42

 

THE SUPER-YACHT, ZEPHYR, MOORED OFF SAN DIEGO, MONDAY EVENING

Sheikh Ali hung up, then he took a key from his pocket, unlocked his desk drawer, selected one of his stock of prepaid, disposable phones, charged and ready for one sole use.

He smiled to himself. Jihad, then money. Time to put in a call to his broker. He did a quick calculation. It would be the next day in Singapore, lunchtime, not that it really mattered. The broker would take his calls any time, day or night, and did.

Marcel Caravaggio was fifty-nine, a nomad. Swiss German by birth, Swiss Italian by blood, American by education, French by MBA, citizen of the globe by financial reach. He was of middle height, dark, a bon viveur waging war with his waistline—winning, for the most part. He played tennis five times a week to a surprisingly high standard. The excellence of his shots meant he had to run less than weaker opponents, and his cunning meant he normally beat his peers too. Marcel had an expensive young Singaporean wife, second version, and an expensive divorce behind him to the first version, so when his cell phone chimed just as he was walking onto Court One at the Tanglin Club for a prelunch game, he took the call, even though he didn’t recognize the number.

He set down his tennis racket when he heard the Middle Eastern voice, signaled to his partner to give him five. He dropped his gym bag, fumbled for pen and paper.

“I would like you to put on a trade for me,” intoned the Sheikh. “Please take out six-month put options on Californian Real Estate Casualty Insurers, or on any insurers heavily exposed to California.”

“How big?” asked the broker, jamming the phone between his ear and collarbone, pen poised.

“How much cash do I have in my accounts with you?”

The broker answered from memory. “Two hundred and ten million dollars in cash, another nine hundred million in liquid investments. But that’ll kill the market.”

“Then put on as many trades as the market will bear. With the utmost discretion,” added the Sheikh, in the soft voice that the broker recognized as his own code red on the threat level.

“Got it. You want me to do it now?”

“I want you to do it now.”

“Can I spread it over the next three-four weeks? Big puts all taken out right now might attract attention.”

Silence for a few beats. “Yes,” murmured the Sheikh, “and we would not want that. Fine. Spread them, but within the month.”

“How about I sell some tailored shorts too, with a view to closing them off in six months? Mix it up a bit.”

“Do it.”

“Consider it done.”

A brief grunt of response, and the line was cut.

Caravaggio, well rewarded, knew better than to ask the underlying reason for the trade. Better not to know. He played his match. He won, ate lunch at the club, wagyu steak, medium rare, fries; no Chambertin, Napoleon’s favorite wine, to his own, self-imposed chagrin. He needed his mind as clear as it got. Then his driver took him back to his office just off Clarke Quay. There he drank the espresso his secretary made him, lit up a Cohiba IV, and started his research. Clouds of aromatic smoke suffused his office. From time to time he would circle his cigar through the air to see the contrail it made, studying it thoughtfully like an ancient alchemist conjuring spells from smoke. He was conjuring, seeking the best way to extract money from the uninitiated.

One hour later, he had identified the companies with the most exposure, and he began with his customary delicacy to put on trade after trade after trade.

This was a multitiered process which involved considerable skill and investment. One of his best investments was his spectacularly curvaceous mistress, Jeannette, a rising star at CFLT private banking in Hong Kong. Jeanette’s creativity in hiding trades was unmatched. She inherited the larceny from her Chinese Father, a legendary loan shark, and her curves from her Colombian mother. Marcel had proved an able student.

The concealment began with the third layer, the trash layer. This comprised four different Hong Kong–based but mainland China-financed private banks. Marcel had visited them, hand-selected them, satisfied himself of their discretion—reinforced by four separate pieces of information about the broker in charge at each, which would ensure a level of loyalty above and beyond the normal corporate requirements. Next layer up sanitized the trash so that it had only the faintest potential whiff of financial skulduggery about it. The four trash banks would issue the trading instructions to the Hong Kong branches of a selection of international banks. Those perfectly respectable financial names would then use their own nominee accounts to instruct the final layer. This layer completed the sanitization process, gave the trades the patina of respectability that would help to veil them and to stall any investigators in the unlikely event it ever came to that. The broker liked state-owned banks for this. The final tier of trades would be funneled through another selection of respectable, unwitting banks in New York. By the time the actual trades were put on, there would be a trail of over fifty nominee companies concealing the originator.

Marcel had set up encrypted contact with four chief brokers at his trash banks using CryptoPhone, a German system that offered mid-level encryption. It was quite commonly used commercially, so would not attract undue attention to itself. He dialed the first one. When Xu Ling answered, three letters appeared at top left of screen and a box that said RESPOND. Marcel typed in the letters, hit SEND. Xu Ling did the same in reverse, then the two men spoke. Marcel described the trades, adding “ultra high discreet” at the end of his instructions. Xu Ling knew the protocol. It had all been well worked out in advance.

Twenty minutes later, Marcel had spoken to all four trash bankers. He had given all four specific instructions re the trades and the necessary secrecy, but slightly different timelines to enter the market. He sat back, lit up another Cohiba, and began to add a few personal trades of his own. For this, he started off with three different Singapore nominee companies, confident of his security since Singapore had possibly the best banking secrecy laws in the world, unlike his birth home of Switzerland, whose banking secrecy now resembled a mouse-addled cheese.

He recognized the whiff of insider trading in his client’s instructions, could not resist its lure.