7.30 am London – Monday 2nd May 2022
They had not moved for 10 minutes or more. The Metropolitan Line train ground to a halt in the tunnel soon after leaving Finchley Road, probably waiting for an available platform at Baker Street. The combination of 40 or so people in a dark, confined space with no air-conditioning was creating a nervous and sweaty tension. For those standing and unable to move it was becoming claustrophobic. Regular commuters buried heads in newspapers and kindles, desperately trying to avoid eye contact with someone more deserving of a seat.
Will Harriman, Head of Compliance and Risk at the UK banking giant British and Commonwealth Merchant Banking Group, known throughout the world as BritCom, had secured the prized possession of a seat. He took a swig from his bottle of water, unable to avoid the feeling of guilt that there might be someone in the carriage more deserving. He closed the spread sheet on which he had been working and ventured an upward glance. A headline on the back of a newspaper, folded immediately in front of him, caught his eye - Cashpoints max at £30 a day. PM getting cosy with new best friends from the Far East. It was stark media confirmation – trillions of pounds, dollars and euros were being transferred between branches of overseas banks, including his own, and used for speculation against sterling. The pound was in freefall and banks were running short of money. Two major high street banks had recently been compelled to close their doors and had their stock exchange quotations suspended. Will desperately hoped that BritCom, which had a 250 year history of traditional British merchant banking stability, would not be similarly affected.
Reading an associated article upside-down he could just about make out that the new Prime Minister, Hubert Walsingham, elected on an ‘anti-establishment’ ticket, had been given a hard ride during his ‘cap-in-hand’ visit that week to the European Parliament in Brussels. Since Brexit no help would be forthcoming from European neighbours who had their own problems to resolve. The owner of the paper looked up, caught his eye, huffed and turned the page.
Will had worked at the same bank for over sixteen years, since leaving uni and had experienced many changes. BritCom had been privately owned for centuries but following the banking collapse of 2008 the youngest in the line of family owners had decided, somewhat controversially, to seek outside capital and floated the bank on the Stock Exchange. Rapid expansion followed and the bank moved its head office from London to Geneva and a growing network of international branches now complimented an existing network of branches in towns and cities throughout the UK.
He looked down at the spread-sheet of confidential lending figures and had to admit to a feeling of unease and concern. He was worried for all those people in the carriage who had placed trust in the fact that the Government of the day would never allow any bank with the word British in its title to fail.
But William Harriman knew that cracks were beginning to show. The Bank had a AAA Rating at Fitch’s and Standard & Poors for as long as he could remember, but he knew that BritCom would struggle if auditors exposed it to the stress tests of the day. Since the float the new board in Geneva had dramatically exposed BritCom to highly-leveraged transactions around the world and for the moment his mind was occupied by some huge speculative real estate development transactions he was being forced to underwrite in London.
He looked-up and saw his reflection staring back through the window on the opposite side of the carriage. The face was no longer youthful. He was popular with the girls at work, but at thirty-eight still did not have a regular girlfriend. No-one since Helen. “Can’t blame her for never forgiving me,” he said to himself, “….must have been mad to have had that one night stand…should have appreciated…. ” A loud hiss followed by the familiar jolt and shudder of the Metropolitan line returned Will to the reality of the day. The train screeched and lumbered its way across the points into Baker Street and the entire carriage breathed a sigh of relief as the occupants anticipated an end to the journey. He closed his laptop, stood-up and looked at the worried faces. He thought about the billions of pounds worth of life-savings that had flowed recently from other major banks to the so-called safe haven of his own bank. He was acutely aware that the financial survival and security of his fellow passengers was at that moment linked to the success or failure of the bank for which he worked. Their hopes and dreams were aligned to the belief that BritCom, the erstwhile pillar of the British financial system, was considered ‘just too big to fail’.
Southern Spain – 8.30 am local time - the same morning
The hydrofoil approached the port of Algeciras and the Moroccan screwed up his eyes as the smeared glass on the little window reflected the early morning sun. The windows were stained and cloudy thanks to months of salt water, storms and general pollution but he could still make out the looming Rock of Gibraltar. He commuted daily but never tired of the view. Through the blur, he could just about make-out the ships queuing for either the dry docks in Gibraltar or the oil refineries on the Spanish side in Algeciras.
Some of the commuters went on deck to catch the early morning warmth, but Benji Ahmed stayed inside. He knew that soon they would be desperate for some shade. He had first made the crossing more than 30 years ago. It would have been on the Mons Calpe – an old-fashioned steamer known locally as the Tangiers Ferry. Now it had been replaced by a craft that more than halved the journey time but, he mused, progress and speed did not necessarily make his own journey more efficient. At least the Mons Calpe crossed the Straits directly into Gibraltar whereas the hydrofoil crossed to Algeciras, in Spain, necessitating a further bus journey to his job in Gib. But this time it served his purpose. His destination was not Gibraltar.
As they approached the port of Algeciras he wiped the beads of sweat from his forehead. Taking a deep breath he allowed his hand to rest on the outside of his brief-case. “Be natural,” he said to himself “don’t do or say anything different to normal...remain calm.”
They came alongside the quay and he found it difficult to hide the fear. The clean white shirt stuck to his back and the plastic cover on the passport became marked with sweat. He would follow the “Nada Para Declarar” green route. But it was not the Spanish Customs Officers who were foremost in his mind. They were the least of his fears.
Britcom London offices 8 am Monday 2nd May 2022
He always got in early, bacon roll in hand, to go through the list of unauthorised loans and overdrafts. Will Harriman liked to be one step ahead of everyone else. He spread-out a small paper tissue on the desk to catch the expected drips of grease and ketchup. Taste-buds salivating from the anticipation and smell of fried bacon his mouth closed around the roll - nothing could spoil the pleasure. However, much to his distress and annoyance the intimate moment was interrupted by a harsh ringing which had him reaching for more tissues just before grabbing the phone and dropping the roll. He nestled the phone between neck and head as he used his free hands to clear-up the mess. Grease everywhere.
“Shit.” He swore under his breath more from the sight of the Swiss number on the display than from the mess he had just created. It would be an awkward call and his roll would get cold. He wiped his desk and the phone, hoped the swearing had not been heard at the other end
“Ah Monsieur Harriman.” Will stiffened as he recognised the French sounding accent of Xavier Mignon, main Board Member of the BritCom Head Office in Geneva.
“Bonjour, Monsieur Harriman, comment ca va.” He was tempted to say “ca va bien, but was in no mood to indulge Mignon with the pleasantries of attempting to speak French. As he spoke, he continued to wipe the grease from his phone and stood up to brush the crumbs off his shirt.
“I’m well, thank you, Monsieur Mignon.”
“Bon. Monsieur Harriman. I know you are busy and I will get straight to the point. I am ringing to discuss with you a couple of excess items which will have appeared on your loans list this morning.”
On the one hand Will was pleased because a call at this time meant the main Board Director knew he always arrived early to work, but on the other hand the man was intruding on his special time and he had not yet had the chance to look at the excess list.
“Yes, I’ve looked through the list.” Will lied, but he wanted Mignon to think he was on the ball.
“Then you must have a lot of questions?” Mignon sounded shocked at the lack of reaction to whatever was on the list. Will opened the attachment on his daily email from the Treasury Division and sped-read it from top to bottom. There were the usual short-term overdrafts for approval - some small, less than £10k and one or two larger ones exceeding £100k which he would have to investigate later. But then - surely it was a computer input error. He looked for a correcting entry somewhere but no, it was clear – the branch of BritCom in London had just received £400m from its own branch in Gibraltar for onward-lending to a Corporation Will knew was building the famous ‘Tower 8’ – a development not far from the London branch of Britcom in the City. His office was on the fifth floor and the thought of the construction works led him to briefly look across the rooftops towards the cranes surrounding the top of the Tower in the distance. But that was not the only one. There were two further amounts further down the list for the same amount. Three remittances in all for £400m each from BritCom Gibraltar. He gasped.
“Monsieur Mignon, we’ve just received £1.2billion pounds altogether for what looks like onward lending by BritCom UK to three Corporations constructing those three towers in London, Manchester and Birmingham.”
“Exactment. Three very high profile and iconic towers, BritCom can be very proud to be given the opportunity to finance their construction. This is a magnificent coup for our bank.”
Will knew that two point four billion pounds had already been advanced on these projects and this would take total lending to three point six billion. His mind raced. He was also conscious that Mignon had been droning-on “Hello.....Harriman...are you there?”
“Yes. Just spilt my coffee.” Again he lied to buy some time to think, trying hard to conceal his surprise. He decided to go on the offensive.
“You’ve generated these loans, Monsieur Mignon. I need chapter and verse. Are these Head Office Facilities?” Mignon gave a clearly rehearsed reply.
“Oui. These are Facilities generated by ourselves in Head Office but technically they will be provided by you on the bank’s balance sheet in London. We have transferred the money from Switzerland to the British Virgin Isands, the BVI, then to Gibraltar...” He quickly anticipated Will’s next question. “…this structure has been established for legitimate tax reasons and we authorised Gibraltar to forward these moneys to your department in London for ongoing funding of the developments. We need to put them as loans to the three BVI Company Clients on the London Balance Sheet.” Will was not feeling comfortable about the way he was expected to collude in all of this. This was now the third occasion that huge unannounced loan transfers, via complex structures, for the construction of the three towers had been foisted on him over the last few months. He decided to push back.
“But Monsieur Mignon, I thought you have said previously that our exposure on these developments was maximised and the Clients would be completing the three Towers from their own resources – which reminds me….”
“Oui, yes, yes. I know. You want full chapter and verse on the background to the ultimate beneficial ownership in these three projects. But we have already told you – we are satisfied with the credentials of the individual behind the deals.”
“I’m sorry, Monsieur Mignon but I do not have the same levels of satisfaction with these transactions. My role is not only Credit but as the Britcom London MLRO – Money Laundering Reporting Officer - I am responsible to the Financial Conduct Authority and Bank of England here in London for all Compliance issues. Apart from lending issues, we do not have enough information about the ownership background behind these companies. You have told me in the past that a man called Tariq Ziyad is the ultimate beneficial owner behind them all but our searches and checks have absolutely no information on him. You have also said that he will be making the final payments to complete these Towers – so how has he made his money?” Mignon raised his voice to what Will thought sounded like a Dalek from Doctor Who
“Are you questioning the judgment and decisions made by myself and the main Board?” “Methinks the man protests too much.” Will thought to himself.
“I am not questioning anything. Merely stating it would look better for our files from an Audit perspective. For KYC purposes we need to know his source of funds…”
“KYC...” Mignon interrupted. “What is that?”
“In English, Monsieur Mignon, KYC stands for ‘Know Your Customer’ It’s the Holy Grail for the Bank of England and the Financial Conduct Authority. We all have compulsory training on it. It’s in place to combat fraud and money laundering – maybe you have an equivalent in Switzerland?” No answer. Will continued
“For all of our loans we need to see a corporate structure, like a family tree, and usually at the top of that tree there will be the ultimate beneficial owner, or owners, behind the deal. The people who, despite the various layers of companies and trusts in different jurisdictions underneath, own and control the deal”
“As I said. Ziyad. Monsieur Harriman, you are a good credit man but you are out of your depth. You are dealing with clients of Head office here. The Corporate structures are complex but it’s all above board and legal. You need to transfer the payments now directly to the Clients Account of our lawyers, Messrs Benningtons. I believe you know the Partner there, Harry Hazeltine, who has our full confidence and will protect the bank’s position. He will pay the contractors.” Will looked skywards
“Yes, but Monsieur Mignon, as you know, the main Tower 8 is just down the road from here. I visited the site last week and was told by the Project Manager that it’s almost half built, but the main contractors have still not been paid the first of the four hundred million pound payments sent to Benningtons, let alone the second which was transferred a couple of weeks ago – and now we are requested to transfer a third payment to Benningtons. Once this goes through we will have paid to our own solicitors one point two Billion pounds for the London Tower alone and the contractors have nothing to show for it. Fortunately the contractors are a major plc and they’ve so far paid for materials and wages of the workers on site from their own funds. But they are about to turn off the tap. Why hasn’t Hazeltine paid them the eight hundred million remitted to him so far – and that’s just the Tower here in the City?”
“I’m sure he has his reasons, Mr Harriman. You’re not a lawyer – he is.”
“No, but I’m a real-estate banker and I can smell when something’s not right” Will instantly regretted the comment
“Harriman you should remember your position.” Will noted the use of his surname and nevertheless decided to back-track a little. He would investigate the situation in his own time.
“Understood, Monsieur Mignon and apologies if I sounded out-of-order. It’s just that the contractors were working on floor forty or so when I was there, out of a total of eighty-eight and they are getting desperate for payment. I’ve since discovered that the other two towers in Birmingham and Manchester are in the same state. The Contractors are about to walk-off site there as well. I’m simply concerned for the bank’s liquidity. If the Clients go bust on each of those three Towers the Bank could lose three point six billion overall. BritCom would have to cease trading and close its doors. We could no longer operate.”
“Monsieur Harriman,” Mignon started to shout and Will knew he had struck a nerve, “I am not questioning our own project consultants here in Switzerland who are liaising with Benningtons and you should not question the decisions of your superiors. As far as I am concerned this is being done properly and that’s the end of it”. Will knew that he was in danger of putting his job on the line, but reasoned that if the bank collapsed he would lose his job anyway. For the sake of his colleagues – not to mention the bank’s depositors throughout the UK - he knew that he had to persist.
“My concern, Monsieur Mignon, is simply practical. I have undertakings from Hazeltine that we have legal pre-lets and pre-sales on the Towers. He holds letters of commitment from international organisations based in the Far East, but there is nothing contracted. We are putting an awful lot of faith in this man at Benningtons and his Far-Eastern commitments. If those Pre-Lets and Pre-Sales in the Towers don’t materialise and the ultimate clients – whoever they may be - don’t come up with the remaining share of the Construction Costs then the projects will fail.” He deliberately used the words whoever they may be in order to make it very clear to Mignon that he was still not satisfied with the ultimate ownership behind the structures.
“You would do well to recognise your position, Monsieur Harriman and to whom you are speaking. Sometimes you need to remember who pays your wages and know where, as you English say, your bread is best buttered…” Will decided that he would not be drawn and did not respond. He had only met Mignon once, at a meeting in the plush Geneva Head Office boardroom. He remembered the man nervously shuffling papers, twitching, rapidly cleaning his spectacles with a dirty handkerchief and generally nodding in agreement with everything the Chairman of the main board, Jean Paul Lefevre, had said. Mignon broke the silence.
“Er....so is there anything else?”
“No thank you Monsieur Mignon. If you could just send me your Board Approvals in writing please?”
“Oui, d’accord. You will receive everything you need within fifteen minutes”
Mignon put the phone down, smugly believing he had convinced the glorified clerk in London that all was OK. But the glorified clerk had considerable banking experience and the last conversation had only served to confirm his suspicions. A sixth sense made him wait for a moment before putting the receiver back on the hook. He heard two further clicks on the other end of the phone. At least two other parties had been listening to the call.
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