18
ALEX HAD BEEN on the board of Barrington Shipping for just a few months when he spotted an opportunity he thought might appeal to Virginia.
During that time, he had assiduously attended every board meeting, read every report, and always voted with the majority, so no suspicion was ever raised about what he was really up to.
Virginia hadn’t been in any doubt that Giles would be suspicious when Alex was appointed to the board. She even wondered if he would try to find out who owned the 71?2 per cent of the company’s stock Fisher represented. If he did, all he would discover was that it was held by a blind trust. But Giles was neither blind nor dumb, so he wouldn’t have needed to put two and two together to make 71?2.
Although the chairman assured him that the major seemed a decent enough chap, rarely opened his mouth at board meetings and certainly wasn’t causing any trouble, Giles was not convinced. He didn’t believe Fisher was capable of changing his spots. But with an imminent election on the cards, at which the Tories were expected to increase their majority, as well as the mystery as to why Virginia still hadn’t signed her decree nisi papers despite her having begged him to give her grounds for divorce, Fisher was the least of his problems.
‘Gentlemen,’ said the chairman of Barrington Shipping, ‘I don’t think it would be an exaggeration to suggest that the proposal I’m making today might well prove to be a turning point in the history of the company. This bold new venture proposed by Mr Compton, our managing director, has my full backing, and I will be inviting the board to support a plan that the company build its first new passenger liner since the war, in an attempt to keep pace with our great rivals, Cunard and P&O. I would like to believe that our founder, Joshua Barrington, would have applauded such an initiative.’
Alex listened intently. He had come to respect Sir William Travers, who had replaced Hugo Barrington – not that anyone ever referred to the past chairman – as a shrewd and intelligent operator, regarded by both the industry and the city as a safe pair of hands.
‘The capital outlay will unquestionably stretch our reserves,’ continued Sir William, ‘but our bankers are willing to support us, as our figures show that even if we are able to sell only 40 per cent of the cabin space on the new vessel, we would recoup our investment within five years. I’ll be happy to answer any of the board’s questions.’
‘Do you think the public might still have the fate of the Titanic fixed indelibly in their subconscious, making them wary of sailing on a new luxury liner?’ asked Fisher.
‘That’s a fair point, major,’ replied Sir William, ‘but Cunard’s recent decision to add another vessel to their fleet would rather suggest that a new generation of travellers have noticed that there hasn’t been a major shipping accident involving a luxury liner since that tragic disaster in 1912.’
‘How long would it take for us to build this ship?’
‘If the board gives the go-ahead, we would put the contract out to tender immediately, and hope to appoint specialist marine architects by the end of the year, with a view to the vessel being launched in three years’ time.’
Alex waited for another member of the board to ask a question he didn’t want to ask himself.
‘What is the estimated cost?’
‘It’s hard to give an exact figure,’ admitted Sir William, ‘but I have allowed for three million pounds in our budget. However, I would consider that to be an overestimate.’
‘Let’s hope so,’ said another board member. ‘And we’ll need to inform the shareholders what we have in mind.’
‘I agree,’ said Sir William. ‘I will do so at our AGM next month, at which I shall also be pointing out that our profit forecasts are most encouraging, and I can see no reason why we shouldn’t pay our shareholders the same dividend as last year. Even so, the board must face the possibility that some of our shareholders may be wary of this change in direction, not to mention such a large capital outlay. This might well cause a fall in our share price. However, once the City realizes we have the resources to cover any short-term difficulties, it should only be a matter of time before our shares fully recover. Any more questions?’
‘Have we settled on a name for the new passenger division of the company, and for its first ship?’ asked Fisher.
‘We’re thinking of calling the new division the Palace Line, and its first liner the Buckingham, signalling the company’s commitment to a new Elizabethan era.’
On that, the board were in full agreement.
‘Explain it to me once again,’ said Virginia.
‘Sir William will announce at the AGM next Thursday that Barrington’s is going to build a luxury liner to rival anything Cunard and P&O currently have on the high seas, with an estimated cost of three million pounds.’
‘That sounds like a rather bold and imaginative step to me.’
‘And risky to others, because most investors on the stock market are neither bold nor imaginative, and will be anxious about the construction costs rising and the difficulty of selling enough cabin space to cover the capital expenditure. But if they were to check the accounts carefully, they’d see that Barrington’s has more than enough cash to cover any short-term losses.’
‘Then why are you recommending that I sell my shares?’
‘Because if you were to buy them back within three weeks of selling them, you’d make a killing.’
‘That’s the bit I don’t understand,’ said Virginia.
‘Allow me to explain,’ said Alex. ‘When you buy a share, you don’t have to settle your account for twenty-one days. Equally, when you sell a share, you don’t get paid for three weeks. For that twenty-one-day period you can trade without having to pay out any money, and because we have inside knowledge, we can take advantage of that situation.’
‘So what are you suggesting?’
‘Barrington’s AGM will open at ten next Thursday morning with the chairman’s annual report. Within a few hours, I anticipate the share price will fall from its present level of just over four pounds to around three pounds and ten shillings. If you were to sell your seven and a half per cent holding as soon as the market opens at nine o’clock that day, it would cause the price to fall even further, possibly below three pounds. Then you wait until the price has bottomed out before moving back in and repurchasing any stock available at the lower price, until you’ve replaced your seven and a half per cent.’
‘Won’t the brokers become suspicious, and tell the board what we’re up to?’
‘They’re not going to say a word as long as they get a commission when they sell the stock and another one when they buy it back. They can’t lose either way.’
‘But can we?’
‘Only if the share price rises after the chairman’s annual report, because you’d have to pay more to buy your shares back. But frankly, that’s unlikely to happen once the company announces that it’s putting three million pounds of its reserves at risk.’
‘So what do I do next?’
‘If you give me the authority to act on your behalf, I’ll place the business through a broker I know in Hong Kong so it can’t be traced back to either of us.’
‘Giles will work out what we’re up to. He’s no fool.’
‘Not if three weeks later the records show that the ownership of your seven and a half per cent of the company hasn’t changed. In any case, he has far more pressing problems to occupy himself with at the moment.’
‘Such as?’
‘I’m told he’s facing a vote of confidence from the local Labour Party executive committee, after they found out about his relationship with Miss Gwyneth Hughes. There’s even a chance he won’t be contesting the next election. That’s assuming you still haven’t signed those divorce papers.’
‘Can you assure me, Major Fisher, that this investigation has no connection with Sir Giles Barrington or Mrs Harry Clifton, because I’ve represented both of them in the past, and that would create an unacceptable conflict of interest.’
‘My enquiries have nothing to do with the Barrington family,’ said Fisher. ‘It’s simply that the local Conservative Association has shortlisted two candidates to be their representative for Bristol Docklands. As secretary of the association, I want to be absolutely sure there’s nothing in their backgrounds that might embarrass the party at some future date.’
‘Are you looking for anything in particular, major?’
‘With your contacts in the force, I need you to find out if either of their names appears in police records.’
‘Does that include parking fines or other non-custodial offences?’
‘Anything that the Labour Party could use to its advantage during an election campaign.’
‘I get the picture,’ said Mitchell. ‘How much time do I have?’
‘The selection process will take a couple of months, possibly three, but I’ll need to know if you come up with anything long before then,’ said Fisher, passing over a piece of paper with two names on it.
Mitchell glanced at the two names before placing the piece of paper in his pocket. He left without another word.
Fisher phoned a private number in Hong Kong at nine o’clock on the morning of Barrington’s Annual General Meeting. When he heard a familiar voice come on the line, he said, ‘Benny, it’s the major.’
‘How are you, major? Long time, no hear.’
‘There’s a reason,’ said Fisher, ‘and I’ll explain everything when you’re next in London, but right now I need you to carry out a sell order for me.’
‘My pen is poised,’ said Benny.
‘I want you to sell two hundred thousand shares in Barrington Shipping at spot price the moment the London Stock Exchange opens.’
Benny whistled. ‘Consider it done,’ he said.
‘And once you’ve completed the order, I want you to buy back the same number of shares during the next twenty-one days, but not until you think they’ve bottomed out.’
‘Understood. Just one question, major. Should Benny be placing a little flutter on this particular horse?’
‘That’s up to you, but don’t get greedy, because there’s going to be a lot more where this came from.’
The major put down the phone, walked out of his club on Pall Mall and took a taxi to the Savoy. He joined his fellow directors in the hotel’s conference room just a few minutes before the chairman rose to deliver his annual address to the shareholders of the Barrington Shipping Company.