by Tom Clancy
Bixby joked, “I don’t even want to know where his scar is.”
All the men at the table laughed.
Ben Herman said, “I guess since I’m the low man on the totem pole, it’s my job to find out.” He muttered, “For this I got a master’s in international affairs?”
Bixby said, “Fun and games aside, this Scar guy is clearly in charge of these younger men. Look at the pictures. The military dudes are holding doors for him, lighting his cigarette.”
“Could be his security team,” someone suggested.
“Doesn’t look like security to me. Their coats are zipped up, so they aren’t packing heat for defensive purposes, and they aren’t looking out at the street for threats. No. These are hard-charging frontliners. Looks like a squad of ex-Spetsnaz guys or something.”
“And a Russian crime boss is running them?” Ben said with surprise.
“Would be odd,” Bixby admitted.
Ostheimer said, “What’s even stranger is this allegation they are meeting with Chechen mobsters. Those are some strange bedfellows for ex-Spetsnaz types. OC here in Kiev is so entrenched, there are shootouts in the street anytime one goon tries to operate on another’s turf. I don’t understand how the hell some Russian guy can just waltz into town like he owns the place without getting his ass tossed into the Dnieper.”
Ben said, “I’ll send a cable back to Langley to see if anyone knows anything about Scar.”
Ostheimer shook his head. “I checked when I was in Saint Pete. His file was thin. Maybe they’ve got more on him, but I kinda doubt it.”
Bixby handed the pictures back to Ben. “With everything else we’ve got going on, I don’t want anyone getting distracted by this. I’ll make some calls tomorrow and reach out to some of the older Russian hands at Langley and see if that nickname makes anything click with them. A guy his age would have been early thirties in the Wild West days of the nineties. If he was a player in Moscow who survived that shooting gallery, someone might recognize him.”
Bixby drained the rest of his drink and dealt the next hand. He figured he’d go ahead and lose his last fifty bucks quick so he could go home and get some sleep, because he liked to get an early start.
Being COS in Ukraine was a challenging posting, indeed.
14
Jack Ryan, Jr.’s Monday morning started at 8:15 when he arrived bleary-eyed at his office at Castor and Boyle Risk Analytics, dumped his jacket and his bag, and headed down to the little cafeteria on his floor. He ordered an egg sandwich and a coffee—not tea—and brought his breakfast back to his desk.
The egg was fried in butter and nearly the size of a dinner plate; it hung out of the bread and dripped all over his hand. And the coffee was instant and tasted like road tar. But he ate the egg and he drank the coffee because he knew he would need the protein and the caffeine today.
He’d spent virtually the entire weekend conducting research into the complicated auction of his client’s company, Galbraith Rossiya Energy, as well as the subsequent sale of the assets to Gazprom. He’d slept little, and now he was running on fumes.
In his two and a half months here at Castor and Boyle, Jack had dug through reams of corporate documents and file cabinets full of accounting ledgers and transcripts of board meetings. As dry as this sounded, Jack was finding the intricate process anything but, because the work he was doing seemed to have more to do with crime than it did with legitimate business.
And the one inescapable truth he had found in his research of the Galbraith Rossiya case was that the beneficiaries of much of this crime seemed to be the men and women who ran the government of Russia.
The phenomenon of criminal takeover of entire businesses in Russia had a name; it was called reidversto, or raiding. This wasn’t corporate raiding as it is thought of in the West. With reidversto, blackmail, fraud, threats of violence, and falsifying of documents were all used, as was the bringing of frivolous lawsuits whereby bribed judges adjudicated on the side of the criminals. Police and government officials were paid off for their help, often with a portion of the stolen venture used as reimbursement.
Official Russian government statistics claimed as many as four hundred companies a year were successfully taken over by raiders, and Ryan knew what this meant for the nation of Russia. This scared off foreign investments, and it damaged the Russian economy in ways difficult to measure.
His company’s client, Scottish billionaire Malcolm Galbraith, had fallen victim to an incredibly intricate and organized scheme to strip him of one of his largest holdings in Russia in one fell swoop. And now Jack found that those working on Galbraith’s behalf—law firms, investigators, and other associated businesses based in the East—were themselves falling victim to the Kremlin’s wrath.
He’d just heard over the weekend that a lawyer hired by Galbraith directly had been arrested in Saint Petersburg, and an officer of one of Galbraith’s pipeline maintenance firms in Moscow had been beaten up by thugs who, he had told the authorities, had freely stated they had been sent to pass a message along to Galbraith to drop the Rossiya Energy investigation.
These two pieces of bad news might have slowed down the zeal of many, but they only encouraged Jack to work harder. He soldiered on, and through his work on the theft of Galbraith’s company he discovered that Gazprom had purchased the pieces of the Scottish-owned gas firm from a series of small foreign companies that sprang up out of nowhere to bid in the auction.
To unravel it all, Ryan had a few weapons he could call on. His main tool was SPARK, a corporate investigation database run by Interfax, a Russian NGO news agency that compiled virtually every nugget of information on every company operating in Russia.
Jack didn’t speak Russian—C&B had translators on staff to help him with that—but he’d taught himself Cyrillic in a day, and by now he could sound out the words on the SPARK database quickly and confidently. He’d picked up nearly three hundred Russian words, all related to business, taxes, banking, and corporate structuring. He couldn’t ask for the bathroom or tell a girl she had pretty eyes in Russian, but he could read a notation on SPARK giving the address and square footage of the headquarters of a new start-up company in Kursk doing business with Russia’s nationalized timber industry.
Another tool Jack made use of was IBM i2 Analyst’s Notebook. It was a data analysis tool that allowed him to put in all manner of different data sets, and then generate quick visual representations via graphs and charts that he could manipulate to track trends, see relationships between people in a target network, and allow himself a more dynamic way of interpreting whichever environment he was studying.
Pattern analysis had become part and parcel with intelligence work; Jack had used it at The Campus with great effect. But when he started working with Castor and Boyle he immediately saw the need to use similar tactics in business intelligence, and Jack knew good data organized effectively was the most important commodity for any analyst.
After an hour going over the database this morning, feverishly adding notes to his database as well as the two legal pads’ worth of chicken scratch he’d created over his weekend marathon work session, he looked away from his screen to sip the dregs of his cold coffee. Just then, Sandy Lamont leaned into his office. The big blond man had just made it in to work, and he held his day’s first cup of tea in his hand. “Morning, Jack. How was your weekend?”
“It was fine.” He thought for a moment. “Well, it was okay. I worked from home.”
“Why on earth would you do such a thing?”
“You told me going up against Gazprom itself was a losing proposition, so I am digging into the front companies involved in the Galbraith deal, trying to find who actually owns them.”
“That will be tough going, mate. They’ll be owned by trusts and private interest foundations, all in offshore financial havens, and the only names you will find attached to them will be the corporate nominees, not the real ownership.”
“You’re right about that, but
I did find that the registered agent for several of the auction winners was the same company.”
Sandy shrugged. “The registered agent is paid to find the nominee to stand in for the real owners on the corporate documents. One register might work with ten thousand companies. Sorry, lad, but you won’t get any valuable information from a registered agent.”
Ryan essentially mumbled the next sentence to himself: “Someone needs to put a gun to the head of the registered agent. I bet he’d suddenly come up with some valuable information.”
Sandy’s eyebrows rose. After a moment he stepped into the office and shut the door. After a sip of his tea he said, “I know it’s a frustrating slog. How ’bout you let me serve as a sounding board so you can talk over what you’re doing?”
“That would be great, thanks.”
Sandy looked at his watch. “Well, I’ve got an appointment in twenty with Hugh Castor, but I’m yours till then. What have you got?”
Jack grabbed a stack of paperwork off his desk and started looking through it while he talked. “Okay. In order to prove the funds stolen in Russia from the auction of Galbraith’s company are now somewhere in the West, where Galbraith can have any chance of laying claim to them, I needed to trace these foreign corporate holdings. We know there is involvement by the Russian government in the theft, so we’ll never get the cash out of Russia itself.”
“Not in a million years.”
“The government accused Galbraith’s gas-extraction concern of owing twelve billion dollars in back taxes. The annual tax bill exceeded revenues.”
Sandy knew the story. “Right. They owed more in taxes than they earned. It was bollocks, but when the crooks own the courts, that’s what you get.”
“That’s correct,” Jack said with a nod. “The tax office gave Galbraith twenty-four hours to come up with the money, which was an impossibility, so the government ordered the company’s assets to be sold and the money collected by the state. A hastily arranged series of auctions was set up, and at each auction, only one company showed up to bid on the assets.”
“How convenient that must have been for them,” Sandy said sarcastically.
“I struck out with most of these phantom companies, but I did learn something about one of them. It’s called International Finance Corporation, LLC. One week before the auction, IFC was registered in Panama and claimed its total listed capital assets to be valued at three hundred eighty-five dollars. Yet they were somehow able to go to a Russian bank and borrow seven billion dollars to bid in their auction.”
“They must have been bloody persuasive,” Sandy said. There was no surprise in his voice about any of this; he was a man well versed in the kleptocracy of Russia.
Ryan continued, reading from notes: “The presumed capital value alone of Galbraith’s assets in this auction was roughly ten billion dollars. The auction took five minutes, and IFC won with their opening bid of six-point-three billion. Four days later, they sold their interest to Gazprom for seven-point-five.”
He looked away from his notes and up at Sandy. “Gazprom makes an easy two and a half billion just in capital acquisition, and the government retains control of the assets, since Gazprom is government-run. The two and a half billion in added value makes Gazprom’s stock go up, and this all gets divvied up between the shareholders of Gazprom.”
Sandy said, “Who just happen to be the siloviki. Fancy that.”
“And, don’t forget, whoever the hell runs IFC made one-point-two billion for their trouble.”
Jack looked back down at his papers. “Since the Galbraith deal, IFC has continued its run of good luck. This little Panamanian-registered firm has branched off into a bunch of different corporate entities, and each one has an uncanny ability to purchase critical infrastructure at knockdown prices, using their newfound wealth to secure bank loans, mostly in Swiss and Russian banks.”
He looked up at Sandy and noticed the man looking down into his mug of tea.
“You following me so far?”
Sandy chuckled. “Sadly, old boy, you aren’t exactly tripping me up with the complexity of the scheme just yet. I see this sort of thing every day.”
Jack looked back down at his papers. “Okay, well, using SPARK, I managed to trace one of these corporate entities through a series of blind P.O. boxes, trusts, and private interest foundations. I finally made my way to a concrete address.”
Sandy Lamont’s eyebrows rose. “Really? Now, that’s something. Where?”
“It’s a liquor store in Tver, a hundred miles northwest of Moscow. I sent an investigator from Moscow to go up and poke around. The people at the store seemed to have no idea what the investigator was talking about, but he feels certain the place is, wittingly or otherwise, serving as a drop box for organized crime.”
“Which criminal group, specifically?”
“Unknown.”
Sandy looked bored again. “Go on.”
“Anyway, a month after the Galbraith deal, this tiny little Panamanian-registered company whose only physical location is a small-town Russian liquor store managed to get an unsecured sixty million euro loan from a Swiss bank that regularly does business with shady offshore corps all over the world. It used this loan to purchase a gas pipeline management company in Bulgaria. Then, a month after that, it bought a pipeline management company in Slovenia for ninety million euros, and another in Romania for one hundred and thirty-three million.
“IFC has dozens of legal entities, all new, and each with accounts in one of the offshore financial centers. Cyprus, Caymans, Dubai, British Virgin Islands, Panama. But one thing I’ve noticed about all these companies”—Ryan flipped through some pages, looking for something specific—“every last one of these companies also has a branch office in Saint John’s, Antigua.”
“A branch office?”
Jack shrugged. “They are all just drop boxes or business suites. There is nothing physically there that ties them to Antigua. To tell you the truth, I don’t understand that part of it at all. Sure, I get it, Antigua is an offshore banking haven, but these companies already reside in other offshore banking havens. Why do they all have to be tied to Antigua as well?”
Sandy thought it over for a moment. “The quick-and-easy answer is the real owner of this constellation of enterprises has a connection to Antigua.”
“What sort of connection?”
“Citizenship would be my guess.”
Ryan looked at Lamont as though he’d lost his mind. “Sandy, I hate to be accused of racial profiling, but I can promise you the oligarch, government bigwig, or mob boss who just made one-point-two billion dollars in a Kremlin-backed scheme in Vladivostok was not born in some Third World town in the West Indies.”
Sandy shook his head. “No, Ryan. Didn’t say he hails from there. Antigua is one of the few nations where you can show up on a plane, hand someone some cash… I’d say fifty thousand U.S. dollars would cover it, and then get yourself a brand-new passport. They hand out citizenship for a price.”
“Why would you want to do that?”
“A few reasons. Probably the most relevant is that only citizens of a nation can open up banks in that nation.”
Jack was thoroughly confused now. “Why would you open your own bank? Even with banking secrecy laws inside a nation, if you want to do business with another bank—and banks pretty much have to do business with other banks—the other bank needs to be able to trust you. Some shady Russian with a suspicious passport isn’t going to be transferring cash to Citibank from the Antigua Bank of Ivan or whatever the hell he calls it.”
Sandy laughed. “I love your energy, Jack, but you are a babe in these woods, aren’t you? You are correct, many offshore banks lack the licenses to trade with the big boys, but there are ways around that. The Antigua Bank of Ivan, as you call it, just needs to find itself an intermediary bank, someone just slightly better positioned in the banking world that is willing to do business with shady characters. A handsome bribe to a bank official sh
ould do the trick. That intermediary will transfer Ivan’s funds to another intermediary—by now we should have the money upstream to Switzerland or Liechtenstein or Madeira, somewhere still nontransparent but more respected than bloody Antigua. And from here the money can go anywhere—USA, UK, or, as I would venture to guess in the Galbraith Energy case, back to Russia.”
“Why would it go back to Russia?”
The Englishman said, “It’s a classic money-laundering scheme called round-tripping. Basically, they take money earned from corruption—theft of property, bribes, organized-crime proceeds, whatever—then they send the money to holding companies in one of these offshore financial centers, where the money is moved to another holding company and then back into Russia as clean funds in the form of foreign investments.”
“Damn,” muttered Ryan. “I still have a lot to learn.”
“You do, lad. But you’re a quick study.” Lamont looked at his watch. “All of this is very interesting, from an academic point of view, but these shell companies pop up and disappear with such ease, if you don’t have a handle on the actual ownership structure, meaning names of real people, you’ll never get anywhere near the money. We’ll never know who is on the board of this IFC company, or any of its entities. They work very, very hard to keep that information secret, and they are bloody good at it. You’ve seen all the documentation.”
Jack’s eyes slowly began to relight. “I have. All the documents are designed to hide the owner, but what if we know where his bank is?”
Sandy scratched his head. “What are you on about?”
“All these companies in Antigua I mentioned. They are all registered in the same building.”
“Not uncommon at all. There will be a registered agent, a company that can help you get a passport, lawyers to help you set up your tax-haven accounts. They will use a physical address set up just for that purpose. No real affiliation with the ownership.”
