16
* * *
Hôtel Beau Rivage, Geneva
CARVER BOUGHT THE drinks. A beer for himself and a martini for Koenig, a well-preserved fifty-year-old, kept trim by tennis and skiing, whose idea of casual weekend attire consisted of immaculately pressed jeans, a Ralph Lauren polo shirt, and a cotton jumper so crisp and clean that that it appeared to have only just been unwrapped from the store tissue paper. Carver had not shaved all day, and he’d seen no reason to change before he went out. He felt like a vagabond by comparison, but that didn’t bother him in the slightest. ‘What do you know about a man called Malachi Zorn?’ he asked.
‘Not a great deal,’ said Koenig. ‘I have never had any reason to do business with him. But he made his fortune shorting Lehman’s, no?’
‘You tell me. How does a guy like this work? For example, you say he shorted Lehman’s. I know that means he bet against them. But how?’
‘Mm … good martini,’ said Koenig, savouring his drink before answering the question: ‘CDSs … sorry, credit default swaps …’
‘Which are what, exactly?’ Carver asked.
‘A credit default swap is a way that an investor can make money out of someone else’s loss. You might say it is an insurance policy taken out on something you do not necessarily own.’
Less than a minute into the conversation, and already Carver felt like he’d walked into an alternative universe. ‘That sounds like me taking out insurance on your car. Why would I want to do that?’
Koenig smiled, as though what he was describing was the most normal thing on earth. ‘Well, you might decide that was a good investment if you knew that I was a terrible driver who was almost certain to crash.’
‘Or if I knew I could make you crash …’ Carver said.
Koenig clearly thought he was joking. ‘Ah, well, that would be cheating!’
‘If you say so.’
‘In any case, a default swap is just like a regular insurance policy,’ Koenig continued. ‘You buy a certain amount of cover for a fixed premium, over a given period – usually ten years – and it pays out in the event of loss. The premium is often very low. If you wanted to take out a credit default swap on a very safe, AAA-rated corporate bond, for example, it might only cost you fifteen thousand dollars a year for ten million dollars of coverage. So your downside is fixed: over the course of a decade the maximum you will ever spend is a hundred and fifty thousand dollars. But if the company collapses and its bonds become worthless, then you will make ten million dollars. Those are very good odds. And because the length of the term is so long, a default swap is very useful when you are sure that a collapse of some kind will occur at some point, but you don’t know exactly when.’
‘But what’s in it for the other guy, the one who’s selling?’ Carver asked.
‘Ah, well, he gets a guaranteed income, based purely on a promise,’ said Koenig, to whom this was clearly a perfectly reasonable proposition. ‘He does not have to spend any money of his own. He just collects your premium every year for ten years, and hopes that he never has to pay out. In most cases, he will be right. He will end up with a hundred and fifty thousand dollars for doing absolutely nothing. But sometimes, particularly in times of crisis, an unexpected, apparently impossible, failure occurs and he loses his bet. The market was certain that Lehman’s was safe, because it was too big to fail, and so it was very cheap for Monsieur Zorn to buy billions of dollars of credit default swaps. When Lehman Brothers collapsed, he collected those billions, and, of course, the banks that had sold him those swaps lost the billions they had to pay him.’
‘That wouldn’t make him too popular.’
‘Not if he did it more than once, certainly,’ Koenig agreed. ‘A bank is like a casino. The management do not mind the occasional jackpot. That encourages the other gamblers. But if someone creates a system for winning, and gets the jackpot again and again … well, then they are asked to leave the casino.’
‘Yes … and they aren’t always asked politely,’ said Carver. ‘So these swaps, are they the only way Zorn makes his money?’
‘I had no idea you were taking such an interest in finance, Sam. May I ask why you are so fascinated by Malachi Zorn in particular?’
‘His name came up in conversation.’
Koenig gave Carver the chance to say more, accepted that no further information would be forthcoming, and then smiled as he said, ‘You are very discreet. You would have made an excellent Swiss banker! OK … get me another martini and I will try to explain.’
Carver bought a second round of drinks and settled back for Koenig’s tutorial.
‘So, Zorn … Well, I imagine he’s using a great many different financial vehicles. His aim, though, will always be to leverage his money to the greatest possible extent, so that he gets the maximum possible return.’
‘The impression I got was that he bets on failure most of the time,’ Carver said.
‘In that case, another way to go is “put” options. Basically, that gives him the right to sell a quantity of a stock or a bond at a particular price, on or before a particular date. So, imagine a company that is doing well. Its shares cost ten dollars, and the price is very solid, very steady … But for some reason, Zorn thinks to himself, “These shares are overvalued, they must crash. Soon they will be worth much less.” So he buys the option to sell these shares at eight dollars. Financial institutions will sell Zorn these options, because they see no reason for this price to go down. If they are right, the price holds steady, and Zorn loses all the money he has spent buying the options. But if the share crashes – say to three dollars a share – Zorn exercises his options, sells at eight dollars, and pockets five dollars a share profit.’
‘Which the bank has to pay for?’
‘Effectively, yes.’
‘So what is Zorn paying for these options?’
‘Ah, Sam, that is a very complicated question … But it can be reduced to a pair of very simple elements: time and risk. The greater these are, the more an option costs. Imagine, for example, that you want to buy “put” options on the price of a house, betting that its value will decrease. A six-month option on a house made of straw will cost you much more than a week-long option on a house made of brick.’
‘Unless you know that the big bad wolf has a wrecking ball.’
‘Precisely … in any market, exclusive information is the most valuable commodity of all.’
Carver took a long drink of his beer, using the time to get his head around what he had just learned. ‘You know, what I really don’t get about any of this,’ he said, putting his drink back down on the table, ‘is what’s the point of it all?’
‘It’s business. It makes money. What other point does it need?’
‘But it doesn’t make money, does it?’ Carver pointed out. ‘You said it yourself. Every time there’s a winner on a trade, someone else loses the exact same amount. So nothing new is created. Oh, no … wait … Something tells me that if a trader does a deal to sell one of those swaps, or “put” options, he puts that down as new business and he gets a slice of that business as his bonus. Am I right?’
‘Sure,’ Koenig agreed. ‘Bankers’ pay is based on a percentage of the profits they generate, so yes, in theory …’
Carver was feeling the excitement that comes when you suddenly get an insight into something new. ‘OK … so then a couple of years go by and – uh-oh – turns out that swap was a bad idea. Lehman’s go bust. Now that swap Zorn bought has cost millions, even billions … does the guy who sold the swap, or the option or whatever it was, pay for that loss? No, of course he bloody doesn’t! He probably doesn’t even work at the same place any more. But the bank certainly has to pay.’
‘Of course, it comes off the balance sheet.’
‘Exactly! So the bank’s profits fall, or maybe it makes a loss. Either way its shares lose value, so the shareholders lose money … and those shareholders are mostly pension funds who invest the money for ordinary people who don’t have a clue about any of this. So now those pensions are worth less … and basically what’s happened is that poor people have lost money so that rich idiots can gamble with their cash and never have to take any of the losses themselves.’ Carver shook his head in surprise. ‘Razzaq was right, after all …’
‘I’m sorry, who is Razzaq?’
‘Someone I was talking to. He said Malachi Zorn’s deals ultimately made ordinary people poorer. And he was right. He just forgot to mention that all those other bastards’ deals have exactly the same effect.’
Koenig laughed nervously, trying to defuse the intensity in the air. ‘Calm down, Sam, really … I have never seen you like this before. My God, it’s a good thing you don’t have a gun on you right now. This bar is full of investment bankers. You might try to shoot someone!’
‘Yes,’ said Carver. ‘I just might.’
Custer County, Nebraska: six months earlier
Seen from the air, the valley that stretches to the north-west of the town of Broken Bow looks like the remains of tiles on a crumbling wall. The mottled, dusty-brown and olive-green earth is dotted with perfectly square fields, in which sit circular splashes of emerald caused by the rotating water sprayers that irrigate the cultivated land thereabouts. The dusty, dead-straight roads that bisect the flat valley floor even criss-cross one another like grouting.
Of course, that’s only in the summertime, when the corn is growing. In the middle of winter, the rock-hard earth is as dark as bitter chocolate, dusted with sugar-white snow. Jed Rogers grew corn on land that ran along County Route 92, land that his father and grandfather had farmed before him. He had been a local celebrity for the best part of twenty-five years, ever since his final two years at high school, when he’d quarterbacked the Broken Bow Indians football team and been voted Homecoming King. Maryjane Rogers had been his pretty blonde queen. The eldest of their three children, Jed Jnr, was only in his sophomore year at Broken Bow High, but already folks were saying he’d inherited all his daddy’s talent and more besides. And his two little sisters were just as cute and pretty as their mom. The Rogerses were a popular family, good people. They worshipped at the First Presbyterian Church, and never missed a Sunday service. They contributed generously to local charities, and Maryjane was the kind of PTA stalwart who could always be counted on to help out at school events or bake a tray of cookies at a moment’s notice.
Custer County, like much of rural Nebraska, has less than half the population it did a century ago. There are barely eleven thousand souls spread across its two and a half thousand square miles. In a place like Broken Bow, people know one another and lend a helping hand when they can. So when Jed Rogers was found in his barn, with the back of his head blown off by the shotgun he’d placed in his mouth, his death was not officially noted as a suicide, but as an accident. No one wanted Maryjane and the kids to lose the insurance money. And it wasn’t as if the insurance company had really been cheated or anything. Jed Rogers was suffering from Huntington’s disease. There was no hope of a cure. All he’d done was spare his family the pain and expense of caring for him as his mind slowly decayed into dementia and his fine, strong body fell apart.
Sometimes it was right and proper to turn a blind eye to the truth.
Sunday, 26 June
17
* * *
Lambeth, London SE1 and Chinatown
CARVER FLEW TO London on Sunday, taking the 12.15 a.m. British Airways flight. He had no intention of staying anywhere that required payment by credit card, so Grantham had arranged a one-bed apartment for him: a safe house halfway between Waterloo Station and the Imperial War Museum, a couple of miles from MI6 headquarters.
‘I’m sorry if it’s not your usual style,’ said Grantham, sarcastically. ‘The public-spending cuts have shot our interior-design budget to pieces.’
Carver had been in some pretty rough billets in his time. His sanity had been all but destroyed in a blinding white torture chamber. But this place took some beating for sheer, gut-churning awfulness. The walls and woodwork had been painted in borstal tones of rancid cream, murky green and excremental brown. The windowless bathroom had grime-encrusted units surrounded by floor-to-ceiling tiles that gave all the warmth and comfort of a municipal public toilet. Carver did not feel housed so much as institutionalized.
‘I’m going to take pictures and tell my decorator to give me just the same effect at home,’ he replied.
‘Just as soon as you’ve sorted out Malachi Zorn,’ said Grantham.
‘Yes,’ replied Carver. ‘Just as soon as that.’
Thanks to technicians in Beijing, who had hacked into the systems through which Carver placed his calls, Derek Choi had been able to have his target tracked from the moment he landed at Heathrow to his arrival at the surprisingly modest apartment where he was staying. This was, Choi noted, situated on the top floor of a development shaped like a hollow square. Vehicle access was only possible through a single arched entrance, and the apartment, which had windows on two sides, overlooked both the road that ran up to the arch and the inner courtyard to which it led. Access to the place was via an external door, followed by a narrow flight of stairs that led up to the front door of the flat itself. It was, in other words, a very easily defended position, and though it would be possible to overwhelm Carver by sheer weight of numbers, the casualties that would be sustained, plus the time that such an attack might take and the unwanted attention it would inevitably attract, made it unrealistic to hit him there.
Another unexpected problem had also arisen. A second man had accompanied Carver to the apartment, and then left alone. Photographs of this man appeared to identify him as John Morley ‘Jack’ Grantham, the Head of the British Secret Intelligence Service. This raised an obvious question: why would such a senior official be acting as an accessory to the assassination of a prominent American? Had Grantham gone rogue? Or had the British identified the threat to their economy posed by Malachi Zorn and decided to remove him by covert means? Both these matters required further consideration, and it would also be necessary to consider the possible consequences of eliminating Carver if he were, in fact, a British asset with highly influential connections. Choi was therefore given instructions to maintain the closest possible watch on Carver, but not to take any further action until ordered to do so. In the meantime, however, he was to prepare detailed plans for Carver’s elimination. So far as both Choi and his masters were concerned, this was just a postponement: the fundamental need to kill Samuel Carver before he killed Malachi Zorn remained as pressing as ever.
18
* * *
Carn Drum Farm, the Cambrian Mountains, Ceredigion, Wales
DAVE SMETHURST PLUNGED his hand into a large plastic bin filled with icing sugar. He lifted it up again, letting the bright white grains slide through his fingers. ‘Almost any kind of weapon you can think of can be improvised if you know how,’ he mused as he looked at his now empty palm. ‘That’s why that whole demilitarization process in Northern Ireland was such bollocks. PIRA were laughing their heads off.’
‘PIRA?’ asked Brynmor Gryffud.
‘Provisional IRA. They knew, and we knew, they could make everything again for themselves the next day. Take this icing sugar. Bags of energy in it, and exceptionally small particles, see? That means it actually coats that stuff over there, the ammonium nitrate,’ he nodded at a pile of garden fertilizer bags, ‘in a very fine powder. That aids the reaction between the two of them. If we mix this properly, you’re going to end up with an explosive more powerful than military-grade TNT.’
Smethurst was not an idealist. This was just another job to him, a means to make a few bob from the skills he had acquired as an ammunition technician, Class 1. That was the unassuming name given to any soldier who was qualified to test and maintain all forms of army ordnance – from rifle clips to anti-aircraft missiles – and, more importantly, to deal with all types of explosives. After six months of initial training at the Army School of Ammunition, followed by an upgrading course two or three years later, an AT Class 1 knew everything worth knowing about all the various ways of making things go bang. He was equally qualified to make a bomb of his own, or dispose of someone else’s. In a twenty-year career in the forces Dave Smethurst had done his time in the streets of Belfast and Basra before spending his last six months in Helmand Province, Afghanistan, disarming Taliban bombs with the sweat streaming down his back and bullets smacking into the dirt tracks and stone walls all around him. The way he saw it, he’d given his country everything he owed it, and then some. From now on he was looking after number one.
He and Gryffud were standing in an old hay barn on Carn Drum Farm, thirteen hundred acres of bleak but spectacularly beautiful Welsh uplands about ten miles south-east of Tregaron, in the county of Ceredigion, that had been in the Gryffud family for generations. The land hereabouts was traditionally used for sheep farming, forestry and field sports. There were black and red grouse nesting on the hillsides, and salmon, sea trout and brown trout in the rivers and pools that watered the valleys between them. More than one local businessman had told Gryffud that he could double his income if he opened the farm up for corporate shooting and fishing parties.
Gryffud had always refused. He was adamantly opposed to blood sports, and would not even keep sheep, preferring to let the grazing land revert from grass to the heather that naturally flourished there. He funded the estate with a combination of environmental grants, holiday lets of the old farmworkers’ cottages, and guided walking tours for ramblers and birdwatchers: the red kites that soared above the landscape with their beautiful russet, black and white plumage always had the twitchers purring with delight.
The recent arrival of a party of eight guests had caused no comment from any of the locals who had happened to see them driving towards Carn Drum. They were only too happy if Big Bryn could make some money from his farm. Better it stay in the hands of a local boy, even if he did spend far too much of his time in London, than be bought by a foreigner. They might have felt rather differently, however, had they known what was going on there on this particular weekend.
The group’s three female members were hard at work, mixing the sugar and fertilizer with which Dave Smethurst had been toying. They were following two different recipes, each involving slightly different proportions of the two ingredients. One was designed to burn as an extremely high-energy fuel. The other was the explosive. The work was delicate. A single spark would be enough to blow the barn and everyone in it sky-high. So the three women had been working in an atmosphere of fierce, near-silent concentration, an atmosphere that was shattered as one of the trio looked up at Gryffud, grinned, and said, ‘Hey, baby, have you been talking about how to spend my money?’
Her name was Uschi Kremer. The heiress to a Swiss industrialist’s vast fortune, she was both the source of the group’s funds and the motivating force that had taken them from conventional acts of protest to the brink of violent action. Her gentle but relentless pressure had steered Gryffud away from his traditional, harmless acts of attention-seeking towards something far more extreme. And when the final decision to act had been made, she had even managed to persuade him that it had all been his idea. Her behaviour, though, was casual to the point of in difference. This morning, for example, she had appeared twenty-four hours after everyone else, without apology for her late arrival, secure in the knowledge that they literally could not afford to do without her.
Gryffud forced a smile. ‘Have no fear, Uschi, we won’t waste a penny of your cash.’
‘I don’t care if you do.’ She laughed. ‘It was all made by thieves and bastards anyway!’
‘If you don’t give it one, I f*cking will,’ Smethurst muttered beneath his breath.
Gryffud gave a grunt of disapproval. There was no denying Kremer was as hot as the fiery red hair that was now all but hidden by her simple cotton scarf. There wasn’t a scrap of make-up on her face, and she was dressed in a simple khaki T-shirt and jeans. But the way those cheap clothes clung to every one of her body’s long, slender curves was as revealing as the most elegantly cut designer gown. Her freckled skin glowed with a tan acquired on a short break in the Mediterranean. ‘I took the family jet,’ Uschi had teased, knowing how annoyed Gryffud would be. ‘But don’t worry. I bought a few more thousand hectares of jungle to make up for it.’
Every man on the farm was affected by her presence at a primal, pheremonal level. They worked that bit harder, spoke more assertively and laughed more loudly in her presence. The other two women knew, and resented it. The result was an atmosphere of sexual tension that was dangerously volatile: a potentially fatal distraction from their mission.
‘Keep up the good work,’ Gryffud said distractedly, and went off with Smethurst to the tractor shed, fifty metres away across the farmyard, where the four other male group-members were at work.
The shed had been split into three discrete zones. In one a collection of thirty-two high-pressure gas-cylinders had been lined up in two groups. Fourteen of the cylinders were the size of large domestic calor-gas tanks: roughly 120 cm tall with a 36 cm diameter. The other eighteen were small enough to fit inside them. One of the men was working with a plasma torch, cutting off both ends of the larger cylinders so as to transform them into open tubes. The smaller cylinders merely lost their bases.
At the next workstation two group-members were constructing a crude steel framework, split into twelve compartments – four long by three wide – like an oversized wine rack. Each compartment was big enough to take one of the large cylinders, with a little room to spare. The whole structure was about as big as a coffin, but twice as deep.
The fourth member of the group was perched on the roof of a white Toyota Hiace camper van that looked far older than its X-registration plates suggested. He, too, had a plasma torch, and was using it to cut a large rectangular hole in the vehicle’s roof. The concrete floor behind the van was piled with the cupboards, bed, cooking gear and chemical toilet that had been stripped from its now-empty interior. Only the old window curtains remained, discreetly drawn to prevent anyone looking in.
Every single one of the Vehicle Identification Number stickers and tags scattered about the camper van had been located and either removed or rendered illegible. The plates belonged to a completely different car that had been bought at auction two weeks earlier, disposed of, and then reported stolen.
‘This is another old PIRA trick,’ said Smethurst, looking at the scene before him. ‘The way they hit 10 Downing Street is the way we’re going to blow a large hole in Pembrokeshire.’
Back at the hay barn, Uschi Kremer sighed theatrically. ‘I need a cigarette,’ she said.
‘Not here!’ one of the other women cried in alarm. ‘You’ll kill us all.’
Kremer laughed. ‘Thanks, but I’d already worked that out for myself! Don’t worry. I will make sure I am much too far away to set fire to anything here. Would either of you care to join me?’
The other two grimaced. Neither woman smoked, and if there was a choice between watching Uschi Kremer have a cigarette or having a good talk about her behind her back, they both knew which they preferred.
Kremer knew it, too. ‘Please yourselves,’ she said with a sly smirk.
Five minutes later and four hundred metres away, she got out her phone and speed-dialled Derek Choi’s number. ‘It’s me,’ she said. ‘I just wanted to let you know that everything is going well.’
‘Are you confident that these people are capable of executing their plan?’
‘Yes. The planned initiative far exceeds what would be required to create the desired effect. If we only achieve a twenty-five per cent success-rate, that will still have a major effect. If the rate is one hundred per cent … well, then there will be a fireworks display that the whole world will see.’
‘We Chinese invented fireworks, of course,’ said Derek Choi.
‘I promise you never saw fireworks like these,’ Uschi Kremer replied.
Beverly Hills, California: five months earlier
In the luxuriously appointed office of his surgical suite, its walls lined with framed certificates proclaiming his medical proficiency, and large colour photographs illustrating his artistry with a scalpel, Dr Arpad Karvakian was dictating a letter to his personal assistant Sherilyn, who was herself a walking advertisement for his work.
‘I am sure you will agree that the operation has been a complete success,’ he said. ‘Do not be alarmed … no, forget that, it’ll only alarm him … do not be concerned … yeah, that’s better, concerned that, ah, there is considerable bruising under the eyes and swelling to the forehead, nose and jaw. This is an inevitable result of surgery, and will subside considerably over the next six weeks. Any remaining swelling … no, any small amount of remaining swelling, will disappear entirely within four to six months. The surgery involved some reduction of the bossed area of the skull across the brow, implants to the cheekbones and also reshaping of the jawbone and chin. These procedures, as well as the mid-facelift, may impact upon nerves in the affected areas, causing a degree of numbness. Again, this is completely normal, and the regular range of sensations will gradually return over time. In general, the healing process appears to be going exactly as I would expect, and provided that all the protocols I have suggested are observed there is no reason to be concerned in any way. I hope you agree that the results are everything you desired. Yours … etc. Got that?’
‘Uh-huh,’ Sherilyn replied. ‘But I still don’t understand. This was the guy with the cancer, right …?’
Karvakian nodded in confirmation.
‘So what’s he doing having his face fixed, when he’s not going to live long enough to enjoy it?’
‘I don’t know, sweetheart. Maybe he’s hoping that death won’t recognize him when the time comes.’
Sherilyn giggled. ‘Or maybe he just wants to look cute at the funeral.’
6, Gresham Street, London EC2: the following day
The Wax Chandlers’ Hall has stood on the same site in the City of London since 1501. Originally built as the home of the Worshipful Company of Wax Chandlers – the merchants who sold the fancy beeswax candles used in royal palaces and aristocratic stately homes – it was burned down in the Great Fire of London, bombed out in the Blitz and rebuilt five times in total. The wax chandlers don’t shift so many candles these days, but they do good business renting out their hall for business meetings, product launches, parties and receptions, along with every type of food and drink any client could require, from elevenses to a banquet.
On a freezing afternoon in late January, with the pavements crusted in hard-packed snow and more falls forecast overnight, an elegantly dressed Indian businessman arrived for an appointment with a senior member of the hall’s management staff. His card gave his name as Sanjay Sengupta. He explained that he represented the interests of a very prominent, but very discreet Bangalore-based industrialist, specializing in computer manufacturing and software, who was interested in establishing a European base in London. A firm of City headhunters would soon be hired to find candidates for key executive positions in this new venture. They would come up with a shortlist of individuals whom Mr Sengupta’s client would interview in person in late June or early July, when he was in any case planning to be in England for social reasons. To this end, he wished to hire the entire Wax Chandlers’ Hall for three full days, evenings included.
‘My principal will not be requiring more than very light refreshments for himself, his assistants and the interview candidates,’ Mr Sengupta explained. ‘He appreciates, however, that this will cause you considerable loss. He is therefore willing to compensate you. Let us assume that the profit margin for yourselves and your caterers is thirty per cent. We will pay you, in addition to the hire cost of the building itself, thirty per cent of the full cost of food and drink, lunch and dinner included, for one hundred people.’
There is, of course, no such thing as a free lunch, particularly in the catering trade. So when a slick operator acting for an unnamed client suggests a deal of improbable generosity, requiring minimal effort from those who will be paid, suspicions are bound to be aroused. Sengupta, however, was able to provide copious references in India, the UK and the US. When he paid half the total cost up front, the money went through without any problems at all. After all, the days when India required British aid were long gone. Indian entrepreneurs today owned Jaguar and Land Rover cars, Typhoo tea and almost all of the UK’s steel production. If one of their number wanted to hire a City hall, who could possibly object?