The Money Makers (55 page)

‘I must be a genius,’ said Josie.

‘You must have very good teacher, I think.’

The computer knight continued to hop, as the computer­in-the-bedroom concept gave a further proof of its merits. After a while they rolled over on to their bellies again and Kodaly reached for the keyboard to give the knight a rest.

‘Homework next week must be harder. Maybe plant a virus in the White House. Or tell Pentagon to invade Canada.’

‘You always talk big, Miklos, but I’ve never seen you do anything like that.’

‘Igen.
Now I am on side of enemy.’

‘You’re not at work now and you don’t work for the Pentagon.’

‘Pentagon is too difficult. I can’t get into Pentagon.’

‘Typical man,’ said Josie. ‘All mouth.’

‘No, not all mouth. Just not Pentagon. Department of Immigration, maybe? Internal Revenue Service?’

‘You can get into the American IRS?’

‘Igen.
Maybe. Don’t know. I haven’t tried for long time. But first wine.’

‘And nibbles,’ called Josie to her man’s retreating bottom. I’m starving.’

‘Food. Wine. Then hacking.’

They didn’t get into the IRS that night, nor did they the week after that. But Kodaly’s blood was up, and on the third week he marched Josie straight into the bedroom and, before she had even removed her clothes, his hands had typed the sequence that gave entry to the IRS system.

‘IRS system for you, beautiful lady.’

‘How long did it take you to crack that one, Miklos?’ Kodaly said nothing, but his grey skin was greyer than usual and his eyes wearier. A tab in the bottom left-hand corner of the screen was labelled ‘Security level: One’.

‘Is security level one the highest or the lowest?’

‘Is lowest,’ said Miklos. ‘But hardest thing is always getting in at all.’

‘Typical man. Mouth, mouth, mouth,’ said Josie. But she was laughing as she slipped naked beside him into bed.

3

‘Coffees?’

‘Yes, please.’

‘Please, yes.’

It was a formality now, the question and answers. When they decided to place a bet, Matthew went out for coffees. It was a ritual, like wolves licking before the hunt. This time the hunt concerned a duff transport company, EuroRoad Haulage and its unhappy banks.

On with his coat. It was late September and the weather offered a preview of the London winter: wet, drab, windy, chilly. Down the lift out on to the street. Up the road to the coffee shop. Then, a few yards before the mouth of the alley, stop and look around. No one? OK. Proceed. Tum into the alley. Go up into the garden. Sit under the tree. Phone. Wait until the odious little man answers. Don’t mind him, just do what you need to do. You have two hundred and forty thousand pounds in your account. You’ve quadrupled your money since starting this game: three big wins, numerous smaller gains, one bad loss. You’ve only got to quadruple it all again, and your million’s in the bag. After that, you never need to talk to the obnoxious little creep again.

‘Good morning. James Belial speaking. How may I be of service?’

‘Matthew Gradley here. I’d like to buy some bonds.’

‘Matthew, my dear fellow. What a pleasure to hear from you.’

Matthew could almost see the ugly little man sitting up straighter in his chair and smirking down the telephone. Matthew quickly described what he wished to do. From past experience, Matthew reckoned that this deal should be a five percenter. Maybe less. Only when Madison did something really dramatic could he expect more.

Belial, as ever, was crystal clear about his instructions and he relayed them back to Matthew virtually word perfect. Belial and the rest of the crew at Switzerland International were good at their jobs. Matthew was always impressed by their trading skill, finding low prices to buy at and high ones to sell at. On a deal like the one today, that kind of skill probably translated into a two percent advantage, which may not sound a lot, but if your objective is only to make five, then you’re already nearly half-way there. If Belial weren’t obnoxious and Matthew weren’t a crook, this would be a beautiful partnership.

This time, however, Belial didn’t get off the phone right away.

‘May I make a suggestion, my dear friend? It’s a little impudent of me, in view of your remarkable eye for a winner, but I fancy there may be a way for you to increase your winnings even further.’

‘Yes?’

‘Well, in the past, you’ve always purchased the bonds of the companies you’re interested in. Your returns have been good, but they’ve seldom been more than a few percent. The trouble is that bonds aren’t really volatile enough. They don’t go up and down in price all that much. If you want real action, you need to buy equities - in short, you need the stockmarket, my friend.’

‘Well, I’m not sure .. .’said Matthew uncertainly. The thought had occurred to him a number of times, but he knew the bond market and was comfortable with it. Bond trading was his living, after all, while shares were unknown territory.

‘Consider this, my dear fellow. Your first trade through us was with Cobra Electronics. You made seventy-two percent on the bonds more or less overnight. That’s by far your best deal to date. But if you had bought shares instead, you’d have quadrupled your money with a single trade. In eighty percent of your other deals, the shares have moved by more than the bonds. I calculate that your portfolio could now be worth close to one million pounds if you had consistently invested in shares instead of bonds.’

‘One million pounds ...’

‘That’s right. And I confess I’m a little surprised that someone as gifted as you should overlook the opportunity.’

Matthew hesitated, but his greed was greater than his fear of the unknown. It’s true. Bond prices don’t move around nearly as much as share prices. You make more money with shares, but you need stronger nerves. Matthew hadn’t done the calculations Belial was talking about, but he guessed that Belial’s answer was pretty much right. In the end, there could be only one answer.

‘OK,’ he whispered. Td like to buy shares. Invest everything in EuroRoad Haulage shares.’

‘Excellent,’ said Belial happily. ‘The shares are trading at about three pence each. We’ll see what we can pick up.’

‘Thanks. I’ll call back.’

4

One thing about buying companies is different from buying cars. If you want to buy a car, you’re not allowed to go up to anything you like the look of, haul the driver out by his collar, stuff a wad of banknotes into his pocket, and drive off. You can certainly try it, but you’ll soon be wearing stripy pyjamas and regretting your new-found social life.

But that’s cars. In business, not only are you allowed to behave like this, the chances are you’ll be revered for doing so. It’s as though, instead of negotiating with the driver, you negotiate directly with the finance company which finances the vehicle. If you persuade the finance company to accept your bid, then the car is yours and the driver is left stunned in the street.

In business, the finance company is the stockmarket, and to appeal directly to it, over the heads of the company management, you make a hostile bid. The bid says, in effect, ‘These useless drongos who manage your company are making a hash of things and you poor shareholders are suffering. We, on the other hand, are offering you thirty percent (or forty or fifty) more than the current market price for your shares. If you say yes, we’ll write you out a fat little cheque, sling out the existing management and the company will be ours. If you say no, we’ll go home, and you can spend the next few years repenting your decision.’

Unsurprisingly, a lot of hostile bids are successful. And, unsurprisingly, the management of the company being bid for tends to be a lot less than thrilled with the whole idea.

After an agonising year for Zack, watching the South China share price rise and dip and rise again, the thing that Lord Hatherleigh and Scottie had predicted came to pass. The South China Trust Bank shipping side sailed into trouble and was eventually forced to reveal its woes to the stockmarket. The market, which thought little enough of the stuffy old bank as it was, punished it by knocking its share price down from forty-four dollars to thirty-nine.

Hatherleigh had always said that forty dollars was the magic threshold, and, the same afternoon that the price sank below forty bucks, he called an extraordinary meeting of the Board. The subject matter was not to be disclosed until the day of the meeting.

At nine in the morning, Lord Hatherleigh and Scottie presented their plan. Their argument was simple. If Hatherleigh Pacific was to go on growing, it needed more scale. South China provided that scale in one simple step. The bid would cost one thousand three hundred and fifty million US dollars, of which they proposed to borrow every penny. What was more, to get the numbers to add up, they were going to employ a tax scam on a scale never before seen in Hong Kong. The plan was breathtaking in its audacity, monumental in its ambition.

Zack sat in a room with his Hong Kong colleague, Phyllis Wang. They were eight yards away from the boardroom and they had no idea what was going on. Zack had drunk four cups of coffee, Phyllis two. They had both called the office and dealt with their voicemails. They had chatted about the weather, the bank, and Hong Kong, but neither of them wanted to chat and the conversation lapsed. It was now one o’clock.

It should have been a slam-dunk. Lord Hatherleigh and Scottie were enthusiastic supporters of the plan. Hatherleigh controlled thirty percent of the company and Scottie another one or two. In most such companies, the Board is a rubber stamp whose role is to con smaller shareholders into believing that their interests are being looked after. Not so Hatherleigh Pacific.

Lord Hatherleigh got some of the toughest and most independent-minded businessmen in Hong Kong to sit on his Board. He made sure they owned a big enough chunk of the company to care about the share price. Then, when he called on them to debate something, they usually did. Just before going into the meeting, Hatherleigh had cornered Zack.

‘You’d better wish me luck, young man. I’ve no idea how the buggers will vote.’

‘Good luck, Jack. Tell ’em that if they say no to South China, you’ll be forced to go after the Hong Kong and Shanghai instead.’

Hatherleigh grinned. The Hong Kong and Shanghai Bank was worth a little over seventy-five billion dollars. Not even Zack’s tax dodging would be able to come up with that kind of money.

‘Hey, why didn’t you suggest that sooner? We don’t want to play in the minor leagues all our life.’

That was four hours ago. Since then, a secretary had come in once to ask for a document which Zack had in his briefcase. Somebody else had come in to put a fresh pot of coffee on the table in place of the old one. Apart from that, nothing. The Board might at this moment be finalising the price at which to launch the bid, or it might be thumping the final nail into the coffin of an overambitious idea. There was no way of telling.

The boardroom had a glorious view over Hong Kong harbour, but the room Zack sat in had no windows, just a couple of tedious little prints of Hong Kong in the 1920s. Zack thought about pouring himself another coffee, but decided against. He picked up the
Asian Wall Street Journal
again, then tossed it down. What did he care about Tokyo steel stocks?

At half past one, a secretary knocked on the door and asked if Zack or Phyllis could get the current stock price of South China. Zack and Phyllis leaped into action, pleased to have something to do. The stock was thirty-eight and a half dollars, down half a dollar since the evening before. The secretary left again with the information. Zack caved in and had another coffee. A quarter of an hour later, someone brought a tray of sandwiches, and Zack and Phyllis tucked in out of boredom. Phyllis called her office again. She was lucky. Her office was open. Zack had to wait hours before his would leap into life. He drifted over to the coffee pot and poured himself his sixth cup of coffee. At two thirty he called Sarah, six thirty in the morning London time.

‘Hello?’ Sarah had been asleep and her voice was bleary.

‘Hello, darling. It’s me. I thought I’d be your alarm clock this morning.’

‘Oh, Zack. Hi, darling. How’s your big deal?’

Sarah knew Zack was in Hong Kong working on something big, but she didn’t know what. Absolute secrecy was the rule and neither Hatherleigh nor Zack had mentioned anything of what was afoot.

‘I don’t know. All the action’s taking place without me. How are you, sweetheart?’

‘Missing you, my love. This bed seems awfully lonely with just little old me in it, lying here in just the teeniest scrap of a nightie.’

Zack heard Sarah moving in the bed. He could imagine her stretching out towards him, her smell, her sleepy kisses. This was a time of morning when they often made love. Zack knew that when he wasn’t there she preferred wearing thick flannel nighties from M & S, not the little satiny slips she wore for him. But he didn’t allow reality to get in the way. He moved as far away from Phyllis as he could in the tiny room and talked low and quiet to his wife.

Too soon, their conversation ended and Zack was at a loose end once more. The day wore on. Zack called his office as soon as it was open and spent half an hour on the phone. RosEs was selling like cold fizz in a heatwave. Just keeping on top of the flow was a full-time job in itself. Zack did what he could by phone, but he needed to be in the office really. God knows how he was going to manage the Hatherleigh Pacific deal as well, but he needed both. He guessed he needed seventy million dollars for his partnership, and if Hatherleigh Pacific was bringing in forty, then RosEs had to manage the remaining thirty. Zack got off the phone and drummed his fingers.