Arthur Hailey - Evening News

Since then, working with whatever happened to be "hot” financially, Fossie Xenos had created sparkling profits for Global Financial, plus a dynamic reputation for himself. The last was why Margot Lloyd-Mason viewed Fossie, who was the third possible candidate for the conglomerate chairmanship, as her most formidable rival.

Despite his manipulative skills and conquests, Fossie retained a boyish manner, appearing at least eight years younger than the forty-one he was. His clothes were mostly casual, his hair untidy, the result of running his hands through it as he talked in a rapid-fire staccato. He was persuasive and convincing; that and a dazzling smile he flashed at everyone were his personality strengths.

Today Fossie Xenos reported on a complex, delicate and largely secret project, now in its early stages but expected to produce a multibillion-dollar bonanza for Global. It involved so-called debt-to-equity swaps and a gigantic real estate investment fund, both relating to Peru, with Globanic working hand-n-glove with that country's government.

As described by Fossie to his fellow CEO's, the steps and conditions were:

Currently, Peru had more than $16 billion of foreign debt on which it had defaulted, thereby cutting itself off from the international financial community which would lend it no more money. Peru, however, suffering a desperate economic crisis, was anxious to get back into reputable status and begin borrowing once more.

Globanic Financial Services had quietly bought up $4.5 billion of Peru's outstanding debt—better than one quarter —paying an average five cents on the dollar, an outlay of $225 million. The original lenders of the money, mainly U.S. banks, were glad to sell even at that low price since they long ago figured they would get nothing back at all. Globanic had now "securitized”the Peruvian debt—that is, converted it into negotiable paper.

The government of Peru, through three of its ministers controlling finance, tourism and public works, had been informed they now had a matchless opportunity to wipe out that $4.5 billion of debt by buying the securitized debt from Globanic for ten cents on the dollar, but with all bookkeeping payments in Peru's own weak currency, the inti. This was Fossie's cleverly baited hook because in that way the country's small and precious store of other countries' hard currency—mainly dollars—would remain untouched.

Three critical conditions were attached to Globanic's acknowledgment of Peruvian currency. Globanic didn't want cash but instead the debt-to-equity swap, giving it total ownership of two spectacular resort locations now owned by the Peruvian Government. Globanic Financial would develop and eventually operate these, believing both to have gigantic potential as premium holiday destinations. One resort city with a coastal location was foreseen as the "Punta del Este of the Pacific.” The other, a mountain-locked site in the Andes, would be a sensational staging point for excursions to Machu Picchu and Cuzco, among the world's most popular tourist attractions.

Along with those vast amounts of land would go government guarantees that Globanic could do the developing freely, in its own way. At the same time Globanic would bring in hard currency to pay for development while also creating massive local employment, both helpful to Peru.

The final condition, to be secret between the Peruvian Government and Globanic, was that the price paid for the two resort sites should be twenty-five percent less than their real value.

Globanic would benefit in several ways: Initially by selling the securitized debt for twice what it paid—an instant bonus of $225 million. Next, by obtaining two magnificent locations for only three quarters of their worth. After that, attracting worldwide investment for the resorts' development and eventually reaping gargantuan profits from their operation.

Fossie's report ended with the information that following long and delicate negotiations, agreement between the Peruvian Government and Globanic Financial had been reached a few days earlier, with all of Globanic's demands accepted.

As K. Phocis Xenos concluded and sat down, there was spontaneous applause from the small, high-powered audience.

Theo Elliott, beaming, inquired, "Questions, anyone?”

"About those government ministers you spoke of,” a CEO named Warren Graydon began; he headed Empire Chemical Corporation.”Is there any kind of assurance that they'll keep their word?”

"Let me handle that one,” Elliott said.”The answer is yes, we have taken precautions. But I don't believe we need lay out details, even here.”

There were subtle smiles, the answer indicating that bribery was involved. In fact, when the Peru—Globanic agreement was signed and sealed, the three ministers would receive Swiss bank accounts, opened in their names, with a million and a half dollars deposited in each. They would also have the free use, whenever required, of luxury condominiums in London, Paris and Geneva, with accompanying fringe benefits. International companies like Globanic Industries frequently made such arrangements for their political friends.

Margot spoke up.”Tell us about Peru's stability, Fossie. Lately there's been an increase in revolutionary activity, not just in the usual Andes areas, but in Lima and elsewhere. Under those circumstances will resorts be practical? Will vacationers want to go there?”

She was walking a tightrope, Margot knew. On one hand, because of their competitive relationship, she could not afford to let Fossie Xenos get away with his presentation entirely unchallenged; also if something went wrong with the resort scheme later, she wanted it remembered that she had doubts in the beginning. On the other hand, if Margot became Globanic Industries' new chairman, she would need Fossie's friendship and his impressive contributions to conglomerate revenues. Keeping that in mind, she tried to make her questions rational and down the middle.

If Fossie sensed the maneuvering, he showed no sign of it and answered cheerfully.”All my information is that the revolutionary outlook is short-term and over the long haul Peru will survive with a solid, law-abiding democracy favorable to expanded tourism. Supporting that, there's a long tradition in the country based on democratic values.”

Margot made no further contribution but noted that Fossie had just exhibited a weakness which someday she might exploit. She had observed the same thing before with others, especially in real estate deals where glamorous objectives could outweigh normally cautious judgments. Psychologists called it the suspension of reality and, as Margot viewed it, anyone who believed an end was in sight to armed insurrection in Peru had done exactly that.

Of course, she reasoned, the resorts could still go ahead and be protected; after all, there were an increasing number of places in the world where holiday-making and danger existed side by side. But in Peru's case, only time and large expenditures would make the outcome clear.

Theo Elliott clearly did not share Margot's doubts.”If that's all the questioning,” he pronounced, "let me just say this: For some time I've known what Fossie has just told you, but have brought you into it today for two good reasons. First, I know all of us can keep secrets and it's to our advantage to keep this one. Second, I don't want anything to damage our still delicate relationship with the government of Peru and thereby spoil what can evolve into the deal of the century.” The chairman rose.”Now that's understood, let's have lunch.”

It took several minutes for Jessica to accept the possibility that what Nicky had told her—that they were actually in Perumight conceivably be true.

It couldn't have happened! Surely there had not been time!