*
Pat Kennedy’s morning had not been wasted. He had risen early for a meeting with Jose Laborda, whose family’s connection with Fitzwilliams’ bank went back to the sixties when his father had been introduced to David Castlemain’s father by a mutual friend, Malcolm Smeaton.
During the fifty years that followed the law firm had supplied legal, financial and consultancy services to the Irish bank and its Caribbean emanation. Beside the usual legal advice relating to contracts, purchases and real estate transactions, the firm provided more specialised services of which there was an ever growing demand: the creation of Panamanian and offshore companies for foreign businesses or individuals, the setting up of private foundations, the opening of all types of offshore bank accounts, questions relating to trademark and patent registration, copyrights and last but not least immigration. The latter concerned the obtention of permits or visas for the entry and sojourn of foreigners in Panama, and procedures related to the acquisition of Panamanian citizenship.
Panama had enjoyed a privileged position in Central America for more than one hundred years, the transoceanic canal was not only of vital importance to Washington, but a vital point of passage for worldwide shipping. Then, in more recent times, Panama City had become an important hub for air travel between North and South America with in addition daily connections to Europe and Asia.
Laborda’s was a family law firm, just one of the many law firms in Panama City, but smaller than the larger better known providers of legal and trust services such as Morgan and Morgan, and Mossack Fonseca. It offered a more personalised service to its clients in a country where discretion was a way of life.
Panamanian providers of legal and trust services, together with their branches throughout the Caribbean, made it easy for their clients to set up offshore bank accounts or shell companies, without public disclosure of ownership and the real directors, in any one of a number of tax havens including the British Virgin Islands, home to about forty percent of the world’s offshore companies.
For more demanding clients they proposed shadowy offshore islands such as Niue, a tiny South Pacific island nation with a population of fewer than two thousand, which offered registration for certain Chinese and Russian clients.
Some of the world’s biggest financial institutions, including HSBC, City & Colonial, Société Générale, Credit Suisse, UBS, and Commerzbank, had aided clients set up complex structures via Panama, to hide money from their respective country’s tax collectors and government authorities. Nominee directors, that is stand-in directors, hid the identity of the real owners of bank accounts held by anonymous offshore companies, which together with the laws of secrecy in the different jurisdictions made it hard if not impossible for authorities to track down the real owners.
Amongst the entities establish in Panama were foundations, initially listed as non-profit making organisations, declaring for example the World Wildlife Fund as a beneficiary, a detail that could be changed without the least formality.
Pat had taken the precaution of walking to Laborda’s office, situated in an office tower in Riu Plaza, off Avenida Cruz Herrera, a short, but sticky, ten minutes on foot from the Intercontinental. He had learnt one could never be too careful when it came to the bank’s business in cities like Panama, a pole of attraction for sensation seeking media investigators.
Pat’s concerns, mostly related to his Chinese clients, were discussed directly with Laborda in a business like manner. It was a serious, to the point, meeting without time for the normal niceties of international business. Towards eleven thirty the discussions concluded Laborda’s chauffeur drove Kennedy to Casco Viejo where he dropped him off a couple of blocks from Plaza Bolivar.
LONDON
Two weeks had passed since City & Colonial grab when Pat and Lili Kennedy flew into London. It was late January and bitterly cold compared to the spring like weather in Hong Kong. On arrival at their London home on Cheney Walk early that Sunday morning they found it glowing with warmth and once settled in they enjoyed a light lunch prepared by Pat’s faithful Irish housekeeper.
Their immediate plan was to relax, take a walk, perhaps over the Albert Bridge to Battersea Park or around Chelsea, before contemplating the week ahead with their lawyers on the subject of INI and its holdings in the different banking companies nominally under the control of City & Colonial.
Michael Fitzwilliams would of course not be there, but he had agreed to meet with them the next evening at a restaurant in the West End. Pat had spoken with Fitzwilliams over the phone; the tone was conciliatory, they had both had time to absorb the shock of the changes in London and now was the time to fight back.
John Francis provided moral support for Fitzwilliams and the banker’s lawyer, James Herring, set about the thorny question concerning the legality of the Bank of England’s role in the affair. The B of E’s role was, theoretically, a consultative one, it was not a commercial bank, and its control of markets and credit covered just a small percentage of all business.
In reality the state no longer controlled the issuance of credit. The fact was, commercial banks, credit companies and the shadow banking system had broken free. The question for government was how to rein in the system, without upsetting its natural equilibrium and at the same time circumventing the interests of the establishment’s chums.
Perhaps banks had become to big to fail, but that did not permit the government to play monopoly whenever they deemed it politically expedient, as it had done with INI to avoid upsetting their forthcoming re-election strategy. The question Fitzwilliams posed concerned the legality the motives behind the government forcing him to surrender control of the bank, causing the disintegration of a viable, though momentarily embarrassed institution.
Arguments pointing to the British banking crisis of 2008, when uncontrolled credit had been the principal cause of the collapse, was not sufficient. The British banking system had neither been threatened by the difficulties of INI, nor its links with InterBank in Moscow.
John Francis was not in the least surprised by the chaotic management by Downing Street. Governments across Europe were losing their marbles, as he put it, one only had to look at their and the ECB’s hastily cobbled together plans to measure the consequences: austerity and unemployment.
Re-election was all that counted, which meant that any governments which did not meet the aspirations of its electorate: prosperity, employment, the defence of their traditions and values, would be swiftly voted out of power.
Historically dominant parties, unable to satisfy the demands of the electorate, would find themselves replaced by populists who promised change. The problem was populist parties offered radical solutions, regardless of their tendencies: extreme right or left, or the surreal semi-mystical imaginings of certain ecologists movements. In simple terms they were demagogues, the forerunners of the kind of leaders that led to disaster in the 1930s.
Francis, and many others, believed human society had reached a critical point in its development, where changing one government for another similar government had little or no consequential effect on human development.
The days when a nation thought it could solve its problems by exporting more, or devaluing its currency were past. Globalisation and technology caused information to flow at Internet speed, ideas being communicated from one country to another in the blink of a politician’s eye. The man in the street was instantly informed of the latest national or international news, be it a terrorist attack, a dramatic fall on financial markets, the shooting down of an airliner, a political scandal, whatever. Politicians were out of touch, slow to react, and many voters saw them as obsolete and with superannuated ideas.
Francis like many economists had long realized the world had changed beyond all previous imaginings. A new era had dawned, one that scientists had baptised the anthropocene. An era where the human species had reached a point in its inexorable expansion where man ruled the earth, and his needs and desires went beyond the capaci
ty of any politician to understand.
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