The Financial Terrorist

  The Financial Terrorist

  John Gubert

  Copyright © 2010 John Gubert

  The moral right of the author has been asserted.

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  or criticism or review, as permitted under the Copyright, Designs and Patents

  Act 1988, this publication may only be reproduced, stored or transmitted, in

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  British Library Cataloguing in Publication Data.

  A catalogue record for this book is available from the British Library.

  Ths is a work of fiction. Characters, companies and locations are either the product of the author’s imagination or, in the case of locations, if real, used fictitiously, without any intent to describe their actual environment.

  Matador is an imprint of Troubador Publishing Ltd

  To my most wonderful supporters,

  Anne and Charles.

  Prelude

  The financial world lives on a dangerous roller-coaster with major names often crashing down from dizzy heights:

  •In 1995, unauthorised trading in the Singapore offices of the reputed British bank, Barings, led to a loss of over US$1.5 billion and its sale for a dollar to a Dutch financial institution

  •In 1996, the Japanese firm of Sumitomo lost US$2.6 billion as a result of unauthorised trading in copper by one of their employees

  •In 2000, the hedge fund, Long Term Capital Management, was rescued by a group of banks after it suffered losses of over US$ 4.5 billion

  •In 2007, the French Bank, Societe Generale, announced that unauthorised market transactions cost it over US$ 5 billion

  •In 2007, the UK Bank, Northern Rock, needed two hundred billion dollars of UK government support to avoid bankruptcy

  •In the year to March 2008, the US Investment Bank, Bear Stearns, saw its share value crash over 90% from US$18 billion to just US$ 0.25 billion as a result of a crisis of confidence. It was bought by US bank, J P Morgan Chase, with a US$ 30 billion support package from the New York Federal Reserve.

  Some may claim that the events in this novel and the earlier “One Step To Danger” are far fetched.

  Others would say they show amazing foresight about what could, and perhaps will, happen in the roller coaster world of finance.

  John S Gubert

  CHAPTER ONE

  Rossi and Di Maglio; those names had hit the headlines over the years. The Rossi family had stunned financial markets around the world as they powered their way to untold wealth. The Di Maglio family were alleged to be Mafia aristocracy.

  It had been business as usual at International Bank of Europe, or IBE as it was more commonly known, since its takeover by Rossi and Di Maglio. But, that was about to change. In the room were men and women with strange pasts, some shadowy, some sinister and some simply unconventional.

  They would place lives at risk and people would die. Companies would fail or be destroyed. Markets would be manipulated. Scams would be run. Fraud would be a way of life. Some would win and some would lose. The amounts would be huge and the losers would be angry. Investors, speculators, governments and criminals would hit out.

  The die was now cast. The stakes were high. The decision had been made. Rossi and Di Maglio were going high profile, high risk for high reward. The Financial Terrorist was preparing to strike.

  Charles Rossi took in the impressive surroundings. The large polished table dominated the boardroom. From the walls, several serious faces pondered the gathering below. They belonged to former chairmen of the company. They had all been distinguished pillars of the establishment in their time, were men who had the ear of the great and the good of the land. Their austere portraits seemed to come to life, and frown as if they did not cherish the sight of the people around the august room where once they had presided in almost royal omnipotence.

  Unusually, although there were some members of the board present, several of the attendees were definitely not on the board. The Chairman was not there. The Honourable James Johnson-St. John-James was the son and heir to the now senile Earl of Ember. His triple barrelled name emphasised his noble roots. Sir Brian Ffinch-Farquar was also absent. As indeed was Lord Dunkillin. They were three of the original directors who had been on the board at the time of the take-over. They remained and assured everyone who worried about those things that nothing had changed at IBE. That was not quite right, but they were not aware of some of the changes that had occurred and, perhaps more significantly, those that were being planned

  Charles, as the new Chief Executive, had allowed the bank to continue on its former profitable path. IBE had, though, gained some new clients from his contacts. And, even more dramatically for some, a ladies’ cloakroom with a baby’s changing area had been installed on the top floor. That formerly strictly all male enclave housed the boardroom and the directors’ offices. IBE had embraced equality, as only a Group obliged to do so can. For Jacqui Di Maglio, who smiled over at Charles, operated under her maiden name, although she was now Mrs Rossi. She was a director and, indeed, part owner of the holding company.

  IBE had recently started dealing with a series of new clients in America. And Giovanni Petroni, who was in the room, was on the board of many of them.

  They also undertook quite a bit of business with the secretive funds of their parent, and the reclusive Jack Ryder, who ran these and other funds, was also present. He had been accused of fraud some years before. It was claimed that he had embezzled a billion dollars from one of London’s biggest international banks. But that had all since been disproved. And Jack was Charles’ father, although Charles had since changed his name and the relationship was only known to a few.

  Most people at IBE also did not know they did business with Di Maglio. Nobody called him by his first name, if he had one. He had a broad range of interests, and some had nominated Giovanni Petroni as their chairman. Di Maglio had an awkward habit of occasionally calling Petroni, councillor, and that fuelled further the rumours of his criminal links. When queried, he would say that all lawyers were known by that title in his house. The brave whispered that Petroni also was Mafia and Di Maglio’s right hand man. But few dared to state that openly. And Di Maglio was in the room, standing apart from the others with Petroni by his side.

  There were two final members of the group. One was John Stephens, a well-known foreign exchange trader, now employed by IBE. He had a somewhat hazy past, and indeed it had been no easy task getting the regulators to agree to his being the head of IBE’s fast growing trading desk. He was, though, not on the board. His earlier role in the downfall of one of the larger US banks prevented that. He had been known as the man with the golden touch in London. Then he moved to New York, where he was said to have exceeded his authority. He had bet the wrong way, and his bank had lost a few billion dollars and its independence. Stephens always claimed that he was the unfortunate boss who had been the fall guy. He claimed events that led to the loss were not of his making. But a group of friends and associates knew how much he had made from the trades. And they knew that they had made more.


  The other person was a girl in her mid to late twenties. She was called Maria Carter. Di Maglio had employed her at one time. She was a girl Friday. But she had a special touch. She killed on command. She was loyal for money. She was also bright. And she had the title of Personal Assistant to IBE’s Chief Executive.

  Charles Rossi looked around the room again. The hawk-like features of Giovanni never changed. He must have looked old and skeletal twenty years ago. He continued to do so. Then he noted the bull-like power build of Di Maglio. His black hair was slicked back from his low forehead. His dark eyes were smiling without malice, but also without warmth. He noted his father, tall and slim, with greying hair. Jack Ryder looked like an academic; a thoughtful man, who watched and noted everything, a thinker and a strategist.

  Outside that group stood Stephens, looking shiftily from person to person, and drinking his coffee in isolation in one corner of the room. There was a man one would use but never trust. But Stephens knew his purpose. He would always obey for the right price, even if resentfully. Stephens would be lucky to see out the next year, even if he did as he was told, although for the moment he was unaware of this.

  Charles smiled at the two women who were now talking together. Jacqui looked exotic in the extreme with her dark hair, hanging loose over her shoulders, framing her gentle face. Her eyes showed that she was a woman of steel. They were warm and lively, but determined as well. The soft face was capable of anger and menace if need be. Maria was a girl with the figure of a model, the face of an angel and the morals of a whore. But for Charles, her fierce loyalty to him as her paymaster was her principal required virtue.

  Charles knocked on the table. “Ladies and Gentlemen, welcome. Please be seated for we have business to do. Let me organise the table.”

  He asked his father and Di Maglio to sit on either side of him. Jack Ryder took the right and Di Maglio the left. Giovanni immediately sat next to his boss, while Jacqui moved next to her father-in-law. Stephens and Maria sat opposite each other.

  The group filled half the boardroom table. There was an air of expectation. Charles began to speak.

  “Two and a half years ago, Jacqui and I created a holding company with Jack and Anne Marie Ryder.”

  He stopped and looked at some of the amused smiles at his failure to recognise his parents. But that was intentional, for Stephens would be unaware of the relationship and they all already knew that there was no value in giving information to Stephens unless he needed it. One of the first rules of survival was to share knowledge only on a need to know basis.

  Charles continued, “It had two assets. Firstly, it owned a fund management company, which operated speculative investment companies, or hedge funds, as they are now known. That was worth around a billion dollars. Secondly, it was sitting on around four billion dollars of cash.

  We now have three main assets. They are still the fund management company. It is worth around one and a half billion dollars. Then we have International Bank of Europe, commonly known as IBE, on whose premises we are today. It is one of the best known UK investment banks and must be worth around two billion against the billion we paid for it just over a couple of years ago. And, finally, we have just over three billion of cash.

  Most people would be pleased with turning a five billion dollar enterprise into a six and a half billion one in eighteen months. But that’s not good enough for us.

  We now plan to make at least another five to ten billion in the next year, and we all need to work together to do that. For, in order to do that, our bank is going to have to go spectacularly bust. We are here today to agree my plans. They require input from you all. Needless to say the aim is for you also to share in the profits that result.

  At the end of this meeting, any of you are free to leave the group. After that nobody can. I have agreed that with my partners and my father in law. Like the rest of you, though, they do not know the details of my plan. They only know that we are building up to the biggest financial coup of the century, perhaps even of all time.

  I assume you will all tell me by the end of the meeting that you are with us, or, that you want to leave. If you go you will have to forget all that you heard here. One casual mention would be fatal. And I mean fatal. Indeed that rule will also apply to those who stay.”

  Charles looked at the faces around the table. There was no reaction from most of them. They knew the comment was directed at Stephens rather than them. Some knew enough of Charles’ past to know that he could fulfil the threat, if need be. And others realised that Di Maglio would willingly offer his expertise in the matter if so requested.

  Most of them knew how Charles had killed two Mafia hit men in the South of France. And they knew of the shootout in Paris, when the Russian Mafia had kidnapped Jacqui. They also knew about the two bloody attacks on the Russian Mafia in the South of France. And they remembered the last killing of Boris the Bear in Barbados.

  Maria had also killed for them. Her list of victims included Jack Ryder’s former associate, a man called Jim. He could have made life hard for them if he had survived; and Maria had ensured that he didn’t. Di Maglio had killed and ordered more people killed than most. Giovanni referred to people as human capital and had them disposed of, as required, without hesitation.

  The only person who did not know this world was Stephens but even he was a good enough judge of character to realise the truth. Jacqui also had not killed anyone, but she would and could if she had to.

  Charles looked at them and smiled. He knew they’d all stay. Jacqui was fully aware of the plans. This was a charade especially for Stephens and for Maria. And both were needed for the plans to succeed. They had shown few scruples about right and wrong in the past; they would have to show even fewer in the future to ensure success.

  Di Maglio looked at Charles, who noted there was pride in the glance. Charles shuddered at the thought. His father-in-law had proved to be a doting grandfather, but still a man to be wary of. Di Maglio ran his beloved drugs and prostitution Empire alongside his legal enterprises. He was the arch villain. The IBE plan was based on sophisticated financial manipulation; the Di Maglio operations were often just old fashioned thuggery. His days were coming to an end. Charles and Jacqui were part of the New World and they could not get him to realise that.

  Charles smiled at them all. “Let me give you a short run-down of my plans and then I will take questions. If we floated IBE on the stock market, we could raise around two billion dollars for it. Last year it made profits of around two hundred and eighty million. That’s not bad for a company of its size. I plan, though, to grow it substantially in the coming year. And it will first grow by acquisition.

  The first acquisition should be the group of banks known as PAF or Pan American Financial, owned by the Di Maglio family interests. Our friend Giovanni Petroni, who I plan to invite to join our board, is their chairman.”

  Both Giovanni and Di Maglio looked astonished by this announcement. It was the first time they had heard of the planned deal. They frowned and it sounded as if Di Maglio growled. But they said nothing.

  Charles continued, “PAF is a group of eight regional banking groups in New York State through to California. Their attraction for IBE will be their ability to sell its securities products to their customers. In other words, we will create investments that they will buy. As there are over five million customers in PAF, we should be able to offload several billion of investments on them. More importantly, as we do, we will make money. I am expecting that many of the investments sold will be fraudulent; they will be empty shells. I’ll look to my partner, Jack Ryder, for help in creating those. As many of you know he is quite an expert in that field. I estimate we could make several hundreds of millions of profits for the combined bank by charging fees when we sell the securities and also the odd billion for ourselves by creating the phoney ones.”

  Giovanni and Di Maglio nodded approvingly. Giovanni spoke, “And I guess you will buy PAF at a p
remium and so we make money up front.”

  “No. It will be a sweetheart deal, you will take shares in the company and not cash. You will get much more cash later when we float the enlarged bank in the market and you can sell your shares. It’s actually simple. We sell clients investments and the bank gets the fees. We raise the profits of the bank. Investors see us as a growth stock. They pay over the odds for us, just before the whole can of worms opens.”

  Everybody around the table was nodding enthusiastically.

  “And there will be more ways of increasing the bank’s profits; we need to use these. I want Jack Ryder and John Stephens to arrange a series of trades by which we siphon money out of the bank. They both have experience at that. In the short term the bank will appear to make money from the trades but in reality it will all be pie in the sky and it will lose a packet.

  We will sell the bank to the public at a high price. That way we should recoup our investment and more. And we can, at the same time, do quite a nice line in insider dealing through our funds. Especially as we will know that, soon after the sale of the bank to the public, it will be hit with trading and other losses; there will be a series of announcements and the share price will slump.”

  This time it was Jack Ryder and Stephens who nodded enthusiastically. This was their forte. They wanted to start talking about the arrangements immediately. Charles stopped them, “Let me finish the plans. I also want to lend to the maximum to a series of companies that will go bust spectacularly. We identified several targets some time ago and have been working on them. These companies are no hopers although they all have a reasonably long pedigree. They are the mongrels of the markets.

  We have managed to place our current chairman and several other original directors of IBE, or their family members and friends, on the board of all of these companies. So they are going to be implicated. Our connection is not apparent, we have hidden it through the usual labyrinth of offshore companies. I’ve had to use the best lawyers in the world for this and they’ve earned their millions in fees. But nobody other than Jacqui and I know the precise linkages between the various companies.