A Week in December (20 page)

Unfortunately, it hadn't worked. While one or two other reviewers agreed that it was disappointing that Sedley seemed to have made nothing up, most of them had enjoyed the book and looked forward to more from a 'promising first-timer'. Tranter wasn't surprised by this supine response; it merely goaded him into further action. His
Toad
piece a fortnight later went through the reviewers one by one and pointed out that they were all Sedley's old university chums (there was no need in an anonymous review to mention his own college connection to the editor of
The Toad
) and suggested that those Sedley hadn't actually bribed were members of a loose homosexual coterie. The fact that Sedley, so far from being gay, was married to a notably good-looking consultant oncologist and was the father of four meant nothing to Tranter, since Sedley's type were always on for some queer stuff; it was part of their education.

But nothing, it seemed, could stop the bandwagon. A few weeks later, the wretched book made it into the preliminary list of six for that year's Cafe Bravo first novel prize. This called for more intense guerrilla action, Tranter felt. From a listings magazine, he saw that Sedley would be reading from his 'highly acclaimed' novel at a bookshop in Hampstead at 5.30 on a Friday, and by 5.10 Tranter had placed himself on the end of a row of chairs in the centre of the aisle with a glass of free Rioja.

Sedley arrived late, looking flustered. The traffic had been terrible, he explained to the bookshop manager, as he quickly downed a glass of wine before facing the dauntingly full book-shop.

'Hello, Alexander,' said Tranter, sidling in to where the author stood preparing himself behind the travel section. 'How's things? You're a bit late.'

Sedley seemed to gasp and swallow. 'I ... er ... I didn't expect to see you here. You know ... A ... er, a fellow professional, as it were. It's normally just, you know, readers.'

'Oh no, I really wanted to drop in. I only live just up the road.' The A1 anyway, he thought.

The strangest thing that Tranter had discovered over the years was that if at a party or a literary festival you accosted someone whose work you had slagged off in print, he didn't punch your nose or pour his drink over you. On the contrary, he always wanted to be your friend. Presumably he felt that by kneeing you in the groin he might lose face; and for these 'poor saps', keeping face, or trying to recover what he'd tried to strip them of in print, was all that mattered.

'Anyway, good luck,' said Tranter and went back to his position in the aisle.

Sedley went to the lectern and began nervously, with an explanation of why he wrote and how he had come to write
A Winter Crossing
in particular.

Tranter began to yawn, aware that he was in Sedley's eyeline. Then Sedley began to read in his posh, slightly tremulous voice, a description of his relationship with his stern father or something. Tranter raised an incredulous eyebrow and looked round the audience to enlist their fellow feeling. This chap had to be joking, didn't he?

Sedley took an admiring question from a sturdy woman in a bobble hat, then launched into a 'party scene' in which the blood-less hero proved unaccountably attractive to some willowy girl.

During this sequence, Tranter upped the volume of his yawns so that they became more like groans of incredulity. Half the audience turned to look at him and he noticed Sedley's eyes also lift from the page. There was an embarrassing hiatus when he tried to find his place again. As he resumed his reading, Tranter glanced round again and this time spread both his arms out wide in a gesture of 'I mean, come on, what
is
this already?' There was a slight answering titter from behind, and the reddening Sedley once again glanced up from his book.

He took another softball question from someone Tranter assumed to be a plant from the publicity department of his publisher, and then with a very solemn look began to read the passage in which his alter ego was jilted by the willowy girl. Tranter remembered the sequence from the book, but it was only now that Sedley was reading it that he saw that it was supposed to be emotional - 'moving', perhaps.

Leaning back in his chair, he let out the loudest yet of his yawns - a sort of roar. Then he flung his arms wide and looked all round him, making urgent gestures at his wristwatch, as though to suggest that some people had jobs to go to, lives to live, thanks very much, rather than listen to any more of this.

Then he pushed his chair back so that its feet squealed on the wooden floor, stood up and walked slowly down the aisle to the doors onto the street. He pushed them open violently and allowed them to swing unchecked behind him, allowing in the greatest possible noise of rush-hour taxis and lorries as they laboured up Rosslyn Hill.

John Veals was on the Tube, going home, thinking with some surprise about how dismissive he had been that morning in his talk with Simon Wetherby about 'Moregain Sucks' and 'Goldbag Lunch'. He had once loved banking. After ten years trading futures, he'd been headhunted, in 1990, by a New York investment bank that viewed itself as the smartest on the planet and had statistics to support its claim. Others of the big banks might dispute the title; Veals did not, and he felt the time was right to move.

The American brokerage for whom he had been selling futures in London had had a rogue trader and had called in management consultants. In the New York office, young men in rimless spectacles rose unspeaking in the bank of elevators that lay beyond the security gates. Their pale faces and watery eyes reflected their hours of study; box after box of paper documents were wheeled into stripped offices by porters dressed like the old Red Caps on the Chattanooga Express. Veals had been glad to leave.

Like everyone else who worked there, he referred to his new employer simply as 'the Bank'. Started by three Latvian Jewish refugees in 1885, it had in its early days brought together investors and capital, enabling businesses to grow and new merchant ventures to be undertaken; but by the time John Veals joined it in 1990 it had become, in all but name, a hedge fund that thrived by trading its own capital. Veals was slightly contrarian at this time in that he still believed the client had an important role. And the function of the client in Veals's view was a simple one: to provide a flow of information on which the Bank could more efficiently trade its own money.

In theory, Chinese walls were intended to separate those trading on behalf of the bank from those acting for clients, and this usually worked. While one arm of the Bank was underwriting a rights issue for a cash-strapped company, the 'prop' desk was short-selling the same company. But the rights issue was public knowledge and no one had had to breach a confidence; it was simply considered by some outsiders to be 'distasteful'. No one at the Bank cared about 'taste'.

At other times the Chinese walls were too thin. Veals and everyone else at the Bank knew that if two men met for a drink after work it was impossible to police everything that was said. It was laughable, really, Veals thought: it was too easy. On the other hand, it was against the law, or against the SEC rules. The fact that everyone knew what went on didn't mean to say that it was all right, that it was risk-free, and Veals preferred at this stage of his career to take his edge in a way that was, in the jargon of the Bank, completely kosher.

His first job at the Bank, on the energy desk, coincided with the time that many East European and African governments were denationalising their energy supplies. The fledgling private organisations that emerged all wanted to buy protection against future price fluctuations. They could do so on an open exchange, but Veals preferred to steer them towards the 'over the counter' method, where deals were made privately, between consenting adults.

He loved it. It was like playing poker with a guy whose hand was all face up on the table. With these ingenus, Veals had found an edge again, but more valuable than anything he'd enjoyed on the market floor. On listed markets there were algorithmic trading engines that kept prices boringly close to fair value at all times; but over the counter, he could act like a tailor's master cutter, providing for Messrs Mbungwe and Radninski a bespoke product so complex and precise that they had no idea of whether or not it was fair.

At the peak it seemed that every day would bring a new wide-bodied jet full of clients to New York, serious men taking their first uncertain steps in the capitalist world. After taking their money, Veals taxied them, with Steve Godley to do the small talk, to lengthy dinners at overpriced midtown restaurants and afterwards provided hookers. These men were desperate for the Bank's expertise; its name alone was a guarantee of financial sophistication and power: they wanted to be able to take it home and show their bosses and their governments. They took off from Kennedy on the Saturday night and went back to their countries with a smile on their faces, dreamily grateful to have been shafted by such an august name.

In his own mind, Veals wasn't really trading CDS's or other fancy options: he was trading Polish credulity; he was trading Czech naivety; he was trading stupidity.

Yet still he was not quite satisfied. It was like going to one of the famous bankers' whorehouses in Geneva and finding the prime hookers, the prettiest girls from Prague and Vilnius, all bent over naked in a row for the visiting fund managers. Veals yearned for something with a bit more challenge and a bit more edge.

In London, in the second part of the 1990s, the Bank asked Veals to concern himself with the question of debt, and Veals responded enthusiastically. Debt could be traded as bonds, on an exchange, but bank debt was not subject to insider trading rules. One of the tasks of Veals's department was to raise money that was not seen by the credit rating agencies as debt, and to achieve this they invented new instruments, with deceptively sunny or simple-sounding names. Who wouldn't want to buy a Fiesta or a High Tider? ('Tider' stood for Tertiary Interest Deposit-Enabled Revenue. 'High' referred, in an extremely private joke between Veals and Godley, to the Bank's margin. 'Still a fucking debt, though,' as Veals admitted to Godley.)

Later, they immortalised the private joke in the name of their hedge fund, High Level Capital. 'Twenty fucking per cent of the client upside, plus two per cent management fee,' said Veals. 'The industry norm! What an industry! What's Latin for twenty fucking per cent? We should put it as the motto on our coat of arms.'
Viginti copulantes per centum
. Godley looked it up, but didn't send it to the printer.

Then they decided to go for three and thirty anyway. It showed they meant business.

The compliance regime in the Bank emphatically met the modern requirements. What this meant in reality was one hour a year training, largely concerned with money-laundering pre-cautions similar to those used by a high-street clerk when taking on a new customer: photocopy of passport and recent utility bill. Veals had once sat a compliance 'exam' in which the first question was 'In what year did the Singapore Stock Exchange open?' He and others at his level were required to go on a further one-day course each year in a country house hotel. After they'd signed the register, most of tHe'students' spent the morning trading or e-mailing as usual on their mobile devices. Veals liked to take bets on his own arithmetical prowess. He would bet one of the young tigers that he could get an answer to a complex sum before his opponent with the palmtop computer and made thousands this way in quiet moments.

In his bright, clean office in Pfaffikon, Kieran Duffy had had a long day. He was a man of strong carnal appetites and a naturally short attention span; for many years his weekends in New York had involved Long Island, much golf, some cocaine, French wine and as many girls as he could manage without alienating Mrs Duffy.

When a large trade was on, however, Duffy could think himself into a kind of trance, in which he would stay for as long as it took. After a vigorous morning encounter with his Italian girlfriend Marcella, he showered, dressed, told her he might not be back till the following day and drove his blue German sports car at speed over the freezing roads to Pfaffikon. He had told his trading assistant and his secretary the night before to be at work by eight, and when he opened the office door he could smell espresso and croissants.

He fired up the four large flat screens at his desk and rubbed his hands.

The markets opened at nine, Swiss time, and he spent the morning on the phone to the main option market-makers in the London banks. One by one, the bids and the offers came back to him, and one by one Kieran Duffy agreed the transactions, over the counter, by a simple phone call. After each trade was agreed he wrote a ticket and gave it to his assistant, a tall, elegant Englishwoman called Victoria Gilpin, who entered it via computer into High Level's back office and risk systems.

As Victoria went to work (she had an old-fashioned touch-typist's style in which the wrists were static and only the long fingers moved quietly over the keys), Duffy received in turn: an e-mail request for confirmation from each bank he had traded with; a notification from High Level's prime broker in London (the shiniest American investment bank) that each trade had been accepted on their books; and an adjustment to his own on-screen trading position. This figure was made up from a constant recalculation of all High Level's many positions. Because of the size of the trades he had done in the course of the morning the slightest variation in ARB's share price was causing huge movements in his own trading figures. It was exciting.

At noon he had a conversation about risk limitation with Teddy Robinson, the deceptively relaxed Californian who looked after most of High Level's business at the prime brokerage in London. Then, after a tomato sandwich on rye bread at his desk at one o'clock, Duffy turned his attention to gilts: loans to the British government, in return for which it issued 'gilt-edged', or guaran-teed, bonds. If British banks got into trouble to the extent that John Veals believed they would, the government would have to borrow huge sums of money to refinance them and the tradable value of British debt would consequently fall to sub-Italian levels.