Michael Ridpath - Free To Trade

Normally, this seasonal pattern irritates me. But this time my mind was on other things, and so I was glad for the cover that August brought.

Specifically, I was thinking about Debbie. And Joe.

It had seemed to me obvious that Joe had lain in wait for Debbie that night, and thrown her into the river. He was there, and he clearly had the capacity to kill. But why did he do it? Even someone like Joe didn't just wander round London murdering his old girlfriends on a whim. He must have had a reason. What could that be?

And then there was the business of the shared taxi taken by Joe and his two friends just after I had seen him leaving the boat. It was possible that his friends were covering for him, but the police believed that they were telling the truth. If the police were right, how did Debbie die?

I didn't believe she just fell into the river by mistake. And I couldn't believe that she killed herself. I refused to believe it. So who else might have wanted Debbie dead?

As I mulled over this problem, my thoughts turned to Piper. Debbie's knowledge of the Bladenham Hall case was of real concern to him. He did not sound like the most upright of citizens. If he were to lose his licence from the Gaming Commission, then his plans for the Tahiti would have to be shelved. At best, he could try to sell it; it would be difficult to recoup most of his costs. Another dangerous enemy.

Then there was also the investigation into the Gypsum company share price. Was that in some way connected to Debbie's death?

I needed to find out more.

I searched the pile of prospectuses on my desk for the information memorandum for the Tahiti. Before I came to it I uncovered the prospectus for Tremont Capital. I stopped my search and picked it up. It was thin and innocuous. No logos, certainly no pictures. I began to read it. Carefully.

Tremont Capital NV was a shell investment company set up in the Netherlands Antilles as a means for wealthy individuals to shelter their tax. The company invested in securities, about which there were no details. The company had issued a $40 million private placement of bonds through Bloomfield Weiss. De Jong & Co. had bought $20 million of these. What had made an investment in the bonds of such a flimsy offshore vehicle attractive was the guarantee from Honshu Bank Ltd. Honshu was one of the largest banks in Japan, and had the top rating of AAA assigned to it by the credit agencies. Investors didn't have to worry about the details of the structure, or what Tremont Capital invested in, as long as they had that guarantee.

But Debbie had worried about details.

I read the whole prospectus through carefully. Lots of tedious legal language, but nothing out of the ordinary that I could see. The sole shareholder of the shell company was listed as Tremont Holdings NV. That didn't tell me anything, and I guessed that under the Netherlands Antilles secrecy laws that would be the most I would ever find out about the ownership structure.

Still nothing strange.

Then I noticed a telephone number pencilled in the margin under the section entitled 'Description of the Guarantor'. I recognised the dialling code as Tokyo. It must be the number for Honshu Bank. I looked at my watch. It was late in Tokyo, but I might still catch someone. I tried the number not knowing what it was I was supposed to be asking.

After a few false starts, I was finally put through to someone who understood English.

'Hakata speaking.'

'Good afternoon, Mr Hakata. It's Paul Murray from De Jong & Co. in London speaking. I wonder if you can help me. I am inquiring about a private placement you have guaranteed for Tremont Capital.'

'I am very sorry,' said Mr Hakata.

Damn, I thought. Just when I needed someone helpful. 'I would very much appreciate some information, Mr Hakata. You see we are a major investor in this private placement.'

'I should like to help, Mr Murray, but we have no record of giving such a guarantee.'

'No, you don't understand. I have the prospectus in front of me. And someone from your bank spoke to a colleague of mine, Miss Chater, about it last week.'

'It was I who spoke to Miss Chater. And I spoke to a Mr Shoffman about it a few months ago. We are quite sure we have given no guarantee to this Tremont Capital. Indeed, we have no record of such a deal existing. If you have some information on this company, we would like to follow up. We don't like people misusing the name of our bank.'

'Thank you very much, Mr Hakata. I will send you some information if I can. Goodbye.'

This didn't make any sense. How could Honshu Bank be unaware of a guarantee they had given? Hakata had clearly checked his files quite carefully. Still, Honshu Bank was a very big bank. Perhaps the guarantee had somehow got lost. Unlikely, but just about possible, I supposed.

If Honshu Bank hadn't heard of the issue, then Bloomfield Weiss certainly should have. I decided to call them. I didn't call Cash. If Debbie was right and there really was something wrong with this issue, I didn't want to alert Cash to it at this stage. So I rang the Bloomfield Weiss library, which would have complete information on every bond issue they had ever managed.

A young woman's voice answered the phone, 'Library.'

'Good-morning. It's Paul Murray from De Jong here. Can you please send me all the details you have on a private placement you led for Tremont Capital NV. It was about a year ago.'

'I'm afraid we have no details on that issue,' the librarian replied immediately. No pause to check files or cards.

'But you must have. Can't you check?'

'I have checked. Your colleague Miss Chater rang last week. We have no details on the issue. And the reason is that the issue does not exist.'

'You must have made a mistake. You can't be so sure. Please check again.'

'Mr Murray, I have checked very thoroughly.' The librarian's voice rose. She was obviously not a woman who liked her professional pride to be questioned. 'Miss Chater was just as insistent as yourself. The issue just does not exist. Either our records are wrong, or yours are. And we have spent hundreds of thousands of pounds on modern relational database retrieval systems. No mention of Tremont Capital anywhere. When you have found the correct name of the bond you own, please call. We will be delighted to help.' With that the librarian hung up, sounding anything but delighted to help.

I leaned back in my chair, stunned. How could the lead manager and guarantor have no knowledge of this bond? Did it really exist? I thought for a moment. Because it was a private placement, it didn't have to be listed on any stock exchange. But there were always lawyers involved in these sort of transactions. I grabbed the prospectus and leafed through, looking for the name of the law firm who had put the transaction together. I quickly found it. 'Van Kreef, Heerlen, Curacao.' Odd. I would have expected a London or New York firm. A few more minutes' examination of the prospectus showed me what I was looking for. 'This agreement shall be interpreted under the laws of the Netherlands Antilles.' None of the customary mention of English or New York law.

Why hadn't this been picked up before? I supposed that if everyone was busy, the documentation might not have been read as thoroughly as it should have been. After all, the Honshu Bank guarantee had probably made it seem unnecessary to check the fine print.

But there was no Honshu Bank guarantee. De Jong & Co. had lent $20 million to a shell company we knew nothing about. We didn't know who owned it. We didn't know what had been done with our money. We certainly didn't know whether we would ever get it back. The legal documentation was probably full of holes.

I made a quick phone call to administration to check to see whether we had received our first interest coupon payment. We had. At least we hadn't lost any money yet. Whoever had set up the company would probably pay at least some interest in order not to arouse suspicion. It looked very much as though we were victims of an elaborate fraud.