Michael Ridpath - Free To Trade

'Come on,' said Tommy, and I followed him out of the door. Looking irritated, Tommy stopped at Jean's desk and said, 'Tell Dick we waited for him. Mr Smith has another appointment, and we are already late. Have him call me, please.'

'I can't think what can have happened to him,' said Jean. 'I am very sorry you and Mr Smith had to wait so long. I am sure he will be back in a minute.'

'We can't afford to wait any longer. Goodbye.' With that, Tommy and I marched out of Waigel's department into the corridor. Our act had drawn one or two bored glances from the people working in the outer office. It was enough to be plausible, not enough to be memorable.

We waited for what seemed an age for a lift to come. Finally one arrived. It was crowded with Japanese businessmen, clients of Bloomfield Weiss. They went through a complicated dance to decide which one of them should get out of the lift first. Behind them all, ushering them out, was the short, bald figure of Dick Waigel. I saw him before he saw me.

'Quick, Tommy. Fire exit!' I said.

Without dithering, Tommy darted to the stairway. I couldn't follow him since I was caught up in the melee of Japanese. Waigel saw me.

'Paul, what brings you here?' he asked, his eyes suspicious.

'Oh, I was in the building and I thought I would drop by to follow up on one or two of the comments you made at lunch yesterday,' I said. 'I found them very interesting.'

'Oh good,' said Waigel, staring at me thoughtfully, trying to decide whether I was telling the truth.

The group of Japanese were looking at Waigel expectantly. I coughed nervously and said, 'Well, this doesn't look like a good time for you. If you are going to be at the conference in Phoenix, perhaps we can chat then.'

I knew I wasn't convincing. Waigel's stare hardened. I stared back. Something was wrong. He didn't know what, but it unsettled him. He hesitated for a moment, but his guests were waiting. 'See you then,' he muttered.

I got into the lift, and breathed out loudly as the doors closed behind me. My heart was beating rapidly, and I could hear the blood rushing round my ears. I hoped Jean would be able to bluff her way round the awkward questions Waigel would be bound to ask her. But at least I had the diagram.

I met Tommy in the lobby. He was clearly enjoying his afternoon. 'Wow, that was close!' he said, eyes shining. 'I just caught the gleam of his bald head, so I beat it. Did you speak to him? Did he suspect anything?'

'I don't know,' I said. I shuddered. 'What a nasty little man!'

Tommy laughed. 'One of Bloomfield Weiss's finest.'

'I hope Jean is all right,' I said.

'Don't worry. The worst Waigel can do is fire her, and she wants to quit anyway. So what did we find? Was the mission successful?'

'It was indeed,' I said, patting my pocket. 'I think this diagram will explain a lot.'

'Well, let's get it out and look at it, then.'

'Look, I'm sorry. I don't think I can show it to you.'

'Why the hell not?' Tommy was upset. 'I just risked getting fired for the second time in one week. I have a right to know. Come on, let's get a cup of coffee and you can tell me all about it.'

'I would, but…'

'Yes?'

'I know this may sound corny, but I don't want to put you in danger.'

Tommy took me by the arm and looked me in the eye. 'You're right, it does sound corny. Look, if you really are in danger, maybe I can help you out. It's no good. You've got me hooked on this thing. I can live with the risk. Let's get that cup of coffee.'

'OK, I give in.'

We found a Greek coffee shop, ordered two cups, and I began.

'About a year ago, Bloomfield Weiss sold us twenty million dollars of a private placement for a company called Tremont Capital NV. Tremont was supposed to be guaranteed by Honshu Bank. It turns out that this guarantee never existed. Neither Honshu Bank, nor Bloomfield Weiss have any record of it. The only security we have for our investment is an offshore shell company.'

'That's bad,' said Tommy.

'What's worse is that two of the three people who have discovered this are now dead.'

'Wow,' Tommy whistled. 'Was one of them Greg Shoffman?'

'Yes,' I replied. 'The other was a woman called Debbie Chater who worked for us in London.'

'Do you know who did it?' Tommy asked.

'No. Debbie fell into the River Thames. I think she was helped. Who by, I just don't know. But I'm going to find out.'

'So who is behind Tremont Capital?' Tommy asked.

'I can guess,' I said.

'Who sold the deal to you?' Tommy asked.

'Cash Callaghan.'

'And Dick Waigel structured it?'

'Dead right,' I said.

'Jeezus,' Tommy said as he leaned back in his chair. 'Well, I am not surprised by that snake Waigel. But Cash? I can imagine Cash bending the rules, but I wouldn't have thought he would go that far. What scum!'

Tommy gulped his coffee, trying to take it all in. 'So Shoffman and your Debbie Chater are dead? Who's the third person?' Tommy paused, and whistled again. 'That's you. Man, you had better watch yourself.'

'I know,' I said. 'And you can see why I was reluctant to make you the fourth.'

Tommy laughed, 'Don't worry about that. They don't know I know. I'll be all right. So what happened to the money?' he asked.

'I don't know,' I said. 'That's why I wanted to take a look at Waigel's files. Let's have a look at that diagram.'

I pulled it out of my pocket and spread it out on the table of the coffee shop.

It consisted of a series of boxes, one underneath the other. Connecting them were arrows, all pointing downwards. They showed the direction of the flow of funds in the transaction.

The first box was labelled '2 investors'. That was presumably De Jong & Co., and Harzweiger Bank.

An arrow with $40 million written by it, pointed down to the next box, labelled 'SPV. That must stand for 'Special Purpose Vehicle', which was Tremont Capital. This represented the $40 million raised by Tremont from the private placement.

The next box down was labelled 'Swiss bank a/c'. That would be the account referred to in Dietweiler's letter.

Next came a more puzzling box-'Uncle Sam's Money Machine'. I had no idea what that could be. Below this were a series of boxes marked 'high return investments'. By the arrows were the numbers '$150 to $200 mm'. I could see the power of 'Uncle Sam's Money Machine'. Forty million dollars went into it and $150 to $200 million came out of it. A money machine indeed.

Underneath the diagram were some notes explaining things a bit further.

'Yrs 8-10 sell investments. Sell or break money machine. Take the profits out of SPV in dividends. Estimated dividends $50 million. Bond repaid if possible.'

'What do you make of that?' Tommy asked.

I thought for a minute or so. 'Well, I don't know what "Uncle Sam's Money Machine" is, but I think I understand most of the rest.

'The forty million dollars raised by Tremont Capital from the private placement is placed in a Swiss bank account. From there it is used to purchase, or perhaps build, the mysterious money machine. There the money is somehow turned into two hundred million dollars. This money is put into high return investments. After eight years or so, these are sold. The proceeds, which by that time are presumably quite large, flow back to Tremont Capital. The forty million dollars is then repaid. Any profits from the investments, over and above the interest costs on the private placement, are paid out by Tremont Capital in dividends. Waigel estimates these to be fifty million dollars. So, Waigel and his accomplices borrow forty million dollars, use this money to generate a further fifty million dollars in profits for themselves and then give the original forty million dollars back, with nobody any the wiser.'

'Why do they do that?' asked Tommy. 'Why don't they just keep the forty million dollars?'