Deceived (12 page)

Nick flipped
the light switch. The fluorescent tubes mounted in the ceiling flickered twice
then caught, bathing his office in a harsh white light.

It was five
a.m., early even for Nick, but these first few hours in the morning were his
most efficient of the day, when he could focus on selected projects without the
maddening interruptions that frequented business hours. This morning he had set
aside for the Yünnan Project.

Two stacks of
paper sat on his office desk. The first, the shorter stack of the two, each
page perforated along the left hand side, came from the records department. The
taller stack was from Meg; Nick flipped through it with his thumb. By the look
of things she'd put in some long hours last night
.

Nick stowed his
brief case behind the office door, then left for the coffee machine down the
hall. He returned with two cups, black, a long running ritual, and settled into
his chair
.

He started on
Meg's papers first, laboriously examined the summary of subcontracts she had
previously prepared for Scott. Nothing unusual jumped out at him; frankly, he
had not expected anything to
.

He sent the
last of the first cup of coffee down his throat.

Next came a
table
—
a couple of dozen pages long
—
what he had asked Meg to
construct when they spoke yesterday afternoon. "Meg," he had said,
"I've got maybe fifteen file folders full of construction bids for
hydroelectric dams down in storage. Dams that were built, dams that weren't
built, winning bids, losing bids. Ask Judy to pull the files. I want you to go
through them."

"What am I
looking for?" Meg had asked.

"Itemized
costs. I want to determine if the payments called for under the Yünnan Project
subcontracts are reasonable in comparison to similar projects. Make a table. Yünnan
costs in column one, itemized, other corresponding project costs to its
side."

From the looks
of it, Meg had done a thorough job. He started his review and, simultaneously,
his second cup of coffee.

Nick compared
itemized costs
—
any Yünnan subcontract payment that seemed wildly out of
step with the norm he marked with a paper clip
.

An hour brought
him to the end of the table and the end of coffee number two. Four paper clips
were affixed to the table, each indicated a subcontract that was now, in Nick's
mind, suspect.

Before turning
to the second, shorter stack of documents, the sheets with the perforated
edges, Nick rubbed his eyes. He had started at five-fifteen. It was past seven
now, and the coffee did not seem to be doing the trick. What he needed was a
solid night of sleep, an impossibility since Scott's death. What rest he had managed
was short, fitful, and uneasy. When he had answers he would sleep soundly, not
before.

He stretched
his arms wide, groaned, and started in again. He lifted the first document from
the stack and examined it.

Kautza, Norman
C., and wife Emma. Three late payments on a joint Visa card within the last
year. Credit line of ten thousand dollars. Five other credit cards, three of
which carried a substantial balance. A one hundred and ninety thousand dollar
mortgage. Two outstanding car loans
.

The finances of
an upper middle class American couple living slightly beyond their means with
the help of credit cards, the ballooning balances at eighteen and nineteen
percent hanging over their heads. Nothing of interest.

He turned to the next, squelching a yawn. There were almost three dozen
credit reports to check, and the start of office hours
—
eight o'clock
—
was
quickly approaching.

Meg stood in
front of Nick's desk, bleary-eyed. She must have worked extremely late last
night, Nick thought, to look so tired at ten in the morning
.

"I got
your message," Meg said, anxiously. Nick had left the message at
eight-thirty, asking her to call. "Sorry I got in so late, but
—
"

Nick held up
his hand. "No need to explain." He pointed at the stack of papers on
his desk. "You did a good job."

Meg visibly
relaxed. "Thanks."

"I've made
eleven-thirty reservations on a flight to Pittsburgh, for both of us." Nick
did not ask if her schedule was clear. If it wasn't, she would have to clear it
—
he
needed her
.

"Smith
Pettit's headquarters?"

Nick nodded. "I
called their general counsel earlier. Tom Martin, the CEO, has agreed to make
himself available to us."

The sleep began
to clear from Meg's eyes. "You found something?"

Nick nodded.

"The
payments under some of the subcontracts?" she guessed.

Nick nodded
again. "Four of them seemed way out of line."

Meg allowed
herself a self-congratulatory smile. "I saw that."

"Well you
didn't see this." Nick shot a sheet of paper, its left edge perforated,
across the desk at Meg.

"What is
it?" she asked as she reached for it.

"A credit
report. I had records pull one on each of the subcontractor's key officers
under our blanket subpoena. I'm just guessing, but Scott may have done the same
thing. It would explain why he wanted you to dig up the officers' addresses
—
you
don't want a credit report on John Smith of Main Street if you're investigating
John Smith of Second Avenue."

Meg started to
read from the report. "Andrew McKenzie?" she said, frowning,
obviously unable to place the name.

"President
of Tremont Engineering. One of the subcontractors whose payments seemed out of
line. Not too long ago, McKenzie had at best a spotty credit history. Late
payments, many over ninety days. All sorts of late charges. Then suddenly
things changed. Turned rosy. He started paying everything on time. Bought a new
BMW. Loan went through no problem after he put forty percent down in
cash."

"Wouldn't
a large subcontract from Smith Pettit explain the improvement in his financial
condition?"

"It
would," Nick agreed, "if
the improvement had occurred
after
the subcontract was signed. Interesting thing is, Mr. McKenzie's credit rating
turned around more than four months
prior
to signing the contract. Could
all be on the up and up
…
maybe he got a bank loan, who knows? But an
inflated contract
and
personal enrichment, that calls to mind all sorts
of questions I'd like answered."

"And you
think Smith Pettit has the answers?"

Nick shrugged. "Let's
just say I'm going to throw a few theories at the CEO and see if anything
sticks."

The elevator
opened on a floor to ceiling glass wall, clear except for gold and black
lettering which read, "SMITH PETTIT, Building a Better World since
1848."

Nick strode
purposefully to the double doors set in the center of the glass wall. The doors
were propped open and he passed through to the reception area; Meg followed.

Her eyes jumped
to the burnished wood walls, to the impossibly large Oriental rug, to the
half-dozen oil paintings. Nick remained focused on the receptionist, unwilling
to be awed by his surroundings.

"May I
help you?" the female receptionist, attractive and professionally attired,
asked.

Nick made the
introduction. "Nick Ford and Meg Taylor to see Mr. Morgan."

"Just a
moment, please." The woman picked up the phone and punched in a number. "There's
a Mr. Ford and a Ms. Taylor here to see Mr. Morgan," she said, and then:
"
…
All right, I'll tell them." The woman hung up the phone and
smiled. "Mr. Morgan's secretary will be right out to escort you to his
office. If you'd care to take a seat
…
" She gestured to the waiting
area to her rear.

Nick bypassed
the grouping of four couches
—
the sitting area
—
drawn instead to
the bank of windows. Predictably, the view was tremendous. He could see most of
the western tip of downtown Pittsburgh
—
similar to the tip of Manhattan
though in miniature
—
including Three Rivers Stadium, where the Pittsburgh
Steelers played.

Nick could have
pointed out the stadium and a few of the other sights to Meg, but didn't care
to. He had set the tone on the plane ride by burying himself in documents, and
Meg had soon done the same. They had discussed, and would discuss, business,
nothing more.

Did it
bother him that Meg now seemed to accept this?

A voice pulled
Nick from the window. "Mr. Ford, Ms. Taylor." Nick turned on a
statuesque woman of forty-five or fifty. "Please follow me," she
said.

The woman
escorted them down the hall to Thomas Morgan's office
—
three offices the
size of Carolyn's could have fit inside.

Meg again
seemed taken by the surroundings, while Nick made sure to ignore them. "Good
to see you again, Mr. Morgan," Nick announced in his best bank examiner's
voice, then gestured toward Meg. "This is my associate, Meg Taylor."

"Ms.
Taylor." Morgan shook both their hands, then indicated the man standing to
his right. "And of course, Mr. Ford, you and Harmond are already
acquainted."

Harmond Rhodes,
Smith Pettit's general counsel. He introduced himself to Meg."

"Harmond
would like to sit in on our discussion, if you have no objection," Morgan
said.

"That
would be fine." In truth, Nick would have much preferred to talk to Morgan
without benefit of legal counsel, but the request was more than reasonable.

The four of
them fit easily around an antique oval table.

Rhodes folded
his hands in front of him, cleared his throat, and said, "You expressed a
great deal of urgency when you called this morning."

Nick nodded. "Some
things had come to my attention and I felt dealing with them quickly and
efficiently might be in both our interests."

"Certainly
a quick and judicious disposition of this entire matter has always been Smith
Pettit's priority."

Pat answer, but
Nick gave Rhodes high marks for eloquence. There would be no giveaways today,
not on Rhodes's part, but then Nick didn't intend to direct all his questions
at Rhodes. "Perhaps we can get right to the matter at hand, then," he
said.

"Certainly."

"We'd like
to ask Mr. Morgan about Smith Pettit's contract with Tremont Engineering."
Rhodes and Morgan shared a quick glance at the mention of Tremont. A nervous
glance? Nick couldn't be sure
.

"If you
could be more specific?"

"The
billing records we have show three payments to Tremont totaling four million
seven hundred and eighty-seven thousand dollars, is that correct?"

Rhodes looked
at Morgan, and Morgan glanced upwards, as if doing some quick mental
calculations in his head. After a few seconds Morgan said, "I don't have
the exact figures in front of me, but it sounds like you're in the right
neighborhood."

That Morgan
even knew the name Tremont Engineering off the top of his head, let alone the
approximate payments under its subcontract with Smith Pettit, piqued Nick's
interest. Perhaps Morgan was simply a hands-on CEO with a good memory for
detail. Then again, perhaps Morgan had paid special attention to putting the
details of the Tremont subcontract to memory. If the latter was the case, Nick
had to wonder why.

"And what
services did Tremont provide in return for those payments?" Nick asked.

"Tremont
was to provide the design work for the dam's turbines. Their specifications,
the turbine beds, the
—
"

Nick
interrupted, having focused on one key word. "
Was
to provide the
design work for the turbines? Didn't they?"

Morgan looked
to Rhodes; a short whispered conference followed. "We never received any
designs, no," Morgan said.

"Nothing?"
Nick said.

"No."

During the
exchange, Meg busily flipped through the Tremont subcontract. Having found what
she searched for, she said, "According to your contract with Tremont, the
designs were to have been delivered to you over four months ago."

"As of today
we have received nothing from Tremont," Morgan repeated.

"And yet
you've paid them almost five million dollars?" Nick asked, adopting a
suitably astonished tone.

"That is
correct."

"Do you
expect
to see anything from Tremont in the future?"

Again, Morgan
and Rhodes paired off in a private whispered conference. "Frankly,"
Morgan said after a moment, "at this point, we're pessimistic."

"Then I
assume you have taken steps to enforce the contract."

"What do
you mean?" Rhodes asked.

"Have you
demanded Tremont perform its obligations and produce the designs? Have you
written them letters? Filed a lawsuit?"

Rhodes tapped a
pen on a legal pad; he didn't look to Morgan before answering. "Representatives
of Smith Pettit engaged Andrew McKenzie, the president of Tremont, in a series
of discussions. The net results were
…
let's say less than
encouraging."

Interesting
that
both
the CEO and the general counsel should know so many specifics
concerning Tremont. "You have informed the Chinese of Tremont's lack of
progress?" Nick asked.

Rhodes nodded.

"And their
reaction?"

Rhodes looked
to Morgan, who shrugged slightly while answering. "They seemed
…
unconcerned."
"Unless I'm missing something, without turbine designs, you don't have
turbines, and without turbines, you don't have a hydroelectric dam. How could
they be unconcerned?"

Morgan's head
vibrated quickly left and right. "The construction of the hydroelectric
dams is not in jeopardy, Mr. Ford. In fact, the turbines have already been
manufactured."

"How? Without
designs?"

"Smith
Pettit completed all phases of design work called for by Tremont."

"
You
completed them?"

"We stand
behind the work of our subcontractors," Morgan said proudly. "In this
case we had little choice but to assume their responsibilities."

"So, in
essence," Nick said incredulously, "Tremont was paid almost five
million dollars for nothing."

"That is
the way it turned out, yes."

"And was
that the way it was intended?" Nick countered.

Once more the
two engaged in a private exchange. Then Rhodes said, "Certainly not from
our point. When Tremont didn't perform, we, as you just heard, were forced to
assume the obligation. That's money out of our pocket."

"Five
million out of your pocket?"

"That,"
Rhodes said hesitantly, "would be hard to estimate."

Nick signaled
to Meg, who held up two stapled documents for Morgan and Rhodes to see. Meg
said, "I have here two separate construction bids for hydroelectric dams,
both submitted by Smith Pettit within the last two years. Each bid breaks out
costs for design, including for turbines."

Nick looked at
Morgan. "Do you know how much Smith Pettit bid in these two cases, Mr.
Morgan? For the design of the turbines?"

Morgan's eyes
dropped. "Not off hand."

Meg made a show
of opening and reading from each document in turn. "In the first case,
$2,821,000, in the second
…
$2,758,000.
…
That's a pretty large
disparity: two point seven, two point eight million versus five million
dollars. A factor of almost two."

Sweat appeared
on Morgan's lip.

"Can you
explain the disparity, Mr. Morgan?" Nick asked.

Rhodes laid his
hand on Morgan's forearm. "Tom, don't answer that."

"Do you
have any reason to believe the money you paid to Tremont went into engineering
design?" Nick asked, pressing the offensive.

"We have
no evidence to conclude otherwise, Mr. Ford," Rhodes replied.

Nick then
interlaced his fingers and studied the two men. Neither would match his stare. "I'll
be frank with you, Mr. Morgan, Mr. Rhodes. I think this whole thing stinks. I
think the subcontract with Tremont was grossly overpriced, and I think you had
no reasonable expectation Tremont was going to perform its obligations."

Nick paused for
effect and got it
.

"I'll give
you my theory," he continued, "this looks suspiciously like a
kickback scheme. Simple enough to work out. An arrangement between you and
Tremont. They inflate their charges, pass on a bill to you. The five million
becomes a line item in the bill you present to the Chinese: design work,
Tremont Engineering. The Chinese pay
—
the tab, subsidized by U.S.
dollars, doesn't look quite so high to them. Then Tremont kicks back enough
cash to you to cover your engineering costs and provide a tidy profit. That's
illegal, but hey, so what? Everybody gets rich, everybody stays happy."

"That
never
happened," Morgan insisted.

Rhodes set a
hand on Morgan's arm, quieting him. "Tom," he said, "let me
handle this." Heatedly, he turned on Nick. "We've tried to be
accommodating, Mr. Ford. You asked for a meeting and we made ourselves
available. We thought you had something urgent to discuss, instead you rehash a
bunch of unfounded allegations that lack even the
—
"

"Rehash?"
Nick interrupted, holding up a hand.

"Yes,
rehash. And unless you have something else you'd like to discuss, I think this
meeting is over."

Rehash a
bunch of unfounded allegations?
Nick looked to Meg, then back to Rhodes.
"Mr. Rhodes, I don't remember anyone raising this subject matter with
you previously."

"Then you
might want to improve your lines of communications with your staff, because I
discussed all this with Mr. Johnson over two weeks ago."

Mr. Johnson.
Scott.
Nick inhaled audibly. "Scott Johnson?"

Rhodes nodded.

"He asked
you these same questions two weeks ago?"

Rhodes nodded
again, smugly. "And our answers haven't changed. I suggest you check with
him."

Nick bit his
lip, lost suddenly in thought.

Meg cleared her
throat. She said, "Scott
…
Mr. Johnson
…
is dead. He was
murdered while investigating this case."

Rhodes's
eyebrows jumped; his voice broke. "I'm sorry
…
very sorry. I had no
idea. Forgive me. But certainly you don't think, aren't suggesting, his death
had anything to do with his investigation."

"Actually,"
Meg said, "we think it might."

The answer
shocked Rhodes to silence and raised Nick from his stupor. He stabbed a finger
in Rhodes's direction. "You say you've had this discussion in the past
…
say
Scott Johnson raised, I'm raising, unfounded allegations. Okay, then you
explain why you paid Tremont Engineering almost five million dollars for work
they never accomplished, because I don't see an explanation."

Morgan and
Rhodes sat mutely.

Nick frowned. "You're
hiding something. I know it. And if I need to personally review every receipt,
every account entry, to find what, then that's what I'll do. But let me warn
you, if I find you've held something back we won't just be talking a civil
action. I'll do my best to see each of you in a federal penitentiary."

"Mr. Ford,
I protest," Rhodes said indignantly. "That was uncalled for."

Nick slapped a
hand on the conference table. "You heard Ms. Taylor. My best friend was investigating
this case, and now he's dead. I'll do what I have to to find out why. Feel free
to take that as a threat
—
if I need to be blunt to get my answers, then
I'll be blunt." Nick stood and began to pack his briefcase. It took a
moment before Meg realized she should do the same.

"Mr. Ford
…
,"
Rhodes said anxiously after a short conference with Morgan
.

Nick snapped
his briefcase closed. "Yes."

"Please,
take a seat."

Uncertain
whether to leave or stay, Nick appraised the two men. Finally, he sat down.

"Can I be
candid?" Rhodes asked, arms wide in a sign of surrender.

"It would
be a welcome change."

"Off the
record?"

"If you
mean can Ms. Taylor stop taking notes, sure. She'll set down her pen. But
understand that I don't keep confidences
—
anything you tell me, it's fair
game to use."

Rhodes nodded
reluctantly, then sighed, as if unsure where to start. "
…
All right.
I want you to try and understand what we're faced with when we negotiate a
contract of this sort. The Chinese government approaches us, indicates it would
like to offer us a contract, a huge contract. We're interested, of course, and
start negotiations, then a few conditions pop up. To the Chinese, perquisites
of one sort or another are common place."