The Fear Index

5





Hardly any faculty is more important for the intellectual progress of man than ATTENTION. Animals clearly manifest this power, as when a cat watches by a hole and prepares to spring on its prey.




CHARLES DARWIN, The Descent of Man (1871)




HOFFMANN’S OFFICE WAS identical to Quarry’s except he had no pictures of a boat, indeed no decoration of any sort apart from three framed photographs. One was of Gabrielle, taken over lunch on the Pampelonne Beach at St-Tropez two years earlier: she was laughing, looking directly into the camera, the sun on her face, a white filigree of dried salt on her cheek from a long sea swim that morning – he had never seen anyone look so vitally alive; it raised his spirits every time he saw it. Another was of Hoffmann himself, taken in 2001, wearing a yellow hard hat and standing 175 metres below ground in the tunnel that would eventually house the synchrotron of the Large Hadron Collider. The third was of Quarry in evening dress in London receiving the award for Algorithmic Hedge Fund Manager of the Year from a minister in the Labour government: Hoffmann, needless to say, had refused even to attend the ceremony, a decision Quarry had approved of, as he said it added to the company’s mystique.

Hoffmann closed the door and went around the double-glazed walls of his office lowering all the venetian blinds and closing them. He hung up his raincoat, took the CD of his CAT scan from the pocket and tapped the case against his teeth while he considered what to do with it. His desk was bare except for the inevitable six-screen Bloomberg array, a keyboard and mouse and a telephone. He sat in his two-thousand-dollar high-backed orthopaedic swivel chair with pneumatic tilt mechanism and oatmeal upholstery, opened a bottom drawer and thrust the CD inside out of sight, as far as it would go. Then he closed the drawer and switched on his computer. In Tokyo the Nikkei Stock Average of 225 companies had closed down 3.3 per cent. Mitsubishi Corporation was off by 5.4 per cent, Japan Petroleum Exploration Company 4 per cent, Mazda Motors 5 per cent and Nikon 3.5 per cent. The Shanghai Composite was down 4.1 to an eight-month low. This is turning into a rout, thought Hoffmann.

Suddenly, before he realised what was happening, the screens in front of him blurred and he started to cry. His hands shook. A strange keening note emerged from his throat. His whole upper body shook convulsively. I am coming to pieces, he thought, as he laid his forehead on the desk in misery. And yet at the same time he remained oddly detached from his breakdown, as if he were observing himself from high up in the corner of the room. He was conscious of panting rapidly, like an exhausted animal. After a couple of minutes, when the spasm of shaking had subsided and he was able to catch his breath again, he realised that he felt much better, even mildly euphoric – the cheap catharsis of weeping: he could see how it might become addictive. He sat up, took off his spectacles and wiped his eyes with his trembling fingertips and then his nose with the back of his hand. He blew out his cheeks. ‘God,’ he whispered to himself, ‘God, God.’

He stayed motionless for a couple of minutes until he was sure he had recovered, then he rose and went back over to his raincoat and retrieved the Darwin. He laid it on his desk and sat down before it. The 138-year-old green cloth binding and slightly frayed spine seemed utterly incongruous in the surroundings of his office, where nothing was older than six months. Hesitantly, he opened it at the place where he had stopped reading shortly after midnight (Chapter XII: ‘Surprise – Astonishment – Fear – Horror’). He removed the Dutch bookseller’s slip, unfolded it and smoothed it out. Rosengaarden & Nijenhuise, Antiquarian Scientific & Medical Books. Established 1911. He reached for the telephone. After briefly debating in his mind whether this was the best course, he dialled the bookshop’s number in Amsterdam.

The phone rang for a long while without being answered: hardly surprising as it was barely eight thirty. But Hoffmann was insensitive to the nuances of time: if he was at his desk, he assumed everyone else should be at theirs. He let it ring and ring, and thought about Amsterdam. He had visited it twice. He liked its elegance, its sense of history; it had intelligence: he must take Gabrielle there when all this was sorted out. They could smoke dope in a café – wasn’t that what people did in Amsterdam? – and then make love all afternoon in an attic bedroom in a boutique hotel. He listened to the long purr of the ring tone. He imagined its bell trilling in some dusty bookshop that peered out through small whorled panes of thick Victorian glass, across a cobbled street, through trees to a canal; high shelves accessed by rickety stepladders; elaborate scientific instruments made of highly polished brass – a sextant, perhaps, and a microscope; an elderly bibliophile, stooped and bald, turning his key in the door and hurrying to his desk, just in time to answer the phone—

‘Goedemorgen. Rosengaarden en Nijenhuise.’

The voice was neither elderly nor male but young and female; lilting, sing-song.

He said, ‘Do you speak English?’

‘Yes I do. How can I help you?’

He cleared his throat and sat forward in his seat. ‘I believe you sent me a book the day before yesterday. My name is Alexander Hoffmann. I live in Geneva.’

‘Hoffmann? Yes, Dr Hoffmann! Naturally I remember. The Darwin first edition. A beautiful book. You have it already? There was no problem with the delivery, I hope.’

‘Yeah, I got it. But there was no note with it, so I can’t thank whoever it was who bought it for me. Could you give me that information?’

There was a pause. ‘Did you say your name was Alexander Hoffmann?’

‘Yeah, that’s right.’

This time the pause was longer, and when the girl spoke again she sounded confused. ‘You bought it yourself, Dr Hoffmann.’

Hoffmann closed his eyes. When he opened them again it seemed to him that his office had shifted slightly on its axis. ‘That is not possible,’ he said. ‘I didn’t buy it. It must have been someone pretending to be me.’

‘But you paid for it yourself. Are you sure you have not forgotten?’

‘Paid for it how?’

‘By bank transfer.’

‘And how much did I pay?’

‘Ten thousand euros.’

With his free hand Hoffmann grasped the edge of his desk. ‘Wait a second. How could this happen? Did someone come into your shop and say they were me?’

‘There is no shop any more. Not for five years. Only a poste restante. These days we are in a warehouse outside Rotterdam.’

‘Well, surely someone must have spoken to me on the phone at least?’

‘No, to speak to a customer is very unusual these days. Orders all come from email.’

Hoffmann wedged the phone between his chin and shoulder. He clicked on his computer and went to his email screen. He scrolled through his outbox. ‘When am I supposed to have sent you this email?’

‘May third.’

‘Well, I’m looking here now at my emails for that day and I can assure you I sent no message to you on May third. What’s the email address on the order?’

‘A-dot-Hoffmann at Hoffmann Investment Technologies dot com.’

‘Yeah, that’s my address. But I don’t see any message to a bookseller here.’

‘You sent it from a different computer perhaps?’

‘No, I’m sure I didn’t.’ But even as he uttered the words the confidence leaked from his voice and he felt almost physically sick with panic, as if an abyss was opening at his feet. The radiologist had mentioned dementia as a possible explanation for the white pinpricks on his CAT scan. Perhaps he had used his mobile, or his laptop, or his computer at home, and forgotten all about it – although even if he had, surely some record of it would be here? He said, ‘What exactly was in the message I sent you? Can you read it back to me?’

‘There was no message. The process is automatic. The customer clicks on the title on our online catalogue and fills in the electronic order form – name, address, method of payment.’ She must have heard the uncertainty in his voice; now caution entered hers. ‘I hope you are not wanting to cancel the order.’

‘No, I just need to sort this out. You say the money was paid by bank transfer. What’s the account number the money came from?’

‘I cannot disclose that information.’

Hoffmann summoned all the force he could muster. ‘Now listen to me. I’ve clearly been the victim of a serious fraud here. This is identity theft. And I most certainly will cancel the order, and I’ll put the whole goddamned thing in the hands of the police, and my lawyers, if you don’t give me that account number right now so I can find out just what the hell is going on.’

There was a silence at the other end of the line. Eventually the woman said coldly, ‘I cannot give this information over the telephone, but I can send it to the email address given on the order. I can do it immediately. Will this be okay for you?’

‘This will be okay for me. Thank you.’

Hoffmann hung up and exhaled. He put his elbows on his desk and rested his head between his fingertips and stared hard at his computer screen. Time seemed to pass very slowly, but in fact it was only twenty seconds later that his email inbox announced the arrival of a new message. He opened it. It was from the bookshop. There was no greeting, just a single line of twenty digits and letters, and the name of the account holder: A. J. Hoffmann. He gawped at it then buzzed his assistant. ‘Marie-Claude, could you mail me a list of all my personal bank account numbers? Right away, please.’

‘Of course.’

‘And you keep a record of the security codes at my house, I believe?’

‘Yes, I do, Dr Hoffmann.’ Marie-Claude Durade was a brisk Swiss woman in her middle fifties who had been with Hoffmann for five years. She was the only person in the building who did not address him by his Christian name. It was inconceivable to him that she could be mixed up in any kind of illegal activity.

‘Where do you keep them?’

‘In your personal file on my computer.’

‘Has anyone asked for them?’

‘No.’

‘You haven’t discussed them with anyone?’

‘Certainly not.’

‘Not even your husband?’

‘My husband died last year.’

‘Did he? Oh. Okay. Sorry. Anyway, there was a break-in at my house last night. The police may want to ask you some questions. Just to let you know.’

‘Yes, Dr Hoffmann.’

As he waited for her to send him the details of his accounts, he leafed through the Darwin. He looked up ‘suspicion’ in the index:



A man may have his heart filled with the blackest hatred or suspicion, or be corroded with envy and jealousy; but as these feelings do not at once lead to action, and as they commonly last for some time, they are not shown by any outward sign …





With all due respect to Darwin, Hoffmann felt this was empirically untrue. His own heart was filled with the blackest suspicion and he had no doubt it was evident in his face – in his downturned mouth and sullen, narrowed, shifting gaze. Whoever heard of a case of identity theft in which the thief bought a present for the victim? Someone was trying to screw with his mind: that was what was going on here. They were trying to make him doubt his own sanity, maybe even murder him. Either that or he really was going mad.

He pushed himself on to his feet and prowled round his office. He parted the slats of his blinds and gazed out across the trading floor. Did he have an enemy out there? His sixty quants were split into three teams: Incubation, who composed and tested the algorithms; Technology, who turned the prototypes into operational tools; and Execution, who oversaw the actual trades. Some of them were a little weird, there was no doubt about that. The Hungarian, Imre Szabo, for example – he couldn’t walk down a corridor without touching every door handle. And there was another guy who had to eat everything with a knife and fork, even a biscuit or a packet of crisps. Hoffmann had hired them all personally, regardless of their oddities, but he did not know them well. They were colleagues rather than friends. He rather regretted that now. He dropped the slat and returned to his terminal.

The list of his bank accounts was waiting in his inbox. He had eight – Swiss franc, dollar, sterling, euro, current, deposit, offshore and joint. He checked their numbers against the one that had been used to buy the book. None matched. He tapped his finger against his desk for a few seconds, then picked up his phone and called the firm’s chief financial officer, Lin Ju-Long.

‘LJ? It’s Alex. Do me a favour. Check out an account number for me, would you? It’s in my name but I don’t recognise it. I want to know if it’s on our system anywhere.’ He forwarded the email from the bookshop. ‘I’m sending it across now. Have you got it?’

There was a pause.

‘Yes, Alex, I got it. Okay, well, first thing I can tell you right away: it starts “KYD” – that’s the Cayman Islands IBAN prefix for a US dollar account.’

‘Could it be some kind of company account?’

‘I’ll run it through the system. You got a problem?’

‘No. Just want to check it out, that’s all. I’d be grateful if you could keep this just between the two of us.’

‘Okay, Alex. Sorry to hear about your—’

‘I’m fine,’ cut in Hoffmann quickly. ‘No harm done.’

‘Okay, that’s good. Has Gana spoken to you, by the way?’

Gana was Ganapathi Rajamani, the company’s chief risk officer.

Hoffmann said, ‘No. Why?’

‘You authorised a big short on Procter and Gamble last night? Two million at sixty-two per share?’

‘So what?’

‘Gana is worried. He says our risk limit has been breached. He wants a meeting of the Risk Committee.’

‘Well, tell him to go talk to Hugo about it. And let me know about that account, will you?’

Hoffmann felt too tired to do any more. He buzzed Marie-Claude again and told her to make sure he was not disturbed for an hour. He turned off his mobile. Afterwards he lay on his sofa and tried to imagine who on earth would have gone to the trouble of stealing his name in order to buy him a rare volume of Victorian natural history using a Cayman Islands dollar account that he seemed to own. But the bizarreness of the conundrum defeated even him, and very soon he sank into sleep.





INSPECTOR LECLERC KNEW that the chief of Geneva’s Police department, a stickler for punctuality, invariably arrived at police headquarters on the Boulevard Carl-Vogt at 9.00 sharp and that his first act of the day was always to read the summary of what had occurred in the canton overnight. Therefore when the telephone rang in his office at 9.08, he had a fair idea of who might be on the other end of the line.

A brisk voice said, ‘Jean-Philippe?’

‘Morning, Chief.’

‘This assault on the American banker, Hoffmann.’

‘Yes, Chief?’

‘Where are we on this?’

‘He’s discharged himself from the University Hospital. Forensics are at the house now. We’ve put out a detailed description. One of our men is watching the property. That’s about it.’

‘So he’s not seriously hurt?’

‘Apparently not.’

‘That’s something. What do you make of it?’

‘Bizarre. The house is a fortress but the intruder somehow just wandered in. He came prepared to restrain his victim, or victims, and it looks as though he handled knives while he was on the premises. But then he ended up just hitting Hoffmann on the head and running away. Nothing stolen. To be honest, I have a feeling Hoffmann isn’t telling us the full story, but I’m not sure whether that’s deliberate or he’s just confused.’

There was a short silence at the other end. Leclerc could hear someone moving around in the background.

‘Are you going off shift?’

‘Just about to leave, Chief.’

‘Do me a favour and pull a double, will you? I’ve already had the Minister of Finance’s office on the phone, wanting to know what’s happening. It would be good if you could see this one through.’

‘The Minister of Finance?’ repeated Leclerc in amazement. ‘Why’s he so interested?’

‘Oh, you know, the usual story, I expect. One law for the rich, another for the poor. Keep me up to speed on it, will you?’

After he had hung up, Leclerc let out a string of expletives under his breath. He plodded along the corridor to the coffee machine and got himself a cup of very black and unusually filthy espresso. His eyes felt gritty, his sinuses ached. I’m too old for this, he thought. It was not even as if there was anything much he could do: he had sent one of his juniors to interview the domestic staff. He went back to his office and called his wife and told her he wouldn’t be home until after lunch, then logged on to the internet to see if he could find out anything about Dr Alexander Hoffmann, physicist and hedge-fund manager. But to his surprise there was almost nothing – no entry in Wikipedia, no newspaper article and not one image available online. Yet the Minister of Finance himself was taking a personal interest in the matter.

What the hell was a hedge fund in any case? he wondered. He looked it up: ‘A private investment fund that may invest in a diverse range of assets and may employ a variety of investment strategies to maintain a hedged portfolio intended to protect the fund’s investors from downturns in the market while maximising returns on market upswings.’

None the wiser, he flicked back through his notes. Hoffmann had said in his interview that he had worked in the financial sector for the past eight years; for six years before that he had been employed on developing the Large Hadron Collider. As it happened, Leclerc knew a man, a former inspector in the police, who now worked in security at CERN. He gave him a call and fifteen minutes later he was at the wheel of his little Renault, driving slowly in the morning traffic, north-west past the airport, along the Route de Meyrin, through the drab industrial zone of Zimeysa.

Up ahead, framed by the distant mountains, CERN’s huge rust-coloured wooden globe seemed to rise out of the arable fields like a gigantic anachronism: a 1960s vision of what the future was supposed to look like. Leclerc parked opposite it and went into the main building. He gave his name and clipped his visitor’s badge to his windcheater. While he waited for his contact to collect him he studied the little exhibition in the reception area. Apparently sixteen hundred super-conducting magnets, each weighing nearly thirty tonnes, were housed in a twenty-seven-kilometre circular tunnel beneath his feet, shooting beams of particles around it so quickly that they completed the circuit eleven thousand times per second. The collisions of the beams at an energy of seven trillion electronvolts per proton were supposed to reveal the origins of the universe, discover extra dimensions and explain the nature of dark matter. None of it that Leclerc could discern seemed to have anything whatever to do with the financial markets.





QUARRY’S INVITEES BEGAN to arrive just after ten, the first pair – a fifty-six-year-old Genevese, Etienne Mussard, and his younger sister Clarisse – turning up on a bus. ‘They’ll be early,’ Quarry had warned Hoffmann. ‘They’re always early for everything.’ Dowdily dressed, they were both unmarried and lived together in a small three-bedroomed apartment in the suburb of Lancy that they had inherited from their parents. They did not drive. They took no holidays. They rarely dined in restaurants. Quarry estimated M. Mussard’s personal wealth at approximately seven hundred million euros, and Mme Mussard’s at five hundred and fifty million. Their mother’s grandfather, Robert Fazy, had owned a private bank, which had been sold in the 1980s following a scandal involving Jewish assets seized by the Nazis and deposited with Fazy et Cie during the Second World War. They brought with them their family attorney, Dr Max-Albert Gallant, whose firm conveniently also handled the legal affairs of Hoffmann Investment Technologies. It was through Gallant that Quarry had managed to obtain an introduction to the Mussards. ‘They treat me like a son,’ said Quarry. ‘They’re unbelievably rude and do nothing but complain.’

This drab couple was followed closely by perhaps the most exotic of Hoffmann’s clients, Elmira Gulzhan, the thirty-eight-year-old daughter of the President of Azakhstan. Resident in Paris and a graduate of INSEAD in Fontainebleau, Elmira was responsible for administering the Gulzhan family holdings overseas, estimated by the CIA in 2009 to be worth approximately $19 billion. Quarry had contrived to meet her on a skiing party in Val d’Isere. The Gulzhans presently had $120 million invested in the hedge fund – a stake Quarry hoped to persuade her at least to double. He had also made friends on the slopes with her long-term lover, François de Gombart-Tonnelle, a Parisian lawyer, who was at her side today. She emerged from her bulletproof Mercedes wearing an emerald silk frock coat with matching head scarf draped lightly over her helmet of glossy black hair. Quarry was waiting in the lobby to greet her. ‘Be not fooled,’ he had warned Hoffmann. ‘She may look like she’s off to the races but she could hold down a job at Goldman any day of the week. And she can arrange for her daddy to have your fingernails torn out.’

Next to roll up, sharing a limousine from the Hotel Président Wilson on the other side of the lake, were a couple of Americans who had flown over from New York especially for the presentation. Ezra Klein was chief analyst for the Winter Bay Trust, a $14 billion fund-of-funds which, in the words of its prospectus, ‘aims to flatten out risk while achieving high returns by investing in a diverse array of managed portfolios rather than individual bonds or equities’. Klein had a reputation for being super-bright, enhanced by his habit of talking at a rate of six words per second (he had once been timed surreptitiously by his bewildered subordinates), roughly twice as fast as normal human speech, and by the fact that every third word seemed to be an acronym or piece of financial jargon. ‘Ezra’s on the spectrum,’ said Quarry. ‘No wife, no kids, no sexual organs of any kind, as far as I can tell. Winter Bay could be good for another hundred million. We’ll have to see.’

Beside him, not even pretending to listen to Klein’s unintelligible jabber, was a bulky figure in his fifties in full Wall Street dress uniform of black three-piece suit and red-and-white striped tie. This was Bill Easterbrook of the US banking conglomerate AmCor. ‘You’ve met Bill before,’ Quarry had warned Hoffmann. ‘Remember him? He’s the dinosaur who looks as if he’s just stepped out of an Oliver Stone movie. Since you last saw him, he’s been spun off into a separate entity called AmCor Alternative Investments, which is basically just an accounting trick to keep the regulators happy.’ Quarry had himself worked for AmCor in London for a decade, and he and Easterbrook went way back – ‘way, way back’, as he dreamily put it: too far to recall, he implied, through the haze of the years – all the way back to the coke-and-call-girl glory days of the 1990s. When Quarry had left AmCor to set up with Hoffmann, Easterbrook had passed them their first clients in return for commission. Now AmCor Alternative was Hoffmann’s biggest investor, with close to $1 billion under management. He was another attendee whom Quarry took the trouble to meet personally in the lobby.

And so they all came: twenty-seven-year-old Amschel Herxheimer of the Herxheimer banking and trading dynasty, whose sister had been at Oxford with Quarry, and who was being groomed to take over the family’s two-hundred-year-old private bank; dull Iain Mould of what had once been an even duller Fife building society, until it had taken itself public at the beginning of the century and, in the space of three years, run up debts equivalent to half the gross domestic product of Scotland, necessitating a takeover by the British government; the billionaire Mieczyslaw Łukasiński, a former mathematics professor and leader of the Polish Communist Youth Union, who now owned eastern Europe’s third-largest insurance company; and finally two Chinese entrepreneurs, Liwei Xu and Qi Zhang, representing a Shanghai-based investment bank, who arrived with no fewer than six dark-suited associates, whom they insisted were lawyers but who Quarry was fairly sure were computer experts, come to inspect Hoffmann’s cyber-security – after a furiously polite stand-off the ‘lawyers’ reluctantly agreed to leave.

Not one existing investor whom Quarry had invited declined the invitation. ‘They’re coming for two reasons,’ he had explained to Hoffmann. ‘First, because over three years, even as the financial markets have tanked, we’ve returned them a profit of eighty-three per cent and I defy anyone to find any hedge fund anywhere that has produced such consistent alpha – I mean, they must be wondering just what the hell it is we’ve got going on here, yet we’ve refused to take a single extra cent in investment.’

‘And what’s the second reason they’re coming?’

‘Oh, don’t be so modest.’

‘I don’t follow.’

‘It’s you, you daft bugger. They want to take a look at you. They want to discover what you’ve been up to. You’re becoming a legend and they want to touch the hem of your garment, just to see if their fingers turn to gold.’





HOFFMANN WAS WOKEN by Marie-Claude.

‘Dr Hoffmann?’ She shook his shoulder gently. ‘Dr Hoffmann? Mr Quarry says to tell you they are waiting for you in the boardroom.’

He had been dreaming vividly, but when he opened his eyes the images vanished like bursting bubbles. For a moment his assistant’s face bending over him reminded him of his mother’s. She had the same grey-green eyes, the same prominent nose, the same anxious and intelligent expression. ‘Thanks,’ he said, sitting up. ‘Tell him I’ll be there in a minute,’ and then he added impulsively, ‘I’m sorry about your husband. I get’ – he twirled his hand helplessly – ‘distracted.’

‘That’s quite all right. Thank you.’

There was a washroom across the passage from his office. He ran the cold tap and cupped his hands beneath it. He splashed his face again and again, flailing his flesh with the icy water. He had no time to shave. The skin on his chin and around his mouth, normally bland and smooth, felt as bristly and textured as an animal’s. It was a curious fact – no doubt an irrational swing of mood brought on by his injury – but he was beginning to feel exuberant. He had survived an encounter with death – exhilarating in itself – and now he had a boardroom full of supplicants waiting, in Hugo’s words, to touch his hem, in the hope that his genius for making money would rub off on them. The rich of the earth had bestirred themselves from their yachts and pools and racetracks, from the dealing rooms of Manhattan and the counting houses of Shanghai, and had gathered together in Switzerland to listen to Dr Alexander Hoffmann, the legendary – Hugo’s word again – creator of Hoffmann Investment Technologies, preach his vision of the future. And what a story he had to tell! What a gospel he had to preach!

With such thoughts surging through his damaged head, Hoffmann dried his face, pulled back his shoulders and headed off to the boardroom. As he passed across the trading floor, the lithe figure of Ganapathi Rajamani, the company’s chief risk officer, moved smoothly to intercept him, but Hoffmann waved him out of the way: whatever his problem was, it would have to wait.