guidebook I had a walk of no more than 200 yards to the Esplanade Hotel. Outside the station was like an old Jack the Ripper movie of London: damp fog, yellow street lights, people flitting past in thick coats with the collars up, flat caps, fedoras, the muffled sound of little traffic and the squeal of a tram.

  The Esplanade had pretensions to grandeur but was run-down. The lobby was dark wood and brocaded furniture, but the brocade was frayed and the wood dull. I had never seen so many suspicious-looking people. Everyone appeared to be a spy. There were men in leather overcoats down to their ankles, the coats either slightly too big or just a bit too tight in the armpits. There were a few women with permed hair and too much lipstick. One had a cigarette holder.

  I smiled with happiness. I was still smiling when I checked in. No one else was. A stern matron took me up to my room without offering to help me with my bags, handed me a key so big it might have been used to lock up the Count of Monte Cristo and left me alone in communist Czechoslovakia.

  I decided to go for a walk and then get some dinner later. The hotel was less than half a mile from Wenceslas Square. That was the obvious destination. I was delighted to be in Prague but feeling a twinge of envy that I was not in the thick of the action in Berlin. Everything looked very quiet. There had been no mention of Prague in the Western press so I assumed that the contagion that had ripped through Poland and was setting Germany on fire had not yet touched Czechoslovakia.

  Wenceslas Square is not a square but a grand boulevard running downhill from the National Museum. If you swapped the Arc de Triomphe for the museum you could be in the Champs-Elysées. Five minutes later I was at the top end of the square. The yellow fog made it difficult to see more than a hundred yards. From the downhill end, several hundred yards away, there was a noise. I walked towards it. As I descended the fog began to clear and the noise got louder. It was people shouting. The whole of the bottom third of the square was packed with yelling demonstrators. I hurried down to see what was up. The demonstrators had surrounded two police Skodas. They were rocking them from side to side and threatening to overturn them. The policemen inside looked terrified. The crowd was growing every minute as people rushed in from neighbouring streets.

  I was desperate to know what was happening but I spoke no Czech. There was a café to one side of the tumult. A waiter was standing outside. Perhaps he spoke some English. I approached him. ‘Please. You speak English?’ I asked.

  He looked around.

  ‘Little.’

  ‘What’s happening? What are they demonstrating about?’

  ‘No, no, you go now. Nothing. Nothing.’ He was very jumpy and kept looking around to see if anyone was watching him talking to the red-haired foreigner in his funny foreign clothes.

  ‘But what are they demonstrating about?’

  ‘No demonstrazion. Small, small manifestazion. Nothing. Please, you go.’

  I thanked him and moved towards where the rioting was going on. This ‘small manifestazion’ must have had over 100,000 increasingly excited people. I was seeing the first anti-communist demonstration in Czechoslovakia since the Prague Spring of 1968.

  Then, from the streets at the very bottom of the square, sirens sounded. Not one siren but an orchestra of them. I stood on a café chair to see what
was happening. Armoured personnel carriers and heavy army lorries were moving in. Brown-uniformed rifle-carrying soldiers jumped out of the vehicles and formed up in line all the way across the square. It must have been 200 yards from side to side. They began to march, shoulders almost touching, up the square. The rioters who a moment ago had been about to capsize the two trapped police cars backed away uphill to get away from the advancing soldiers. I did not want to miss the action but neither did I want to get bayoneted for rioting so I pushed back into the entrance of the café and tried to look as foreign as possible.

  The soldiers tramped unstoppably past. No one stood up to them or resisted. The police cars were now free and disappeared with a squeal of tyres off to the south end of the square. The rioters were evaporating. They slid into side streets; they escaped through the open north end by the museum. Fifteen minutes after the sirens had sounded, the square was all but empty of civilians.

  This demonstration was never reported. If you look in Wikipedia the first Czech riot was on 19 November. The one I had just seen was on 9 November. All the reporters were in Berlin or Leipzig.

  Based on what I had just witnessed, my conclusion was that the Czech government still had a tight rein on things and the people no stomach for a fight. How wrong I was. I left Prague two days later on the 11th. Two weeks after that half a million people were demonstrating in Wenceslas Square, and on 28 November, less than three weeks after the riot that I had witnessed, the communist government surrendered, agreed to hold elections and hand over power to whomever the people chose to elect. I had seen the first wrinkle of what later came to be called the Velvet Revolution.

  I returned to my hotel room and had some excellent Czech beer, veal stew and dumplings sent up by room service. I had not slept much on the train and was exhausted. I wished I could find out what was going on elsewhere in Eastern Europe. What was the news from East Germany? I turned on the television. It had two channels, both state run. At 9 p.m. the news came on. I would not be able to understand what they were saying but I hoped I could get an idea what was happening.