The Billion Dollar Sure Thing Read online

  “If he has always worked with the Basel branch, why are you all of a sudden handling his business?”

  “Yesterday he came up with this very large operation. It’s too big for any of our branches, including Basel. So Widmer sent him directly to me. He, of course, operates exclusively with numbered accounts. His instructions are quite simple. He wants to buy gold bullion at the market for just a shade under $200 million. He put up $100 million in cash. Then he wants to use the gold as collateral for a very substantial short sale of U.S. dollars against the Swiss franc. From our standpoint it makes good sense. We will make at least $1 million in commissions on what is essentially a very simple operation. Our exposure is nil. Of course, there is risk from his standpoint.”

  “He realizes this?”

  “No doubt. He has one of the fastest minds I’ve ever seen among our private clients. Obviously a very professional money manager. I feel that I can completely assure you, Dr. Hofer, that he will not turn into a crybaby and pester us to death if the operation goes wrong. He’s not a troublemaker. So also from that standpoint, our exposure is essentially nil.”

  “I still don’t like it,” stated Hofer. “At all. Has he come with good funds?”

  “Yes, sir. He had the entire $100 million delivered in T-bills a few days ago in New York. The people at our branch there checked out their validity. No problem. They are authentic, not stolen. In fact, they were sold yesterday, and the proceeds have already arrived here. So he’s working from cash.”

  “No idea where the Treasury bills originated?”

  “No, sir. They’re bearer instruments, you know. No way of really checking back. But still, there is something. He opened up an entirely new numbered account for these transactions. He maintains about twenty accounts in all with us—in Basel, except for this one. There is a co-signature on all the new account papers. A certain Ali ben Fezali of Beirut.”

  “The same one we work with in the currency business?”

  “Right. We get shipments of assorted bank notes, and I do mean assorted, about every other week. We buy them from him at rather special rates, and then clear the notes, or most of them, back to the country of origin. He usually employs the proceeds for the purchase of gold and silver coinage. I would guess that we make large return shipments to him at least once a month. He maintains excellent sight balances with us, and has for many years. All in all, he’s one of our better clients in Lebanon.”

  “Did he show up with Rosen yesterday?”

  “No, sir. Apparently Rosen had all the account papers made out and signed a week or so ago. He had a habit of keeping a few sets with him. As I said, he maintains about twenty accounts with us and keeps opening up more all the time. So that’s hardly unusual. Of course we’ve got countless specimens of Fezali’s signature, and everything checks out there also.”

  “Isn’t Rosen a Jew?” asked Hofer.

  “I assume so,” replied Kellermann. “But I would not attach too much importance to that element. After all, we have seen a lot of stranger combinations around here.”

  “Has Rosen ever done anything like this before?”

  “No. He’s never touched either gold or currency futures. Actually, Widmer over at our Basel branch told me that this operation is completely out of his usual line. Apparently Rosen’s a type who plays things very carefully, never plunges, takes profits early, never tries to squeeze out the last drop. A rather ideal type of client. He never blames us for giving him bad advice, like so many of our other American customers. He relies completely upon himself and his own ideas. He’s often not too happy about the delays and errors in our accounting. But that’s not new. All Americans are very fussy in that regard.”

  “The more I hear, the less I like it,” said Hofer. “Look, I don’t want our bank to be dragged into something that could bring us up against the American authorities. You know it’s illegal for an American national to deal in gold bullion. Sure they overlook all the little fishes, but a couple of years ago they tried to get at Bernie Cornfeld and IOS for an alleged gold purchase they made way back in 1968—a big one. This could mean big trouble, and that could bring big publicity, especially in those damned American newspapers. One Helga Hughes affair was enough for Zurich in this decade. And I have a funny feeling that there’s something wrong here. Kellermann, you tell our people in New York to get everything available on this man. Right away. And stall Rosen in the meantime. I want a reply on my desk no later than eight tomorrow morning. The fellows in New York have almost all of a working day left to get what we need.”

  Kellermann frowned. This was not normal, and Kellermann did not like abnormal things. He lived a very orderly life. He prided himself that once his word was given, that was it. And he had given it to Rosen. As far as he was concerned, the bank was committed to carry out Rosen’s instructions, as received.

  “Dr. Hofer, I’m afraid that it’s a bit too late to change things very much. I have accepted his order to buy the gold and to start building up his short position in dollars.”

  “Verbally?”

  “Of course. But he will expect to be able to go through the confirmations of these transactions from his dossier before the week is out. He’s staying in Zurich for that express purpose. As far as I know, Zimmerer’s men must have already arranged to accumulate part of that gold in this afternoon’s fixing session, and no doubt they are also selling dollars as instructed.”

  Hofer thought this over.

  “Kellermann, what’s done is done. That’s clear. But now I want you to do something. Immediately. Get hold of Rosen and tell him that we cannot proceed further with his orders unless we get 50 percent more cash margin. If that doesn’t stop him, it will at least slow him down quite a bit. Very few people can raise $50 million in cash quickly.”

  “Yes, sir.”

  “Now tell me, Kellermann, have any of your other big clients started to move in the same direction?”

  “Nothing on the order of Rosen, but things have greatly heated up during the past few hours. Everybody was expecting an unusually large sale of Russian gold this week through the Bank for International Settlements. But nothing happened. Apparently they withdrew it at the last moment, without any logical explanation. Reuters had a speculative type of story on the wire just before I came up here. Apparently they got to somebody at the Zurich airport who claimed that the gold was actually shipped in last week but is just sitting there in the bonded warehouse out at Kloten. A thing like that alone could produce a lot more action today, especially in a market which is already on the move. One thing is for sure; these days the speculators do not lack either money or crazy ideas.”

  “Kellermann, keep in touch with the gold department and the foreign exchange people. If anything really unusual develops this afternoon, I want you to stay personally on top of it. Something’s going on.” Kellermann knew when he was dismissed. Hofer simply no longer recognized his presence. This often proved highly offensive for executives new at the Hofer game. But Kellermann had gotten used to it long ago. He closed the double doors protecting Hofer’s office from any possible audible intrusion from the outside world, and walked down the corridor to the bank of elevators. He was perturbed. He did not like Hofer interfering with his clientele. Especially after he was already committed. More than just Hofer was involved here. It was the integrity of the bank, and of himself. His instructions were clear. If Rosen could produce the additional cash margin, as far as he, Kellermann, was concerned, the deal was on. If not, it was strictly Hofer’s responsibility, and he would have to explain it to Rosen. On that, he would insist.

  But first he had to give the good news to Rosen. He proceeded to do so, in the briefest of telephone calls.

  12

  “SO we will need an additional $50 million in cash before we can proceed further, Mr. Rosen.”

  “Fine, Herr Kellermann. I’ll see what I can do.”

  The telephone went dead for a few seconds.

  “You did understand what I sai
d, Mr. Rosen.”

  “Completely. I’ll be back to you this afternoon. Let’s say after lunch. You’ll be in?”

  “Yes, yes.”

  “Fine. Good-bye.”

  Stanley burped, put on a pink shirt, a green tie, a blue suit, brown shoes with black socks. He placed a call to New York and went down to the Grill Room for a steak, well done, and some french fries on the side.

  He actually enjoyed his lunch, while he mulled over Kellermann, the General Bank of Switzerland, and $50 million. So what else was there to expect? Everybody has to look after himself. And the aristocrats of the world were the first to learn this. That’s why they became aristocrats. To himself, over lunch, Stanley had no qualms about thinking of his big customers in the States. Sure, they were Mafia. But they were the aristocrats of their chosen line of business. They were the best surviving capitalists in the United States. They believed as fiercely in the system that made America what it is, as did the Rockefellers, the Harrimans, the Kennedys of past generations. Swiss bankers were cut of exactly—but exactly—the same cloth.

  They used the cloak of piety plus the bank secrecy laws in the same way as the Mafia used bribes and the threat of secrecy or death. Both provided services that a greedy and essentially anti-law public wanted. Neither group of twentieth century capitalists could survive and prosper to that degree if vast numbers of people, in both low and high places, did not want and need them. The type of power that resulted by merit of their holding the keys to many different kinds of financial kingdoms was as close to invincible as you could get. There was no use fighting it. Bow your head, accept it for what it is, roll with the punches. Cooperate. Since you can’t join ’em, don’t be stupid enough to try to lick ’em. Just have enough money to keep up with them. Power and money. That was something that both the Mafiosi and the gnomes of Zurich respect. And money Stanley had. That’s why he enjoyed his lunch. In spite of the fact that his stomach was not exactly in A-1 shape.

  The tummy trouble had started with that bender the week before. After fooling around in those bars in France and Germany right across the border from Basel until four in the morning, how could it have been avoided? That guy from Geneva sure had known them all: all the places, all the girls. And could he drink. Brother! Funny that the stomach business was hanging on so long. But still, it had been worth it. Anything would have been worth getting away from that hotel in Basel. Christ, what a stiff dump. And the manager! Boy, if looks could have killed when we turned up with those gals. Probably a fairy.

  “Hey.”

  The head waiter stared at him.

  “Hey. Gimme the check, will you?”

  The head waiter approached.

  “Sir?”

  “Look, just gimme the check. I’m expecting a phone call upstairs.”

  Ten minutes later he got the check, and as he entered his suite, slightly peeved, the phone was ringing.

  “Your party in New York,” said the operator.

  “Stanley, is that you? It’s me, Harry Stahl.”

  God, thought Rosen, that guy will never learn that you don’t have to yell to be heard across the Atlantic. Typical New York jerk.

  “Yes, Harry, it’s me. Now just talk normal, will you. I can hear you fine. How are things going?”

  “Fine, fine,” screamed Harry. “How come I haven’t heard from you? I was worried sick that something bad had happened.”

  “Harry, you worry too much. I’ve always told you that. And stop screaming into the phone.”

  “O.K. Stanley, don’t get worked up. Did you do the deal with the Arabs?” Harry pronounced it A-rabs.

  “I sure did. Fantastic thing. I’m onto something very, very big, Harry. The biggest idea yet.”

  “Like what?”

  “Harry, I don’t want to discuss it on the phone. You understand. Just do one thing for me, right away. Have the First National Bank of Nassau transfer $50 million to the General Bank of Switzerland, head office in Zurich, attention Kellermann.”

  “Wait a minute. Attention who?”

  “Kellermann.” He spelled it, with one n, and then continued. “Get the guys in Nassau on the phone and stress that it has to be a cable transfer. I want no screwups. The funds have to be good here not later than eight tomorrow morning, Swiss time. That gives you almost all day to arrange it on your side of the ocean.”

  “Fifty million?”

  “Fifty million.”

  “Out of what accounts?”

  “Take five million out of our personal one, Harry. And do the rest pro rata from some of the other really big ones. The guys from St. Louis should be good for five. The Las Vegas group’s account should be good for another five. Just use your judgment. We’ve got lots of cash sitting around in the Bahamas.”

  “You sound awfully sure of yourself this time, Stanley. Shouldn’t I, perhaps, come over quick, so we can talk this over?”

  “Look, Harry, I’d like to. But this must move fast. It’s not the sort of thing we can sit around debating about. But don’t worry. I know exactly what I’m doing.”

  “That’s going to put every one of our operations pretty short of cash.”

  “I know. But not for long. This is a quick in and out. And it will involve zero downside risk where our Bahamas money is concerned. I just need that for a very short-term, very high-interest loan, to back up the operation here.”

  “Well, remember, Stanley, it’s both our necks. Rumour has it that some of our clients play pretty rough if something gets screwed up where their money is concerned.”

  “I know,” was Rosen’s only response, although he did have to admit to himself that Stahl had a point.

  “Where are you calling from, Stanley?”

  “The Baur au Lac in Zurich. But I’ll be checking out of here on Friday. Moving back to Basel for the weekend. Usual place.”

  “O.K., Stanley. If anything gets messed up in Nassau, just call me. When do you expect to be back?”

  “End of next week.”

  “O.K., Stan. Take care, and believe me, I really mean that!”

  “Bye, Harry. And thanks, buddy.”

  He hung up. Great guy, that Harry Stahl. A worrier though. Still, he’s a guy who will stick it out, even if he doesn’t have a clue as to what’s going on. He picked up the phone again.

  “Fräulein,” he said, “give me the General Bank of Switzerland, head office. I forget the number. I’ll wait.”

  Why these idiots don’t install direct dial phones in hotels was an eternal mystery.

  “General Bank of Switzerland.”

  “I’d like to speak to Director Kellermann.”

  “Just one moment, please.”

  Come on. Come on.

  “Kellermann,” came the deep voice.

  “Herr Kellermann, this is Stanley Rosen. You’ll have your $50 million in good funds tomorrow morning.”

  “Well—”

  Rosen interrupted, “So I expect you to start proceeding on my orders immediately.”

  “But Mr. Rosen—”

  Again Stanley cut in. “I don’t think there is room for any more ‘buts,’ Herr Kellermann. You agreed to accept my order, and you further agreed to start immediately on the bullion purchases and short dollar sales. Frankly, you broke your commitment when you asked for the additional cash margin, but I understand your position. I’m producing the extra cash. Now I expect you to keep your word.”

  Rosen, unknowingly, had hit upon Kellermann’s weak spot: he had given his word.

  “Agreed, Mr. Rosen. I shall proceed.”

  “Fine. The funds will be coming by cable from the First National in Nassau. If you don’t have them by nine tomorrow morning, call me up. I’m at the Baur au Lac, Room 718. In any case I’ll be keeping in touch the next few days.”

  And that was that. Now Beirut. He placed the call and then undressed and stepped into the shower.

  The shower dribbled, like most European showers. Probably because, when you come right down to it, these birds
over here still have an aversion toward water—at least too much of it at one time. That’s why the bidets, probably. And the looks of horror when you order some ice water in Paris on a scorching hot summer day. At least the towels were big. Huge in fact. The phone rang. In the bathroom.

  Why not? thought Stanley Rosen and picked up the dainty pink receiver.

  “Your call to Beirut, sir. You did place one, didn’t you?”

  “That’s right. I’ll hang on.”

  A minute went by and Rosen still hung. Onto a pink telephone, in the bathroom of a Swiss hotel, calling an Arab, to talk about buying gold and selling the dollar, by the millions. It had been a long way from New Jersey.

  But, he thought, it was time to drop New Jersey, and Miami, and Las Vegas, and the rest of it. Very, very slowly and very, very carefully. Because in the investment business there is no such thing as lasting success. There were merely high points—and then nothing. That’s the lesson the go-go boys in the fund business, the hot-shots in the brokerage game, the hot-wind artists in the savings and loan industry would never learn. So after three or maybe five years, they ended up on the same pavement they started from. There is a very definite cycle to success in any business. Rosen was convinced of this. It was obvious to any fool in industry. From the transistor to the colour TV to fast-back car to miniskirts. They started as an innovation, soared to unbelievable heights within a short time, and ended up overproduced, market-saturated, and ordinary. As time progressed, the life cycles were becoming shorter and shorter and shorter, from sensational birth to ignominious commonplaceness. The same was true with ideas in the financial business. Growth, hot new issues, performance—the gospel of a bright new generation, the obvious solution, the modern way of life—if one expected to live for three years. Capital preservation, yield, interest—the new philosophy of a new permanent approach to investments. Life expectancy: two years. International diversification, natural resources, ecology—the magic formula for the next well-spring to eternal financial success. Interest span: eighteen months. The problem was, as Stanley so well knew, you had to sell the clients on something. And no sooner were they sold, the something was passé. But if you did not sell them, somebody else right in the middle of the current product cycle would, and no more clients. A rat race.