The Helsinki Pact (8 page)

He whirled into his office on the
30th floor, hurled his coat at a chair and tugged papers from his
briefcase, ordering these quickly and handing them to his secretary
to type. He rushed to his inner office and went over the contract
documents once more in preparation for the imminent meeting with
his boss, Alfred Herren, CEO of Deutsche Bank.

At five to nine Stephan sank into
a soft, dark leather armchair by Herren’s desk. He clutched the
papers for the Board meeting which Lise had completed from his
handwritten notes moments earlier. He’d had no time to review them,
something he would ordinarily have done as Herren had an uncanny
eye for detail and would pounce on any error. Fortunately Lise was
one of the best secretaries in the company and he was confident she
would have typed everything up correctly and laid it out
neatly.

“Good morning, Mr Fischer. Where
are we on the Morgan Grenfell acquisition process? Any major
changes since the last contract revision?”

“I’ve summarised them here.” He
handed a set of papers to Herren. “The two main changes relate to
the guaranteed bonus payments, which have been reduced
substantially, and the request that the CEO of Morgan Grenfell, Mr
Ryan, take a board seat here in Frankfurt.”

Stephan paused to watch Herren’s
reaction to this apparent provocation. Since its founding in 1870
Deutsche Bank had never once admitted a foreigner to its board. The
idea was unthinkable—Deutsche Bank was far more than simply a
commercial bank but was intimately enmeshed with German industry,
through mutual and interlocking directorships, and also with the
German political establishment. No important economic decision was
ever taken by the government without at least informal prior
consultation with the bank, typically with the CEO
himself.

Herren looked unperturbed. “I see
that Mr Ryan has followed my suggestion. Giving Ryan a seat will
reassure Morgan Grenfell employees that this is an integration, not
a takeover. And if Morgan doesn’t get the results we expect they
won’t be able to put the blame on us.”

Herren’s cunning and skill in
reaching his objectives again impressed Stephan. Had Herren
proposed bringing Ryan on to the board the other members would
almost certainly have blocked it. But by having Ryan present it as
a fundamental point in the acquisition negotiations he ensured that
the proposal would be accepted, albeit reluctantly, by his
co-directors.

Herren glanced quickly over the
papers. “Yes, everything seems to be here. If I have any questions
I’ll call you. We need to complete within a week but I feel that Mr
Ryan is ready to sign.” he said, with the calm confidence which
could still surprise Stephan. The competing bid from the French
Societé Générale didn’t seem to worry him in the least.

“But there’s another matter I
want to tell you about, a new project I want you to start working
on immediately. It’s extremely confidential. Extremely
confidential.” He paused and looked intently at Stephan. “We are
about to launch our first Euroloan programme for the Soviet Union.
Fifteen billion Deutsche Marks.”

“Fifteen billion!” Stephan could
hardly contain his amazement. “The Soviet Union?”

“Exactly.”

“Have they done deals of this
kind before? Any documentation I can go through to find ...
”

“There have been some small
issues, in the millions, through some agency but this will be their
first time accessing Western capital markets at anything like this
level. That’s what makes this project so interesting. You’ll learn
a lot from it, I’m sure of that.” The board meeting was about to
start and Herren got up to leave.

“But do you think the markets
would take that kind of credit without some form of guarantee?”
Stephan tried his best to sound positive as he rose and walked to
the door. He knew from experience that Herren hated to be
contradicted. But the idea made no sense whatsoever unless some
entity like the World Bank or the IFC guaranteed the loan. The risk
of a country like the USSR defaulting on the loan was too high to
attract investors, whatever the interest rate put on the
paper.

“You’re right. Soviet paper would
be unsellable without some guarantee. That’s why the Federal
Republic of West Germany has agreed to provide that
reassurance.”

Herren was looking at him calmly,
the hint of a smile about to break out, enjoying Stephan’s
astonishment and discomfiture.

“You will be working on the
documentation with senior members of the Ministry of Finance. The
first meeting is scheduled for tomorrow at nine. You should …
”

The phone ringing interrupted
him.

“We’ll speak further after the
board meeting.” He waved Stephan out of the office, turning on the
speaker phone. Stephan heard “The Chancellor is on the line for
you, Mr Herren.” as he closed the door with care.

Stephan slowly returned to his
office, collecting coffee on the way. He’d been working non-stop
for the past five months on the Morgan Grenfell acquisition and had
been looking forward to some breathing space and time for a social
life. Camille would be furious at this new load on him. And the
first meeting was tomorrow. God, let it not interfere with this
coming weekend in Berlin with Thomas, he thought. Even at the speed
that Stephan drove it was still a five hour trip and he’d arranged
to collect Camille from their apartment at midday. Well, she
wouldn't like it, but at least she was used to his being late.
Surely the meeting would be over by half past twelve at the
latest.

Not that he was wild about
listening to opera – he took some pride in describing himself as
having Van Gogh’s ear for music—but he desperately wanted time away
from work and he knew how much Camille was looking forward to the
trip as she’d never been to Berlin. He and Thomas had spoken
yesterday to finalise details and he’d learned of some feisty new
woman that Thomas had just met and was hoping to get to know
better. As for the opera - “Best seats in the house!” Thomas had
said – it might turn out better than he feared and in any case he
knew how much music meant to his friend. They deserved this
weekend, he thought, and he was looking forward to it.

*

Anxious about being punctual the
following day Stephan had set two alarm clocks, placing the more
insistent one on top of his wardrobe, out of easy reach. Of course
he’d then slept badly, his mind racing with thoughts about what he
might have overlooked in his preparations or what might go wrong
during the meeting itself or how long it would go on for. After
tossing and turning and peering blearily at the time every hour or
so, desperately afraid he was now going to sleep through when he
needed to be up, he finally abandoned his futile attempts and rose
at 6.15, a good half hour before he needed to. It was always the
same when he started a new deal or had an important meeting, he
thought crossly, as he yawned and made himself some strong
coffee.

Herren dealt only with the top
echelon of business and political figures and that meant that
Stephan, as his assistant, had to work hard to be respected. He was
conscious that that he didn’t always make a strong enough first
impression, that these powerful men disdained him to some extent.
Perhaps I need to be more arrogant, more opinionated, he thought; I
may come to be less liked but they’ll listen to me and what’s more
important they’ll remember me. He struck a pose and growled at his
reflection in the bathroom mirror. At least his teeth and his skin
were good, he thought.

The meeting was to be held at the
offices of Gottlieb Chance, the law firm founded in Frankfurt fifty
years earlier and which had risen to become immensely powerful in
its work within the financial sector. It was hardly known outside
this specialist area and its partners worked hard to ensure that
that situation continued. Its discretion was legendary and it was
that, coupled with its reputation for reliability and a wide
ranging understanding of law and finance, which had brought it to
its current dominant position. If you were unsure about legal
precedents and perhaps consequent implications relating to some
arcane financial instrument or transaction or policy you could be
certain that a Gottlieb Chance partner would know the
answer.

The receptionist summoned an
assistant who accompanied Stephan in the lift and showed him to the
large meeting room at the very top of the building. The entire
outer wall of this room was lightly smoked glass and gave Stephan,
from his position on the forty fifth floor, a breathtaking view of
Frankfurt. To his left he could see the Main curving away in both
directions and an old building he decided must be St Bartholomew’s
Cathedral, a large 18th century etching of which hung on the wall
to his right. Hanging beside it was a Merian engraving of Frankfurt
with the same church centrally placed while several other
engravings or etchings of Hesse and old urban or village views of
the Main and the Rhein decorated the other walls.

Stephan was the first to arrive
and as the assistant left him he tried the door through which
they’d entered, the only one in the room, finding without surprise
that it was locked. Gottlieb Chance deserved its reputation as a
consummately professional firm, he thought. Sitting down at the
massive oval mahogany table which dominated the room he skimmed
through some documents on earlier Euroloan deals he’d found in the
Deutsche Bank library. As he'd expected there was almost nothing
there of much interest; there were no useful Soviet economic
figures, nothing on the USSR Central Bank’s currency or gold
reserves. He’d have to be very alert during this meeting and learn
as it progressed.

The door opened and Weigel, the
German Finance Minister, closely followed by Herren and six other
formally suited men entered. Everyone was in their late fifties or
older, Stephan noted apprehensively.

“Weigel looks even more
impressive than he does on television!” Stephan thought noting that
even his enormous black eyebrows, looking almost like moustaches
transplanted to above his eyes, appeared different and gave him
additional gravity. Herren greeted Stephan, shook hands, introduced
him to Weigel, and then to the others. Apart from two Finance
Ministry officials there were a couple of senior Bundesbank
officials and two Gottlieb Chance partners - Erich von Hesswald,
the senior partner, and a colleague, a specialist in Eastern and
Central European finance.

Weigel briskly called the meeting
to order, surprising Stephan who had expected representatives of
the Soviet government to be present. They were, after all, the
party seeking the loan and so responsible for repaying
it.

“Gentlemean, you will all be
aware that this is the first time that the Soviet Union has sought
to access Western capital markets in any significant manner. We
therefore thought it important to be here today to underline our
government’s commitment to this project. The Central Committee of
the USSR has been implementing radical reforms, perestroika, in
response to the policy of glasnost introduced by Mr Gorbachev. We
believe these reforms are desirable and will bring about dramatic
changes, changes which will be evident not only in the Soviet Union
itself but also in its relations with other countries, including
our own. There is still internal resistance to Mr Gorbachev’s
reforms, however, and Chancellor Kohl believes that Mr Gorbachev is
risking a great deal and should be supported in facilitating a
structural shift towards a more democratic and more open Soviet
Union. This demands finance and as German Finance Minister I am in
complete agreement with the Chancellor on these various
matters.”

He paused, took a long sip of
water from the glass on his left, and looked slowly round the room
at all those present. Feeling out of place in the company in which
he now found himself Stephan felt a powerful urge to look down as
Weigel paused and looked at him curiously. Meeting and holding the
Minister's gaze with an effort of will Stephan recognised the
authority others spoke of and with which he dominated the Bundestag
during discussions on finance and the economy. Weigel nodded
slightly and moved his gaze to the next man and resumed his
comment.

“It’s for these reasons that
Chancellor Kohl has decided that we must provide a guarantee on
these loans. I repeat, I am in entire agreement with the Chancellor
on this point. The close personal friendship and mutual trust which
has developed between Chancellor Kohl and Secretary Gorbachev is
shown by their request that we negotiate the terms and conditions
of this financing on their behalf. Dr Herren, would you kindly
expand on this.”

“Thank you.” said Herren, barely
glancing at Weigel but focusing on a document he had placed in
front of him. “The Ministry of Finance and the Bundesbank will in
this instance be representing both the issuer, the USSR, and the
guarantor of the loans, the West German government. This is largely
because the Soviet Central Bank officials lack experience in such
matters.”

Stephan listened attentively to
Herren’s words but his mind kept buzzing with questions. There was
a structural conflict between the issuer and the guarantor. Each
wanted the other’s responsibilities under the loan to be as great
as possible, to minimise their own. It made no conventional sense
whatsoever that the German authorities were covering both
roles.