“Of course I know about it. I’m running this company. It’s my deal.”
“Well, then explain it to me. Because I’m sure as hell not seeing it. The housing market is the worst it’s ever been. And yet we’re betting that the demand for lumber is going to go up? For there to be massive, imminent growth?”
“Correct.”
“What the hell, Michael?” Brad stood up and started pacing. “This isn’t some murky situation where we don’t know what the economy is going to look like next year. We do know. No one in their right mind is going to be building.”
“In North America, maybe. But before you get any more worked up, Brad, I suggest you look at the bigger picture. We’re not betting on there being demand here.”
“Where, then?”
“China.”
“China? Are you serious? We have no idea what the Chinese are going to do tomorrow, let alone next year. Since when do we make predictions about their market with any kind of confidence?”
Michael chuckled. “Brad. Are you sure this isn’t some kind of personal animosity? I know the Koreans aren’t big fans of the Chinese, but—”
“Stop. Just stop. Does Kleinman know about this?”
“It doesn’t matter. Kleinman put me in charge, and frankly it would look bad for him to be overseeing every little deal while he’s in Washington.”
“Every little deal? Michael, are you even listening? Our exposure on this is massive. If it goes the wrong way, we are totally fucked.”
“You’re getting hysterical about something that’s going to make us a lot of money. Will you listen for a minute, please?”
Brad stood in place, quivering with anger. He seemed on the verge of shouting, but he clamped his mouth shut and crossed his arms over his chest.
“Thank you. Sit down, too. You’re acting like a lunatic. We’ve been working on this position for a long time. Months and months. Demand from the Chinese market for North American lumber has already gone up this year. Every single one of our predictions has played out, and I guarantee you that demand is going to continue to skyrocket in 2009. Our calls on WestCorp are going to make you a very rich man.”
My mind was racing. So the deal wasn’t dead. Not at all. It was very much alive.
“What I don’t get,” Brad said, “what I don’t understand, Michael, is that if this bet is such a sure thing, why isn’t everyone else all over this? We don’t specialize in this. There are a dozen shops that know lumber better than we do.”
“Because it’s impossible to make any real money selling anything to the Chinese, that’s why. You know that. The tariffs and taxes eat into your profits like a parasite. It’s byzantine. The only way to make money is to find your way through that system.”
Brad started pacing again. Michael sat back on the couch calmly, waiting.
Brad wheeled around to look at Michael. “Your trip to China in August. For the Olympics, right? Did you go to a single event? Or was that all just a cover?”
“Of course I did. Swimming, rowing, whatever. Let me tell you, you meet all sorts of people at the Olympics. All sorts of politicians and government flunkies who are just so eager to rub shoulders with us Americans. The people in that country love us. They finally got a taste of capitalism, and now they can’t get enough. They know how much better things are over here. They’ll do just about anything to catch up. “
“Jesus Christ. Are we talking bribery, Michael? Did you bribe the fucking Chinese government?”
On the plane ride that day, we had encountered a particularly nasty bout of turbulence. I gripped the armrests, my jaw clenched. I hated turbulence. I kept counting to ten, over and over, waiting for the plane to steady again. Surely it would stop when I got to ten. That’s exactly how I felt at that moment.
“Give me a little credit,” Michael said. But before I could exhale, he continued. “Bribery. It’s such an unsubtle word. You can wipe that sneer off your face. I didn’t bribe the Chinese government. We worked out an arrangement that was mutually beneficial.”
“What arrangement?”
“Sit down. You’re making yourself all agitated.”
“What arrangement, Michael?”
“The appropriate Chinese authorities are now inclined to look favorably upon lumber imports from certain Canadian companies. Those imports won’t be subject to the usual taxes and tariffs. When WestCorp sells their lumber to Chinese buyers, they’ll keep one hundred percent of the revenue.”
“And what are they getting in return?”
Michael sighed. He seemed bored by the conversation. “WestCorp wanted the Chinese to drop the trade barriers. The Chinese wanted a few favors that some highly placed WestCorp executives were, luckily, able to grant.”