*
As John Francis turned off the M3 to Kaluga, one hundred and fifty kilometres south of Moscow, he discovered to his surprise an agreeable, airy, green city. A little research had told him that Kaluga meant a bog in Russian, and in the Middle Ages it had probably been just that.
It was there the Princes Vorotynsky established a small fort on the south-western borders of the Grand Duchy of Moscow. Later, in the autumn of 1480, on the banks of the Oka River, a tributary of the Volga, the armies of Moscovy held back the Golden Horde, a turning point in Russian history.
On arriving in the city centre, Francis was welcomed by the traditional colours of czarist period urbanism. Incongruously mixed with the elegant czarist theatres, museums and ancient churches stood the eyesores of Soviet and post-Soviet architecture. These considerations apart, Kaluga had become a modern industrial city, which was not been the case two decades earlier when the Soviet Empire imploded.
Volkswagen Kaluga – Russia
At that time it was a run down backwater that had suffered years of neglect as the economic fortunes of the Soviet Union slowly declined. A paroxysm was reached in 1998 with an economic crisis that resulted in Russia’s default and the collapse of the rouble and only when Boris Yeltsin handed over the reins of power to Vladimir Putin did things started to look-up.
The economic collapse of the USSR and its disintegration, freed Eastern Europe and coincided with China’s astonishingly sudden emergence as the world’s workshop, unleashing hundreds of millions of new workers onto the labour markets.
Almost overnight the globalised world work pool doubled, leading to a quarter of a century of wage stagnation, during which Workers from Canton to Manchester and Detroit, not forgetting Bangkok, Jakarta, Calcutta and Karachi, suffered as a consequence. At the same time men like the chief executive of UK home builder Persimmon, Jeff Fairburn, pocketed an obscene bonus of one hundred million pounds, offered a middle finger to the ordinary wage earners of the world.
In 2000, helped by the rise in the price of crude oil, Russia’s troubled economy started to pick-up. It was the dawn of an economic renaissance and consumer boom with foreign businesses pouring into Kaluga, conveniently situated not too far from Moscow. These were led by major automobile firms that set-up production lines and international leaders in other sectors such as L’Oréal, Samsung, General Electric; pharmaceutical firms including AstraZeneca; and Lafarge a leading producer of cement and building products.
In 2010, Kaluga had topped The Moscow Times’ regional investment list, attracting more the one billion dollars in direct foreign investment, more than double that of its nearest rival.
It was for both business and pleasure that Francis was in Kaluga, the home town of Ekaterina’s family. The Easter holiday was a good moment to relax and discover life in that middle sized Russian city and meet Ekaterina’s family. It addition he hoped to measure the effects of sanctions and falling oil revenues on the Russian economy.
With its population of more than three hundred thousand, Kaluga was described by the Western financial press as a boom city, though its industrial tradition dated back Soviet times. It had had undergone a remarkable metamorphosis, from a city known for its heavy traditional mechanical industries - and fame as the cradle of space exploration in more glorious times - to a modern and dynamic manufacturing centre where Volkswagen, Volvo, Renault and Citroen had built assembly lines.
Office and factory workers had flooded in from Moscow. Their new prosperity was visible in the new steakhouses, unheard of in Soviet times, where they could enjoy imported cuts of prime beef. The good life was attested to by the bright and bustling shopping malls that had sprung up all around the city, outside of which shoppers parked their new SUVs, foreign models built or assembled in Kaluga. In the bars and coffee shops, drinking imported wines and cappuccinos they had talked of plans for their next vacation in Thailand or Cyprus, or discussed the latest designer clothes in the fashionable boutiques in the malls.
They were the new Russians, proud of their country and confident in Vladimir Putin’s leadership.
So where had everything gone wrong?
Ekaterina whispered travel agents were going bust, Russians were cancelling their foreign holidays as the rouble exchange rate priced them out of the market, restaurants were empty, and on top of that, what with sanctions, American steaks and imported foodstuffs had disappeared from menus.
The plenitude of the boom years was suddenly replaced by restrictions along with a return of images of the bad old days as consumers struggled to adjust to steep inflation and the country’s new economic realities.
For the first time since 2000, ordinary Russians were seeing their wages fall in real terms. Manufacturers were laying off workers, putting them on short time, as vehicle sales stalled, as purchasing power fell and the price of imported car parts rose. A blood bath, as one of Ekaterina’s friends put it.
Russia’s tragedy was the making of Vladimir Putin’s regime, which was one step away from transformation into a fully fledged authoritarian dictatorship, already visible by the manner in which it cracked down on any form of dissension. It was as if Moscow was determined to break with Western influence.
The root lay in Putin’s perception of the West and more precisely NATO, which was designated as the Kremlin’s arch-enemy, a threat to the very existence of Mother Russia.
Nevertheless, from an academic point of view, it was the duty and obligation of Francis to judge the situation from the Russian point of view, or at least with a certain impartiality. The facts were there. The Cold War had been won by the West, more precisely Washington. Once the Soviet threat had been removed, little had been done to accommodate the wounded bear. Instead it had been circumvented, surround by a sanitary cordon. The inevitable happened: Moscow, like Berlin after after its humiliating defeat in 1918, and an even more humiliating peace, chose a nationalistic authoritarian path.
BREAKING NEWS
Kennedy stopped in his tracks. He looked at his phone in stunned disbelief. Switching from flight mode his phone flashed breaking news from Reuters: Banker Michael Fitzwilliams’ yacht Marie Gallant II disappears in Irish Sea off Wexford coast.
He hurried through the controls to a discrete VIP exit and his waiting car. He was confused unable to decide what to do, who to call, as the driver headed out into the traffic in the direction of the Harbour Tunnel and Hong Kong Island.
He looked at his watch, it was six in the morning in Dublin. He hesitated then called John Francis.
A thick voice replied.
“Hello John?”
“Pat! Where are you?”
“Hong Kong. You’ve heard the news?”
“Yes. It’s awful. An accident they say … late yesterday afternoon.”
“Michael?”
“He’s missing. They are still searching.”
“Jesus.”
“What happened?”
“There’s no details. Irish and English coastguards said there was an explosion, the boat sank …,immediately … there was no mayday call, when they got there all they found was floating debris.”
“Feekin Holy Jesus!”
“What should we do?”
“If something has happened to Michael, it’s first of all a family matter, if you see what I mean. Then there’s the bank.”
“Yes, of course.”
He’s no longer on the board. Just a shareholder, even if he holds a very large minority. It doesn’t affect the functioning of the bank, but that’s our problem today.”
“Where’s Sergei?”
“I haven’t heard from him for the last week or more.”
“Was it an accident?”
“They’re talking about an explosion.”
“OK John. Try to find out more and call me back when you’ve got something.”
Pat switched off his phone and tried to think. If Fitzwilliams was dead it was a game changer.
Was it an accident?
Pat
thought back. Fitzwilliams had spoken of his fears, however, he had never seriously talked of physical danger, though he often voiced his concern for Tarasov’s safety.
There was the recent example of the chairman and chief executive of Total SA, Christophe de Margerie, who was killed when his private jet hit a snow plough at Moscow airport, reported as a tragic accident, at least that was how it was interpreted in the French and international press. Some Russians saw it differently: a CIA plot to eliminate the Frenchman who was a leading opponent of Western sanctions against Moscow.
Michael Fitzwilliams had many enemies and not only Russians. He was also, or had been, an embarrassment to Downing Street. Rumours had been making the rounds of the extreme measures the secret service would go to to silence individuals, especially those whose knowledge of sensitive or damaging information could affect the credibility of the government if divulged.
To Kennedy’s mind the INI grab, if not a plot, was an opportunist swoop to dispossess the banker of his rightful position, filling the pockets of certain interested parties, whoever they were, and who could have faked an accident to silence the banker.
As the car pulled into the forecourt of his home on Severn Road, Kennedy realised his world had changed, his mentor had gone. In a manner of speaking Fitzwilliams had been a dominant elder brother, suddenly the chain was broken, with Ireland, the City, his past, and the future was his.
A LESSON IN SOUTH AMERICAN POLITICS
“Venezuela, has become a very dangerous place,” Alfonso told Barton as he spread out his design plans, “in fact it has been classified as the most dangerous country in the world.”
“How does this affect you?”
“Me? nothing, but we have a lot of illegal immigrants from Venezuela. The Venezuela-Colombia border is more than two thousand kilometres long; mountains, rivers and jungle. Very difficult to control. There’s a lot of smuggling.
“Smuggling?”
“Yes. Gasoline costs almost nothing in Venezuela, about four cents a gallon, so a tank of gas sold over the border in Colombia, two-thirds of the going price in our gas stations.”
“Where?”
“Cucuta, near the Simon Bolivar international bridge. They’re called pimpineros, that’s what we call the plastic drums … pimpins. They make about two dollars a gallon.”
“Is it serious … I mean it can’t be that much.”
He laughed
“Serious? Yes it’s a huge loss in tax revenue for the our government and a loss for Venezuela because more the fifteen percent of the gas produced in their refineries ends up in neighbouring countries.”
“That’s huge. What does the law do?”
“Nothing, at least here. It’s been going on for years. But it’s not just gasoline. With their oil revenues the Chavez and Maduro governments used the money to win votes, under the guise of socialism. The smugglers sell almost everything, meat, rice, beer, even powdered milk and diapers, at half or even a quarter of Colombian prices. With all their political problems and the price of oil, their money, the Bolivar, has been devalued, making contraband gas and food stuffs even more profitable.
“It’s a disaster for Venezuela, there’s shortages of almost everything. Maduro’s government’s really in deep trouble and things are not about to get better. But we have to keep him happy because of the negotiations with the Farc being held in Cuba, with Maduro’s buddies.”
“Incredible.”
“It’s an institution. Everybody’s in on the act, government officials, police, criminal and even the Farc.”
Barton laughed.
“Yes. I’m sorry to say it’s part of our tradition in Latin America … corruption.”
“What about emigration? Illegal or otherwise.”
It’s always been low compared to the USA or Europe. Who wants to come to a country that’s fighting against Marxist revolutionaries? Iraqis … Syrians?
Barton nodded. He was beginning to feel depressed.
Seeing the Englishman’s face he changed tack. “Don’t worry Tom, the fact is immigrants arriving here come from Latin America, the US and Europe. We do have a few Arabs, but many are Christians, Lebanese. So integration’s not a problem.”
“Well I can’t say the same for Europe. If you take France, there are a lot of Muslims and they’re not integrated into the political system.”
“Here the Farc is a revolutionary movement fighting for social justice. There are no other connotations. Their ideology is Marxist. A kind of latter day Castro style Communism.”
“In Europe the party to which immigrants will adhere to has yet to be invented, and when that happens it will be radically different to our traditional political parties, almost certainly with some kind of Muslim identity, which will inevitably be a cause of conflict.”
“Here in Colombia the question doesn’t exist. We are all Christians, Spanish speaking, and identify with Colombian history, even if it has been painful, and not some foreign religious ideology.
“The Pope and the Vatican are not foreign?” he said smiling
“Today no, the Pope’s Argentinian.”
They laughed.
“Of course. I see what you mean.”
“OK, let’s talk about your new home, Casa Verde, we don’t have to worry about Venezuela in Cartagena.”
BANKING & ART
Pat Kennedy was preoccupied by the growing dilemma facing the Chinese financial system, its ever growing shadow banking sector and the fact that loans were increasingly used to roll over existing credit. It was estimated as much as seventy percent of new credit was going to pay interest and principal on existing loans and much of that was provided through the shadow banking system, that is outside of government control.
The shadow banking sector was born of the need to circumvent restrictions imposed by government and an ever growing demand for credit. Its development was such that it had even overtaken conventional banking as a source of credit.
The shadow banking system existed in a broad variety of forms: funds, trusts, brokerages, small lending companies and every kind of wealth management product on the market, often invented by the conventional banking system itself.
Regulators turned a blind eye to its extraordinary development and by doing so tacitly authorized its existence, whilst governments positively encouraged it.
These were facts that every banker was aware of. It was the proliferation and excessive use of these means concerned Pat Kennedy. INI itself was part of the system with its funds and wealth management products.
It was the unregulated and sometimes underground nature of the Chinese shadow banking system that made it a knee jerking subject. Many of the wealth management products offered by Chinese banks had the same damage potential as the products that precipitated the 2008 crash: structured investment vehicles and collateralised debt obligations, both of which had been used by banks to keep loans off balance sheets.
Many Chinese banks attracted investors by telling them they could earn over ten percent on such products, which was possible given the country’s exceptionally high growth rates. What many investors could not easily determine was the quality of such wealth management products, often stuffed with non-performing loans in risky companies.
Kennedy made a mental note to speak to Angus MacPherson the next morning on the matter. If as certain forecasters were predicting, a serious slowdown for the Chinese economy was on the books and, it was essential that INI Hong Kong ensure the solidity of its investments.
With that in his mind Pat set off for Sotheby’s at One Pacific Place. An important auction of Chinese art was being held that evening and Lili’s friend, Liu Sunfu, a collector from Shanghai, in town for the occasion, would be joining them.
Amongst the works that were to come under the hammer was a series of ink paintings by Qi Baishi, one of China’s twentieth century masters who died in 1946, which according to Liu were expected to fetch several millions of dollars.
Once at the auction hou
se, Pat forgot his banking worries. He was soon bubbling with enthusiasm in the hope of picking up some lesser known works for their new home in London. However, Liu quickly dampened Pat’s exuberance when he spoke of the scandal that was rocking the world of Chinese art: the question of authenticity.
“The problem today Pat, is the market’s is going a very difficult period,” Liu explained. “Few people here in Hong Kong, not to mind London or New York, take China very seriously when it comes to authentication. I mean would you risk investing millions of dollars in fakes?”
Pat was startled. He had reason to worried considering he was about to bid several hundreds of thousands of dollars for the works he had inspected at Sotheby’s viewing.
The market was being destabilized by forgeries, a problem which in itself was nothing new. What was new was the quantity of high quality forgeries, which coupled with the vague records kept during the turbulent years of Chinese history, from the fall of the Qing dynasty to Mao’s death in 1976, was enough to give serious collectors a nightmare. On the positive side there had been improvements in the market, but that was tempered by a flourishing industry which had emerged capable of producing the most astonishing forgeries.
The real problem however was China’s art market was expanding faster than regulators could keep pace. The demand was spectacular as an ever growing number of Chinese nouveaux-riches wanted a piece of their now powerful country’s cultural heritage.
Chinese art auctions had overtaken those of the US with a staggering nine billion dollars in sales, though in general the tastes of rich Chinese were in relative terms restricted in that they preferred traditional Chinese works.
“I’m sorry to say we’ve been extremely successful at making reproductions,” said Liu. “Jingdezhen, which has been one of our most important porcelain making centres for more than a thousand years, is producing work that even our most experienced experts have difficulty in detecting.”
Jingdezhen, the ‘city of all day thunder and lightning,’ located in the north-eastern part of Jiangxi province in Northern China was known as the porcelain centre of the world. It was where ceramic production started in the Han dynasty, two thousand years ago, thanks to the abundance of pottery clay in the region, but more especially, the Gaoling mountain, a source of pure kaolin, named after the mountain, the most important raw material for the manufacture of porcelain.
Pat nodded. He was acutely aware he was one of the world’s nouveaux-riches with a bank account many magnitudes greater than his knowledge of art and in particular Chinese art.
“Sorry to say our artists are trained to imitate the old Chinese masters, that means they are very skilled in producing high-quality copies of paintings, ceramics and jade carvings. It’s good for tourists, but bad for collectors when there’s a great deal of money to be made by crooked dealers.”
Lili had disappeared, off for the ritual of preening ceremony with influential friends and acquaintances gathered for such occasions, which were as much about social events for the rich as art or business.
Pat spotted Tom Barton and waved him over to meet Liu.
“Got your eye on something interesting Pat?”
“I’m not so sure,” he said with a nervous laugh. “Sunfu tells me there’s a lot of fakes about.”
“So I’ve heard.”
“Look’s like I’ve got Mr Kennedy worried,” Sunfu said with an embarrassed titter.
“I wouldn’t worry Pat, you’ve got a guarantee from Sotheby’s.”
“I suppose so,” he replied, though a hint of doubt lingered.
“Look at it this way Pat, you can afford to take a few risks.”
“What do you mean?”
“Well with the crisis behind us we can relax a little. I mean what have you got to lose?”
Pat smiled. Barton was right. In spite of negative mumblings things were looking up and what was two or three hundred thousand dollars compared to his burgeoning fortune.
Since marrying Lili, Pat shuttled back and forth between London and Hong Kong, where he had gained the confidence of her family, directing investments towards their business empire, profiting not only the bank but his own personal affairs. In spite of that there were days when he felt alone, nagged by a lingering doubt when he surveyed the riches and complexities of Hong Kong from his home in Victoria Heights, what if he was just a pawn in the wily hands of Lili’s family.
Pat had been encouraged by Lili to read Midnight, a novel written by Mao Dun in the early thirties, which described life in Nationalist China, where rich industrialists rigged markets and corrupted officials with scant regard for their workers, in a complex interplay between very wealthy families. Little seemed to have changed, it was if China had reverted to form, more modern, richer and more powerful.
Pat was surrounded by Lili’s family and business friends, he had no close family to speak of on his side, other than very distant uncles, aunts, cousins; he had felt closer to Michael Fitzwilliams, who he met in Boston when they were two young Irishmen learning the ropes of their trades far from the confinements of their respective, but different, backgrounds at home in Ireland.
“Where’s the buffet Pat?” asked Barton. “Let’s get something to drink before the show starts.”
Liu excused himself and the two Europeans headed towards the spread in the adjacent reception area.
The question as to whether the work they were about to bid for was a fake or not was foremost in the minds of a good many of the potential buyers present at the sale.
In the past fakes had gone virtually unnoticed, passing from one collectioner to another until a series of high-profile scandals broke. Not long before, a Chinese oil painting sold for more than ten million dollars was exposed as a fake, produced thirty years after the artist’s death by a student.
Rich Chinese saw the art market as a place to invest, but fraud was cooling their enthusiasm, something that encouraged Pat to think they would be keener to bank their money offshore in London, hedging against changing government policy in Beijing.
With a seriously overheated property market, compounded by a lack of enthusiasm for the stock market, investors were left with few alternatives, which is why many had turned to the art market.
Christies – Hong Kong
“What are you looking for Pat?”
“Here?”
“Where else?” Barton said with a laugh, thinking Kennedy was as inscrutable as a Chinese.
“There’s a couple of interesting Zhang Daqian paintings,” he replied with the aloof air of a connoisseur.
Barton nodded in approval of Pat’s newly gained knowledge in Asian art.
“He’s a modern landscape painter,” Kennedy added.
Barton had never heard of him, Chinese art did not really excite him, if anything it was Sophie’s domain and her tastes were very European.
“Is the market here really that important?”
“You’d better believe it Tom, it’s a multi-billion dollar business.”
Barton wondered if he was exaggerating. But if what Kennedy said was true, it was a confirmation of the mind boggling dimension of the country and its wealth. In a few short decades a new class of very rich Chinese had sprung up from almost nowhere.
Statistics were faceless and the names of Chinese companies told him nothing about their owners; anonymous for the most part. But the individuals that gathered at Sotheby’s sales in Hong Kong were real and as ever their wealth more than conspicuous. They arrived in Rolls, Ferraris and Mercedes accompanied by their elegant wives dressed in the latest fashions, adorned with gold and diamonds; husbands sporting exclusive watches, exuding the confidence of the very rich as organisers and flunkies scuttled around them.
As Barton observed the opulent scene, the reality of the transformation, which had taken place almost unannounced, sunk in. A new elite had appeared and were making their presence felt in domains that had been the exclusive reserve of Europeans and Americans in modern times. The US had been
surpassed in art sales and a new market had been created to feed the voracious demand for art by Chinese tycoons, banks, businesses and investors.
Pat found Lili in conversation with one of the organisers, a specialist in the history of Chinese art.
“Pat, you know Mr Zhan?”
“Yes of course.”
Kennedy had met Zhan at different gatherings in Hong Kong and was indebted to him for his introduction to the world of Chinese art and its long history.
“So Mr Kennedy, looks like an interesting evening.”
“Yes, and I hope I’ll be lucky enough to get what I want.”
“It’s not my role, but be careful if the bidding gets wild!”
They all laughed nervously remembering rumours of ‘stir frying’ that certain unscrupulous auction houses rigged the bidding.
Art collecting was nevertheless in its infancy in China with many nouveaux-riches acquirers being very inexperienced with little real knowledge of art and too much money to spend. It had become a craze in China with get rich quick aficionados of every ilk piling into the maker, mobbing auction rooms across the country. The prices of even modest cultural objects had exploded feeding the ancient Chinese tradition of gambling and risk taking as buyers bought with the sole idea of flipping their acquisitions to turn in a quick profit.
John Francis remembered Hong Kong thirty or more years before when Chinese art and antiques was the domain of arcane collectors. As a young man he had been introduced to Chinese ceramics by Kim Adhiyatman, head of Adam Malik’s cabinet. Adam Malik at that time vice-president of Indonesia owned the largest private collection of antique Chinese ceramics in South East Asia, and Adhiyatman’s wife had taken advantage of her husband’s position to build her own extraordinary collection.
Francis had collected cultural objects, mostly ceramics, ivories and textiles, in markets across South East and East Asia, picking up interesting pieces here and there for a few dollars. After China opened up there were many new opportunities, though he paid a little more in Beijing, when such objects were sold to mainly foreign tourists or exported to dealers in the US and Europe.
In those days serious Chinese collectors were mostly from Taiwan, Hong Kong or Macao when Mainland China was just emerging from the austerity of Maoism under the direction of Deng Xiaoping.
The Chinese art market did not really take off until 2004, when China’s wealth was bolstered by booming Western economies, confirming its place as the world’s leading manufacturing and exporting nation, at the same time as Europe fuelled its own bubble, abandoning large swathes of its manufacturing sectors by investing in services led by banking and property construction.
Hundreds of Chinese auction houses had since sprung up, the largest of which being billion-dollar businesses having links to the ruling elite, establishing offices in major foreign capitals.
Kennedy reassuringly told Barton: “Don’t worry Tom, I’m not going to mortgage our home in London to buy a couple of fake paintings.”
Lili frowned at the very thought.
“Maybe I’ll just offer them to the minister next week, when he signs up for the deal in London,” he said lowering his voice. “They call it yahui, that means elegant bribery.”
“Yah ... what?”
“Shush,” said Lili with a serious frown.
“It’s a kind of baksheesh,” said Pat lowering his voice. “Giving a valuable piece of artwork for favours. Lili’s father tells me it’s as old as the hills, goes back to the Ming Dynasty.”
“I see,” said Tom Barton discretely, as though they were conspiring together.
“They’re cracking down on it … even have spies at auctions.”
“Why?” asked Barton puzzled, “it was not as if paintings would be given away in public.”
“It’s to know how much artwork is sold for and by who. In a way selling a paint is like cashing a cheque.”
“Okay.”
“So when ministers and high officials retire they sell their collections, or at least part of them. Now they’re afraid to sell them at public auction, so they use middlemen. The trouble is it distorts prices, as businessmen snap up pieces sold by their friends.”
“I get it, very clever. So objects are deliberately overpriced.”
Yes. Some of the gifts are forgeries, which are bought back at auctions by the same businessmen.”
“Laundering.”
“Not even that, just pure corruption, they were worth nothing in the first place, it’s plain bribery.”
Lili made an urgent sign to Pat who had raised his voice again. “You want someone to lose his head Pat!” she hissed with pretended concern.
It was a well known fact that government officials had their finger in the pie, using frontmen to buy and sell works to camouflage bribery and corruption.
“Today clever forgers are turning their attention to foreigners, like those two naïve princesses over there,” Pat said nodding in the direction of two overdressed Middle Eastern looking women.
“At least they’ve brought an expert with them,” said Lili, recognising Alexis Poniatowski a London art specialist with them.
Poniatowski was accompanied by three women: two were exotic and richly dressed; the third, stylish, though in subdued manner compared to here friends, was European.
“Mr Kennedy, let me introduce you to Princess Ameerah al-Taweel and Princess Iffat Al-Thunayan.”
Pat, instantly recognising them as Saudis, gracefully bowed.
“And this is Agnes de la Salle, Comtesse d’Urtubie, from France.”
To the amusement of Agnes, Pat offered a baisemain.
“The princesses are amateurs of Chinese art.”
They both nodded enthusiastically.
On closer inspection Pat noticed they were younger than he had imagined at first appearance. Perhaps it was their style that made them look older, a little too fashionable and a little too much jewellery.
“We are looking for something to decorate our new Paris apartment.”
“Ah, I hope Alexis can help you.”
“I hope so too. Agnes is our expert. She’s with the Musée Cernuschi in Paris.”
“Mr Kennedy is a collector.”
“From where?” asked Princess Ameerah.
“Hong Kong and London.”
Lili, her curiosity aroused by the three women’s interest in Pat, arrived, took her husband’s arm possessively.
“Let me introduce you to my wife.”
The women exchanged polite nods.
These princesses are from Saudi Arabia.
“How nice,” Lili said. “Do you speak Cantonese?”
“I speak a little Mandarin,” said Agnes.
Lili turned to Pat and with a smile whispered in his ear, in Cantonese: “I’ll leave you with your princess, fakes like our more recent antiques.”
“Please excuse me,” she said. “I hope you find something interesting. We have some excellent creators, past and present.”
HONG KONG
Jardine Matheson was familiar to Pat Kennedy, and it had every reason to be, Jardine House was the home to INI Hong Kong, a fifty two storey tower situated in Central at 1 Connaught Place, the tallest building in Hong Kong at the time of its construction.
Jardine Matheson Holdings, a conglomerate incorporated in Bermuda, one of the original Hong Kong trading houses or Hongs, dated back to Imperial China, still earned over forty percent of its profits in China. After more than two centuries existence it was still controlled by the Keswick family, descendants of co-founder William Jardine's older sister.
Jardine Matheson, or simply Jardines, was all that remained of the old Hongs and their family associations, rather like the Wu’s, which included bothers, sisters, uncles, aunts, cousin and in-laws on their company’s roll call where kinship was the general rule. European business heads, like Pat Kennedy, were known in Hong Kong as taipans.
In the early years of the third millennium Hong Kong was a kaleidoscope of cultures and
languages, though ninety percent percent of its people were Chinese, speaking many languages including, variations of Cantonese, Mandarin, Hakka, Hokkien and many other dialects that were totally ignored by foreigners. The vast majority of Europeans spoke little or no Chinese, a few expats took lessons in Cantonese, others in Mandarin, but few were fluent.
The Chinese educated classes, many of whom studied in the UK or the US, some in Swiss finishing schools, were Europeanised or internationalised, speaking excellent English, in addition to Cantonese, Mandarin and their local dialects.
Hong Kong was not affected by China’s one-child policy which had been in place for over thirty years, which meant that before 1980, most families had more than one child.
Lili was born of her father’s second marriage and had two step brothers from the first, both of whom had been born before the law came into force.
After that date Chinese families were one child families, with the exception of those in isolated rural districts. This gave rise to what was called the 4-2-1 dynamic: four grandparents, two parents and one grandchild, on whom was bestowed the entire family wealth.
On matters of religion the Chinese remained devoted to their families and ancestors with old Confucian ideas making their return. Mainland China however has been governed since 1949 by the Chinese Communist Party, an atheist institution that prohibited party members from practicing religion while in office, though in recent years there had been a return to Confucian traditions. Hongkongers on the other hand had always continued to pray to their multifarious gods.
Though three hundred thousand Hongkongers were Christians or Muslims, a great many more were Daoists or Buddhists and a pantheon of dozens of divinities was supplicated daily for favours: gods of wealth, gods of happiness, of mercy, long life, wisdom, kitchen gods, sea gods and earth gods, all were part of a long list.
As to Europeans, the better off amongst them spent Sundays on their roof terraces and the rich, like the Kennedys, in their extravagant pent house gardens entertaining friends as the sunset over the hills of Lantau Island. The Kennedys, and other who could afford it, often enjoyed weekend boating in Repulse Bay, the East Lamma Channel, or around the islands off the southern coast of Hong Kong Island. Depending on their means they owned launches, yachts or motorized junks. The larger more luxurious junks were attended by trimly uniformed Chinese boat crews, who served the owners under white canvas awnings suspended over the high poop decks, where tables were laid with white tablecloths, silver cutlery and fine glasses with wine at the ready in silver coolers while the younger women were stretched out sunbathing on the prow.
The was also Happy Valley Race Course, one of the most famous horse racing venues in the world, a meeting place for rich and poor alike. Before the handover in 1997, it was said that Hong Kong was ruled by the Jockey Club, the Hong Kong and Shanghai Bank and the Governor … in that order.
Behind the glamour of Hong Kong lurked the triads, secret societies, a kind of Mafia, with over fifty gangs and one hundred thousand or more members engaged in huge variety of illegal activities. Some of these, such as the Sun Yee On society, played a more or less visible role in the community, with emanations reaching out into every corner of China and beyond. Corruption was also omnipresent, traditionally known as cumshaw, squeeze or tea money.
Many Hongkongers and visitors like Tom Barton enjoyed an evening walk in the warm humid air along the Kowloon waterfront, watching ships pass by, and ferries toing and froing against the fabulous backdrop of Hong Kong Island with its spectacular display of lights. Every year many thousands of ocean-going ships entered or left Hong Kong Harbour, providing a permanent around the clock spectacle.
Almost twenty years after the transfer of sovereignty, Hong Kong retained its economic power, with its four hundred plus square miles of territory and a population of over seven million, an integral part of China, a Special Administrative Region of the People's Republic of China.
Since his move to Hong Kong Kennedy’s latent hostility towards the City of London and the British government had grown. London was a good place to live, but doing business there had become seriously risky. Of course Hong Kong was not without risks, which explained his interest in developing the bank’s business in the Caribbean, in this way he was no different to many of the Chinese and Russians he had got to know, for whom a last resort safe haven was a must if things went wrong, as he knew they eventually would.
A junk in Victoria Harbour – Hong Kong
His references were City & Colonial and HSBC, both banks had long links to the former colony. The former was founded in London, but its business was built around East Asian trade, the latter in Hong Kong. Both worked in their different ways, both were amongst the world’s largest. However, HSBC had a schizophrenic relationship with its former colonial home, where its biggest subsidiary was already based and supervised by the Hong Kong Monetary Authority.
Under the Wu family INI Hong Kong thrived in greater China, like its larger competitors, though it was small fry compared to HSBC, whose balance-sheet was nine times bigger than Hong Kong’s GDP.
Cornucopia Page 94
