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Francis’ role as head of the think tank set up by Michael Fitzwilliams in 2007, was to analyse world events, anticipate crises and pre-empt the negative effects they could have on the functioning of his banking group. As such Francis had warned the banker of the growing risks of Russian business, but even he had not see the Ukrainian Maidan uprising, the ousting of Viktor Yanukovych and Vladimir Putin’s reaction. It was a Black Swan event as was the seizure of the Crimea and imposition of sanctions against Russia by the West.
No one had seen the reversal of Russia’s policies in 2014 and 2015. On the positive side Francis had foreseen the volatility of oil prices, which in reality had not been that difficult. But for all the wrong reasons. What changed was not American shale oil production, but the speed with which it had pumped up levels of production. That conjugated with Putin’s Ukrainian adventure had seriously blurred his vision.
Much worse was the totally unseen, or even imagined, predatory move by City & Colonial, aided by the British Treasury, to dispossess Fitzwilliams of his bank. The coup had arrived so astonishingly suddenly the banker had been literally hoodwinked into signing away the control of his bank, all because of a liquidity spike that had not lasted forty eight hours.
Since the advent of the drama, Michael Fitzwilliams had gone. The elections were over; the Tories had been returned to power; banks would not quit London; and Labour would not ruin the country. Even that bastard, Hainsworth, who had set up the organised the theft of the bank had been expedited into early retirement.
The commodity bubble had burst and Sir Alec Hainsworth was accused of presiding over a Johnny-come-lately policy of financing exporting countries in their reckless expansion race.
Commodity producing countries saw themselves not only burdened with vast stocks of unsold, overpriced, raw materials, but huge debts, much of which had no chance of being repaid. Accused of straying foolhardily outside of the bank’s traditional activities, Hainsworth was forced to step down, as the banking group announced a series of economic measures, which included deleveraging and the sale of its interests in a number of subsidiary holdings, notably in INI London.
At the beginning of the year Hainsworth had grabbed control of INI London through an injection of fresh capital against a new issue of shares bearing special voting rights, giving City & Colonial a controlling interest, ousting Fitzwilliams from the board and leaving his family as simple shareholders.
That capital had been raised via a complex private placement montage in which City & Colonial and a number of high net worth individuals participated. Certain of those individual investors were Chinese, who after being caught short in the Chinese stock market bubble, sold their shares in a behind closed doors arrangement to Pat Kennedy and the Wu family.
The fact Hainsworth had not understood the multifarious structure of INI Holdings and its Hong Kong and Chinese emanations was another of his hastily made miscalculations. INI had not been the monolithic entity he had imagined, unlike City & Colonial itself. In a certain manner of speaking, apart from it City interests, INI was to all intents an almost a virtual entity, with its various external holdings quasi independent.
The Wu family moved swiftly acquiring City & Colonial’s remaining interests in INI London and promptly announced the relocation of it headquarters to Hong Kong, thus consolidating its existing interests in INI Hong Kong with Pat’s brother-in-law as CEO.
A new generation of the Fitzwilliams family, led by his nephew, regrouped their different interests in Castlemain Holdings Ltd., a bank that had been incorporated in the Caymans by his uncle in the nineties, specialised in private banking, investment and asset management, and offering a wide range of investment strategies for a small number of very select clients. The family holdings included interests in INI’s Irish Union Bank in Dublin, Nederlandsche Nassau Bank in the Netherlands with its Caribbean branches, as well as properties in Ireland, the UK, France and the Caribbean. In addition a new management hub, Castlemain Private Capital, owned and managed by George Fitzwilliams, a nephew and successor of the late banker, was established Mayfair, London, one of the world’s leading hedge fund centres.
HONG KONG
Hong Kong had become Kennedy’s home, at least one of them, another of the different universes in which Pat Kennedy moved in his blasé way.
Liam Clancy, much younger than Pat, saw it in a different light. Hong Kong had so much to offer, it was awash in money, restaurants, night clubs, markets, shopping, fashion, art, culture and exhibitions.
But what attracted Clancy was its nightlife. He was not content to return to a silent company appartment after work. He was drawn by the lights of Lan Kwai Fong, the legendary nightlife zone in the middle of Hong Kong’s busy Central business district, the economic and financial heart of Hong Kong with its high concentration of foreign business, banks, multinational and government offices. LKF as it was known was the kind of place where a young banker could relax with people of his own age.
On occasions the bank organised events in the nightlife district, attracting young people from fashion houses, real estate firms, investing houses, the sons and daughters of the rich, and young entrepreneurs from the Mainland and the world. LKF had spread to the neighbouring streets and beyond and was the scene of regular street events and carnivals attracting dense crowds of visitors in search of an evening out in one of its hundred or more bars and restaurants.
Liam and his friends usually started with a ritual bar crawl, followed by dinner in more often than than not in one of the small restaurant in Wing Wah Lane, where Japanese, Indian, Malaysian, Indonesian or Thai specialities abounded, where the food was good, before ending up in one of the trendier night clubs in or near Central.
Liam Clancy, after starting out as a trader in Dublin at the Irish Union Bank, had quit home in desperation for crisis racked Spain in 2009, after the collapse of the Irish banking system. His idea was to make a new start in the sun where he had hoped his reserves would allow him to ride out the worst of the crisis.
After the excitement of Marbella faded, he set to work to build a consultancy providing expats with advice on their property investments and finances, a difficult enterprise given the hard times. A great many Brits who had retired to Spain saw their hopes dashed as the value of sterling dived along with Spanish property prices leaving them to repay loans contracted in euros far from home.
After two years, just when the going had gotten really hard as Liam and his two associates struggled to make ends meet, he was offered a job in the London offices of his former employer when business was starting to pick up again in the City, where Michael Fitzwilliams’ bank had entered into a partnership with Sergei Tarasov’s Russian banking group.
One of the partnership’s ventures was a new property fund set up by Pat Kennedy, the bank’s business development director. A new and dynamic team was formed under Tom Barton, the fund manager, who on Kennedy’s recommendations hired those the bank knew and who knew the bank: their ex-traders.
Lan Kwai Fong in Hong Kong’s Central District
Liam Clancy was amongst the first. With his experience at the bank’s pre-crisis trading unit in Dublin and the knowledge he had gained in Spain he was an ideal candidate. The tall good looking young man with a soft Kerry accent had acquired a smooth continental style, all of which made him an automatic choice for Kennedy, who naturally preferred an Irish lad to an English public school type.
Kennedy took Liam under his wing, he liked his self-assurance and his positive out-going attitude. Clancy progressed rapidly, taking on responsibility, building the property fund’s portfolio under the guidance of Tom Barton, making a name for himself at board level where he was seen as a young man going places.
Following the City & Colonial grab, Clancy, finding himself in a delicate situation via-à-vis the new management, jumped at the opportunity Kennedy offered him in Hong Kong where his International experience and his budding knowledge of China made him a valuable asset.
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Kennedy feared a Brexit, a vision that seemed to be making more and more headway in British public opinion. The idea appalled him, an idea he shared with Clancy, as they realised the damage Little Englanders could do to the European dream. Liam had seen the idea of an independent Catalonia grow, Pat the effects of Basque Nationalism, and whilst neither was against regional cultural expression, the thought of a multitude of small states clamouring for their rights did not seem to be the way forward in what had become a fragile, if not dangerous, world.
SYRIA
It was just a question of time before Putin moved and when he did he didn’t hang around waiting for international approval, in his usual brutal take it or leave in manner he gave the Americans an hour to clear Syrian airspace.
The contrast with the West’s timid actions couldn’t have been starker. Barack Obama, the de facto leader of the Western World, had earned the sobriquet of ‘Hamlet in the Whitehouse’, the ‘to be or not to be’ president, who, at a perilous moment in the modern history of the Middle East, was incapable of acting decisively.
While Obama dithered the Duma authorised air strikes, the Orthodox Church declared a holy war and Russian warships in the Caspian Sea launched cruise missiles against Syrian rebel strongholds.
Whatever the methods it did not disguise the fact that Western policy in the Middle East, plagued with division and indecision, had been a disaster for the region and Europe would reap the fruits of the chaos it had sown, a vast uncontrollable flood of refugees.
Twenty five years after Saddam Hussein’s invasion of Kuwait, the situation in the Middle East had gone from bad to worse to catastrophic. Syria, Iraq and Yemen were embroiled in disastrous civil wars. The Lebanon and Jordan were invaded by millions of refugees. Turkey was on the point of being dragged into the conflict as it turned against its own Kurds and sided with its Sunni co-religionists, notably Saudi Arabia and the Gulf states, in a holy war against Iran and its Shiite allies.
Israel watch from the sidelines with barely disguised schadenfreud as its Arab and Iranian enemies fought a proxy war. However, its own latent conflict with Palestine remained and the smallest incident could rekindle the flames.
Cornucopia Page 109
