The Plan by John Francis Kinsella
Kennedy swallowed hard and tried to compose himself, his eyes bulging as would those of a frog contemplating a serpent, as he stared at the thick set figure. Almost forgotten images flashed through his brain. At first he had not recognised the Armenian, who now looked like Joseph Stalin’s ghost, older, his hair white and his moustache fuller. It was the evil smile that brought the memories of Tallinn rushing back.
Ten year had passed since he had said goodbye to the Armenian in a grim Soviet style apartment on the outskirts of the Estonian capital. For almost ten years Kennedy had lived in the idea his secret was forever hidden after Erikkson went down with the Marie Gallant off the southern coast of Cuba in a tropical hurricane.
Holy Mother of feckin Jesus Christ! He swore under his breath as he recalled the khaki kitbag that had contained five million dollars in forged one hundred dollar bills packed neatly in chocolate boxes.
Dermirshian lifted his index finger to his lips, ‘In banking secrets are important Mr Kennedy n’est ce pas.’
Kennedy spluttered.
‘I think it’s a good moment to toast to our cooperation,’ said the Armenian pouring two glasses of Vodka to the brim and handing one to Kennedy.
‘Твоё здоровье!’
Kennedy swallowed the ice cold Vodka in one gulp just as Tarasov returned.
‘I see you are friends already.’
‘How you say in English?’ asked Dermirshian, ‘Almost like old friends.’
Kennedy choked.
‘You’ll get used to our Vodka Pat,’ said Tarasov giving the Irish banker a friendly thump on the back, thinking it would help the vodka on its way down.
Ten years before, Pat Kennedy had been unwittingly involved in the Tallinn transaction with Dermirshian, a deal set-up by a corrupt Swedish banker, Stig Erikkson. Only the Armenian would have remembered the affair, that is unless he had confided their dirty little secret to Tarasov.
Fitzwilliams was met in the VIP arrivals area of Moscow’s Sheremetyevo Airport and led directly to the oligarch’s armoured Maybach limousine. With sirens wailing and flashing blue lights the limousine, joined by two black Mercedes SUVs, left the airport. Reaching the outskirts of Moscow the convoy hogged the central lane, normally reserved for police, emergency services and high ranking government officials, as it sped towards the city centre and the Hotel Metropol.
The Russian spared no expense to demonstrate his power and influence in the Russian capital. The managing director of the Metropol, surrounded by a crowd of fawning assistants, met the VIPs on the hotel steps and led them through the vast Art Nouveau reception hall at the mezzanine level. They were ushered to the lift, up to the fourth floor, and to the magnificent early 20th century style presidential suite overlooking the Teatralnaya Ploshchad and the Bolshoi Theatre.
‘Welcome to Moscow,’ Tarasov said theatrically as he took one of the bottles of chilled Champagne from a silver bucket placed on an antique table in the suite’s splendid reception room. He opened the bottle with a flourish and poured the foaming liquid into three glasses, then handing one to Fitzwilliams, and the other to Kennedy. Then lifting his glassed he beamed and addressed his guest: ‘Майкл, добро пожаловать в Москву, па здоровье.’
‘That’s welcome to Moscow Michael and good health,’ said Pat proud to be able to show off his linguistic skills to Fitzwilliams.
They lifted their glasses.
‘Sláinte mhaith!’ replied Fitzwilliams.
‘Sláinte agus táinte!’ Kennedy rejoined adding ‘wealth’.
‘Help yourself gentlemen,’ added Tarasov inviting them to a tray spread with miniature blinis and a crystal bowl of glistening caviar.
‘For our programme tonight we have booked a box at the Bolshoi, a performance of the Nutcracker.’
‘Excellent,’ said Fitzwilliams flattered by the attention of his Russian host.
‘But first, if you are not too tired, we shall spend a short while looking at our business for tomorrow.’
Galina appeared on cue presenting three folders containing the final version of the memorandum of understanding and its annexes, which Fitzwilliams had already received from Kennedy and approved. They went through the motions of thumbing through the papers and then with little else to do headed off for the obligatory VIP visit to Red Square and the Kremlin Walls.
Under a blinding wall of spotlights and a barrage of flashes, cameras turned zooming in on Sergei Tarasov and Michael Fitzwilliams. In the presence of Prime Minister Vladimir Putin, at the new headquarters of Tarasov’s InterBank Corporation, the two bankers surprised the business world with announcement of the creation of the first major Anglo-Russian banking alliance.
Tarasov’s arrogantly proud tower, situated in Moscow’s new financial district, was a symbol of Nova Russia, thrusting skyward amongst its peers in the form of a futuristic crystal the tower was a challenge to the best the world had to offer.
It was good news for investors in the UK, as it was in effect a recapitalization of Fitzwilliam’s INB Holdings Plc., backed by InterBank’s extensive holdings in Russia’s major oil and gas producers.
The newly created INI Banking Group would be a new force to be reckoned with in banking, as it reached from the Atlantic to the Pacific, across the Eurasian continent, for the development of Russia’s vast oil, gas and mineral resources. Putin underscored Russia’s ambitious plans for the development of its financial sector and announced the construction of a new World Trade Centre in Vladivostok, a cornerstone for Russia’s plans to counter China’s ever-growing influence on the north-east Pacific façade.
Such plans whet the appetite of Nikolai Yakovlevich Dermirshian, who after a long criminal career, could not avoid seeing the internationalization of the Russian economy in terms of an extension to his mafiya related empire and links to other criminal organizations, amongst them the Chinese triads, that enjoyed the protection of corrupt senior officials, operating in Shanghai, Tianjin, Shenyang, Guangzhou and Hong Kong.
That evening, in a tête-à-tête during the gala dinner given at the Metropol Hotel, the bankers agreed that apart from the political chest-beating, their immediate priority was the INI Europa Property Fund. They concluded that Kennedy should immediately head for Hong Kong with a view to establishing relations with important Chinese investors.
Kennedy wallowed in his gung ho reputation, he was an unconventional go-getter, who projected his natural enthusiasm into business relations, seeking new business ventures and creating new relations in the most unexpected quarters. Though his infuriating self-confidence was seen by Fitzwilliams as a quality, the exotic drew him like a moth to a flame.
The majority of experienced investment bankers tended to be cynical with a dislike of risk; nothing was more natural in a business where few were capable of even approximately forecasting future trends. Some of course had lucky streaks, but as casino owners knew only too well they never lasted. Most investment bankers were survivors, wrong guesses and narrow escapes made them very cautious men.
‘Nikolai Yakovlevich has good contacts in Hong Kong and Macau,’ Tarasov confided to his partner, ‘and he seems to have struck it off with Pat.’
If Fitzwilliams had been attentive he would have perhaps remarked the slightest edge of doubt in Tarasov’s voice.
Then after a brief instant of thought, the Russian added, ‘Though it’s probably best if Kolya stays in the background for the moment, when the moment comes he can arrange all the introductions Pat will need.’
‘Excellent, we should also get Tom Barton involved, he knows property and that part of the world…and perhaps Pat’s new man, a young Irish lad…Clancy’s his name I think,’ Fitzwilliams enthused looking in the direction of Kennedy, who seemed strangely dejected. ‘Quite a bright lad I’ve heard, anyway Pat will look after the arrangements.’
Pat nodded.
‘I’m sure you know best Michael,’ said Tarasov. Such details were not his problem.
The INI Europ
a Property Fund was what was commonly described as a ‘hedge fund’, a term that had once been used to describe private unregistered investment pools, using special hedging and arbitrage methods to trade in equity markets. Modern hedge funds had evolved into sophisticated vehicles as had the instruments traded and tools employed.
Unlike mutual funds, open to the general public, hedge funds were private and very discrete investment vehicles, usually structured in the form of limited partnerships, and reserved for exceptionally wealthy investors.
Such funds were mostly incorporated in non-regulated offshore locations, though they were generally managed in the US or the UK. London based managers required authorisation from the Financial Services Authority and were obliged to respect UK rules and regulations, on the contrary the US had no requirements obliging a hedge fund to register with the Securities Exchange Commission.
As far as investors in the UK were concerned, hedge fund regulations were set out in the Investment Companies Act of 1940. Once set-up, all a hedge fund needed to function was a modest administrative structure, and could operate from a small office or apartment, often located in an exclusive district of London. In general the minimum investment required was one million dollars though that varied from one fund to another.
All an unsuspecting passer-by would see in London’s Mayfair district was a few discreet nameplates. In the case of the INI Europa Property Fund it was technically administered from a Knightsbridge address and there was of course no nameplate. The fund’s day to day operations were effected out of Dublin, where managers kept track of matters such as accountancy, movements of investors’ money, and portfolio evaluation. The fund’s physical and legal locations were distinctly separate, its registered headquarters, for tax purposes, being situated in the Cayman Islands.
Barack Obama’s early hedge fund bluster was, very conveniently, forgotten, ‘put on the back burner’ as his American banker friends would have described it. Offshore islands in the Caribbean and elsewhere had shrugged off Obama’s, and other leaders, rant, which in any case had not had the slightest effect on their business. Looking back, future financial historians would justifiably write Britain lay at the heart of these legalised fiscal paradises. With three crown dependencies: Guernsey, Jersey and the Isle of Man, and its fourteen overseas territories, including the Cayman Islands, the British Virgin Islands, Turks and Caicos, and Gibraltar.
Its huge capital dwarfed the size of the INI Europa Property Fund’s modest structure. INI, whose registered offices were situated in Saint Mary Axe, was appointed custodian of the fund’s portfolios; held its capital and managed the leveraging of investment funds using securities in the fund’s portfolio as collateral. INI also hedged bets to offset possible losses should the commercial property market turned sour.
Property management was handled by a series of service firms who reported to the fund manager, who transmitted the reports to the appropriate INI department.
Fitzwilliams beamed, he set down his glass, stood up and discretely opened a crib note. Gathered before him at a luncheon held in the Savoy, was an assembly of prominent guests to celebrate the fusion of his bank with that of Tarasov’s, to form the INI Banking Corporation. It had become a rare event to see such a large number of quality investors, clients and friends gathered together given the morose atmosphere of the City.
Tarasov was an important stake holder in the new banking group. Surprising, given the difficulties of the Russian a year earlier. Questions would have been in order, but the fact so many of the rich and nouveaux riches had bounced back eluded the question.
The oligarch had indeed been in difficulty, but it was his ‘godfather’ Dermirshian who had come to the rescue, propping up the bank with vast injections of money, the source of which was lost in a complex web of ephemeral offshore vehicles. The aging mafiosa had little desire to see his life of luxury and his yacht on the French Riviera vanish in a crisis that was not of his making, and of which he understood little. With Dermirshian’s links to the murky world of Russian power and the underworld, channelling the profits from his extra-legal activities into the legal banking system was part of his business. The fact that these came from the smuggling of timber, precious metals, oil and gas, not to speak of drug and human trafficking, or deprived the Russian state of tax and export duties was of little importance. Given the scale of the crisis that had hit Russia, its leaders did not look too closely at the means its bankers employed to stave off peril when danger threatened.
Organized crime had existed in Russia since the days of the Tsars, then known as вор в законе. After the fall of the Soviet Empire many ex-government workers turned to crime to survive, joining the mafiya, including ex-KGB men, and veterans of the Afghan and Chechen wars. Poverty and mistrust of the state had led to widespread corruption, contributing to the rise of organized crime, as the new criminal class erected a legal business façade behind which organized crime flourished.
Chapter 58 SARAH KAVANAGH
Ten year had passed since he had said goodbye to the Armenian in a grim Soviet style apartment on the outskirts of the Estonian capital. For almost ten years Kennedy had lived in the idea his secret was forever hidden after Erikkson went down with the Marie Gallant off the southern coast of Cuba in a tropical hurricane.
Holy Mother of feckin Jesus Christ! He swore under his breath as he recalled the khaki kitbag that had contained five million dollars in forged one hundred dollar bills packed neatly in chocolate boxes.
Dermirshian lifted his index finger to his lips, ‘In banking secrets are important Mr Kennedy n’est ce pas.’
Kennedy spluttered.
‘I think it’s a good moment to toast to our cooperation,’ said the Armenian pouring two glasses of Vodka to the brim and handing one to Kennedy.
‘Твоё здоровье!’
Kennedy swallowed the ice cold Vodka in one gulp just as Tarasov returned.
‘I see you are friends already.’
‘How you say in English?’ asked Dermirshian, ‘Almost like old friends.’
Kennedy choked.
‘You’ll get used to our Vodka Pat,’ said Tarasov giving the Irish banker a friendly thump on the back, thinking it would help the vodka on its way down.
Ten years before, Pat Kennedy had been unwittingly involved in the Tallinn transaction with Dermirshian, a deal set-up by a corrupt Swedish banker, Stig Erikkson. Only the Armenian would have remembered the affair, that is unless he had confided their dirty little secret to Tarasov.
Fitzwilliams was met in the VIP arrivals area of Moscow’s Sheremetyevo Airport and led directly to the oligarch’s armoured Maybach limousine. With sirens wailing and flashing blue lights the limousine, joined by two black Mercedes SUVs, left the airport. Reaching the outskirts of Moscow the convoy hogged the central lane, normally reserved for police, emergency services and high ranking government officials, as it sped towards the city centre and the Hotel Metropol.
The Russian spared no expense to demonstrate his power and influence in the Russian capital. The managing director of the Metropol, surrounded by a crowd of fawning assistants, met the VIPs on the hotel steps and led them through the vast Art Nouveau reception hall at the mezzanine level. They were ushered to the lift, up to the fourth floor, and to the magnificent early 20th century style presidential suite overlooking the Teatralnaya Ploshchad and the Bolshoi Theatre.
‘Welcome to Moscow,’ Tarasov said theatrically as he took one of the bottles of chilled Champagne from a silver bucket placed on an antique table in the suite’s splendid reception room. He opened the bottle with a flourish and poured the foaming liquid into three glasses, then handing one to Fitzwilliams, and the other to Kennedy. Then lifting his glassed he beamed and addressed his guest: ‘Майкл, добро пожаловать в Москву, па здоровье.’
‘That’s welcome to Moscow Michael and good health,’ said Pat proud to be able to show off his linguistic skills to Fitzwilliams.
They lifted their glasses.
‘Sláinte mhaith!’ replied Fitzwilliams.
‘Sláinte agus táinte!’ Kennedy rejoined adding ‘wealth’.
‘Help yourself gentlemen,’ added Tarasov inviting them to a tray spread with miniature blinis and a crystal bowl of glistening caviar.
‘For our programme tonight we have booked a box at the Bolshoi, a performance of the Nutcracker.’
‘Excellent,’ said Fitzwilliams flattered by the attention of his Russian host.
‘But first, if you are not too tired, we shall spend a short while looking at our business for tomorrow.’
Galina appeared on cue presenting three folders containing the final version of the memorandum of understanding and its annexes, which Fitzwilliams had already received from Kennedy and approved. They went through the motions of thumbing through the papers and then with little else to do headed off for the obligatory VIP visit to Red Square and the Kremlin Walls.
Under a blinding wall of spotlights and a barrage of flashes, cameras turned zooming in on Sergei Tarasov and Michael Fitzwilliams. In the presence of Prime Minister Vladimir Putin, at the new headquarters of Tarasov’s InterBank Corporation, the two bankers surprised the business world with announcement of the creation of the first major Anglo-Russian banking alliance.
Tarasov’s arrogantly proud tower, situated in Moscow’s new financial district, was a symbol of Nova Russia, thrusting skyward amongst its peers in the form of a futuristic crystal the tower was a challenge to the best the world had to offer.
It was good news for investors in the UK, as it was in effect a recapitalization of Fitzwilliam’s INB Holdings Plc., backed by InterBank’s extensive holdings in Russia’s major oil and gas producers.
The newly created INI Banking Group would be a new force to be reckoned with in banking, as it reached from the Atlantic to the Pacific, across the Eurasian continent, for the development of Russia’s vast oil, gas and mineral resources. Putin underscored Russia’s ambitious plans for the development of its financial sector and announced the construction of a new World Trade Centre in Vladivostok, a cornerstone for Russia’s plans to counter China’s ever-growing influence on the north-east Pacific façade.
Such plans whet the appetite of Nikolai Yakovlevich Dermirshian, who after a long criminal career, could not avoid seeing the internationalization of the Russian economy in terms of an extension to his mafiya related empire and links to other criminal organizations, amongst them the Chinese triads, that enjoyed the protection of corrupt senior officials, operating in Shanghai, Tianjin, Shenyang, Guangzhou and Hong Kong.
That evening, in a tête-à-tête during the gala dinner given at the Metropol Hotel, the bankers agreed that apart from the political chest-beating, their immediate priority was the INI Europa Property Fund. They concluded that Kennedy should immediately head for Hong Kong with a view to establishing relations with important Chinese investors.
Kennedy wallowed in his gung ho reputation, he was an unconventional go-getter, who projected his natural enthusiasm into business relations, seeking new business ventures and creating new relations in the most unexpected quarters. Though his infuriating self-confidence was seen by Fitzwilliams as a quality, the exotic drew him like a moth to a flame.
The majority of experienced investment bankers tended to be cynical with a dislike of risk; nothing was more natural in a business where few were capable of even approximately forecasting future trends. Some of course had lucky streaks, but as casino owners knew only too well they never lasted. Most investment bankers were survivors, wrong guesses and narrow escapes made them very cautious men.
‘Nikolai Yakovlevich has good contacts in Hong Kong and Macau,’ Tarasov confided to his partner, ‘and he seems to have struck it off with Pat.’
If Fitzwilliams had been attentive he would have perhaps remarked the slightest edge of doubt in Tarasov’s voice.
Then after a brief instant of thought, the Russian added, ‘Though it’s probably best if Kolya stays in the background for the moment, when the moment comes he can arrange all the introductions Pat will need.’
‘Excellent, we should also get Tom Barton involved, he knows property and that part of the world…and perhaps Pat’s new man, a young Irish lad…Clancy’s his name I think,’ Fitzwilliams enthused looking in the direction of Kennedy, who seemed strangely dejected. ‘Quite a bright lad I’ve heard, anyway Pat will look after the arrangements.’
Pat nodded.
‘I’m sure you know best Michael,’ said Tarasov. Such details were not his problem.
The INI Europ
Unlike mutual funds, open to the general public, hedge funds were private and very discrete investment vehicles, usually structured in the form of limited partnerships, and reserved for exceptionally wealthy investors.
Such funds were mostly incorporated in non-regulated offshore locations, though they were generally managed in the US or the UK. London based managers required authorisation from the Financial Services Authority and were obliged to respect UK rules and regulations, on the contrary the US had no requirements obliging a hedge fund to register with the Securities Exchange Commission.
As far as investors in the UK were concerned, hedge fund regulations were set out in the Investment Companies Act of 1940. Once set-up, all a hedge fund needed to function was a modest administrative structure, and could operate from a small office or apartment, often located in an exclusive district of London. In general the minimum investment required was one million dollars though that varied from one fund to another.
All an unsuspecting passer-by would see in London’s Mayfair district was a few discreet nameplates. In the case of the INI Europa Property Fund it was technically administered from a Knightsbridge address and there was of course no nameplate. The fund’s day to day operations were effected out of Dublin, where managers kept track of matters such as accountancy, movements of investors’ money, and portfolio evaluation. The fund’s physical and legal locations were distinctly separate, its registered headquarters, for tax purposes, being situated in the Cayman Islands.
Barack Obama’s early hedge fund bluster was, very conveniently, forgotten, ‘put on the back burner’ as his American banker friends would have described it. Offshore islands in the Caribbean and elsewhere had shrugged off Obama’s, and other leaders, rant, which in any case had not had the slightest effect on their business. Looking back, future financial historians would justifiably write Britain lay at the heart of these legalised fiscal paradises. With three crown dependencies: Guernsey, Jersey and the Isle of Man, and its fourteen overseas territories, including the Cayman Islands, the British Virgin Islands, Turks and Caicos, and Gibraltar.
Its huge capital dwarfed the size of the INI Europa Property Fund’s modest structure. INI, whose registered offices were situated in Saint Mary Axe, was appointed custodian of the fund’s portfolios; held its capital and managed the leveraging of investment funds using securities in the fund’s portfolio as collateral. INI also hedged bets to offset possible losses should the commercial property market turned sour.
Property management was handled by a series of service firms who reported to the fund manager, who transmitted the reports to the appropriate INI department.
Fitzwilliams beamed, he set down his glass, stood up and discretely opened a crib note. Gathered before him at a luncheon held in the Savoy, was an assembly of prominent guests to celebrate the fusion of his bank with that of Tarasov’s, to form the INI Banking Corporation. It had become a rare event to see such a large number of quality investors, clients and friends gathered together given the morose atmosphere of the City.
Tarasov was an important stake holder in the new banking group. Surprising, given the difficulties of the Russian a year earlier. Questions would have been in order, but the fact so many of the rich and nouveaux riches had bounced back eluded the question.
The oligarch had indeed been in difficulty, but it was his ‘godfather’ Dermirshian who had come to the rescue, propping up the bank with vast injections of money, the source of which was lost in a complex web of ephemeral offshore vehicles. The aging mafiosa had little desire to see his life of luxury and his yacht on the French Riviera vanish in a crisis that was not of his making, and of which he understood little. With Dermirshian’s links to the murky world of Russian power and the underworld, channelling the profits from his extra-legal activities into the legal banking system was part of his business. The fact that these came from the smuggling of timber, precious metals, oil and gas, not to speak of drug and human trafficking, or deprived the Russian state of tax and export duties was of little importance. Given the scale of the crisis that had hit Russia, its leaders did not look too closely at the means its bankers employed to stave off peril when danger threatened.
Organized crime had existed in Russia since the days of the Tsars, then known as вор в законе. After the fall of the Soviet Empire many ex-government workers turned to crime to survive, joining the mafiya, including ex-KGB men, and veterans of the Afghan and Chechen wars. Poverty and mistrust of the state had led to widespread corruption, contributing to the rise of organized crime, as the new criminal class erected a legal business façade behind which organized crime flourished.
Chapter 58 SARAH KAVANAGH