The Fear Index (11 page)

QUARRY’S INVITEES BEGAN to arrive just after ten, the first pair – a fifty-six-year-old Genevese, Etienne Mussard, and his younger sister Clarisse – turning up on a bus. ‘They’ll be early,’ Quarry had warned Hoffmann. ‘They’re always early for everything.’ Dowdily dressed, they were both unmarried and lived together in a small three-bedroomed apartment in the suburb of Lancy that they had inherited from their parents. They did not drive. They took no holidays. They rarely dined in restaurants. Quarry estimated M. Mussard’s personal wealth at approximately seven hundred million euros, and Mme Mussard’s at five hundred and fifty million. Their mother’s grandfather, Robert Fazy, had owned a private bank, which had been sold in the 1980s following a scandal involving Jewish assets seized by the Nazis and deposited with Fazy et Cie during the Second World War. They brought with them their family attorney, Dr Max-Albert Gallant, whose firm conveniently also handled the legal affairs of Hoffmann Investment Technologies. It was through Gallant that Quarry had managed to obtain an introduction to the Mussards. ‘They treat me like a son,’ said Quarry. ‘They’re unbelievably rude and do nothing but complain.’

This drab couple was followed closely by perhaps the most exotic of Hoffmann’s clients, Elmira Gulzhan, the thirty-eight-year-old daughter of the President of Azakhstan. Resident in Paris and a graduate of INSEAD in Fontainebleau, Elmira was responsible for administering the Gulzhan family holdings overseas, estimated by the CIA in 2009 to be worth approximately $19 billion. Quarry had contrived to meet her on a skiing party in Val d’Isere. The Gulzhans presently had $120 million invested in the hedge fund – a stake Quarry hoped to persuade her at least to double. He had also made friends on the slopes with her long-term lover, François de Gombart-Tonnelle, a Parisian lawyer, who was at her side today. She emerged from her bulletproof Mercedes wearing an emerald silk frock coat with matching head scarf draped lightly over her helmet of glossy black hair. Quarry was waiting in the lobby to greet her. ‘Be not fooled,’ he had warned Hoffmann. ‘She may look like she’s off to the races but she could hold down a job at Goldman any day of the week.
And
she can arrange for her daddy to have your fingernails torn out.’

Next to roll up, sharing a limousine from the Hotel Président Wilson on the other side of the lake, were a couple of Americans who had flown over from New York especially for the presentation. Ezra Klein was chief analyst for the Winter Bay Trust, a $14 billion fund-of-funds which, in the words of its prospectus, ‘aims to flatten out risk while achieving high returns by investing in a diverse array of managed portfolios rather than individual bonds or equities’. Klein had a reputation for being super-bright, enhanced by his habit of talking at a rate of six words per second (he had once been timed surreptitiously by his bewildered subordinates), roughly twice as fast as normal human speech, and by the fact that every third word seemed to be an acronym or piece of financial jargon. ‘Ezra’s on the spectrum,’ said Quarry. ‘No wife, no kids, no sexual organs of any kind, as far as I can tell. Winter Bay could be good for another hundred million. We’ll have to see.’

Beside him, not even pretending to listen to Klein’s unintelligible jabber, was a bulky figure in his fifties in full Wall Street dress uniform of black three-piece suit and red-and-white striped tie. This was Bill Easterbrook of the US banking conglomerate AmCor. ‘You’ve met Bill before,’ Quarry had warned Hoffmann. ‘Remember him? He’s the dinosaur who looks as if he’s just stepped out of an Oliver Stone movie. Since you last saw him, he’s been spun off into a separate entity called AmCor Alternative Investments, which is basically just an accounting trick to keep the regulators happy.’ Quarry had himself worked for AmCor in London for a decade, and he and Easterbrook went way back – ‘way, way back’, as he dreamily put it: too far to recall, he implied, through the haze of the years – all the way back to the coke-and-call-girl glory days of the 1990s. When Quarry had left AmCor to set up with Hoffmann, Easterbrook had passed them their first clients in return for commission. Now AmCor Alternative was Hoffmann’s biggest investor, with close to $1 billion under management. He was another attendee whom Quarry took the trouble to meet personally in the lobby.

And so they all came: twenty-seven-year-old Amschel Herxheimer of the Herxheimer banking and trading dynasty, whose sister had been at Oxford with Quarry, and who was being groomed to take over the family’s two-hundred-year-old private bank; dull Iain Mould of what had once been an even duller Fife building society, until it had taken itself public at the beginning of the century and, in the space of three years, run up debts equivalent to half the gross domestic product of Scotland, necessitating a takeover by the British government; the billionaire Mieczyslaw Łukasiński, a former mathematics professor and leader of the Polish Communist Youth Union, who now owned eastern Europe’s third-largest insurance company; and finally two Chinese entrepreneurs, Liwei Xu and Qi Zhang, representing a Shanghai-based investment bank, who arrived with no fewer than six dark-suited associates, whom they insisted were lawyers but who Quarry was fairly sure were computer experts, come to inspect Hoffmann’s cyber-security – after a furiously polite stand-off the ‘lawyers’ reluctantly agreed to leave.

Not one existing investor whom Quarry had invited declined the invitation. ‘They’re coming for two reasons,’ he had explained to Hoffmann. ‘First, because over three years, even as the financial markets have tanked, we’ve returned them a profit of eighty-three per cent and I defy anyone to find any hedge fund anywhere that has produced such consistent alpha – I mean, they must be wondering just what the hell it is we’ve got going on here, yet we’ve refused to take a single extra cent in investment.’

‘And what’s the second reason they’re coming?’

‘Oh, don’t be so modest.’

‘I don’t follow.’

‘It’s
you
, you daft bugger. They want to take a look at
you
. They want to discover what you’ve been up to. You’re becoming a legend and they want to touch the hem of your garment, just to see if their fingers turn to gold.’

HOFFMANN WAS WOKEN by Marie-Claude.

‘Dr Hoffmann?’ She shook his shoulder gently. ‘Dr Hoffmann? Mr Quarry says to tell you they are waiting for you in the boardroom.’

He had been dreaming vividly, but when he opened his eyes the images vanished like bursting bubbles. For a moment his assistant’s face bending over him reminded him of his mother’s. She had the same grey-green eyes, the same prominent nose, the same anxious and intelligent expression. ‘Thanks,’ he said, sitting up. ‘Tell him I’ll be there in a minute,’ and then he added impulsively, ‘I’m sorry about your husband. I get’ – he twirled his hand helplessly – ‘distracted.’

‘That’s quite all right. Thank you.’

There was a washroom across the passage from his office. He ran the cold tap and cupped his hands beneath it. He splashed his face again and again, flailing his flesh with the icy water. He had no time to shave. The skin on his chin and around his mouth, normally bland and smooth, felt as bristly and textured as an animal’s. It was a curious fact – no doubt an irrational swing of mood brought on by his injury – but he was beginning to feel exuberant. He had survived an encounter with death – exhilarating in itself – and now he had a boardroom full of supplicants waiting, in Hugo’s words, to touch his hem, in the hope that his genius for making money would rub off on them. The rich of the earth had bestirred themselves from their yachts and pools and racetracks, from the dealing rooms of Manhattan and the counting houses of Shanghai, and had gathered together in Switzerland to listen to Dr Alexander Hoffmann, the legendary – Hugo’s word again – creator of Hoffmann Investment Technologies, preach his vision of the future. And what a story he had to tell! What a gospel he had to preach!

With such thoughts surging through his damaged head, Hoffmann dried his face, pulled back his shoulders and headed off to the boardroom. As he passed across the trading floor, the lithe figure of Ganapathi Rajamani, the company’s chief risk officer, moved smoothly to intercept him, but Hoffmann waved him out of the way: whatever his problem was, it would have to wait.

6

No doubt wealth when very great tends to convert men into useless drones, but their number is never large; and some degree of elimination here occurs, for we daily see rich men, who happen to be fools or profligate, squandering away their wealth
.

CHARLES DARWIN,
The Descent of Man
(1871)

THE BOARDROOM HAD the same corporate impersonality – the same soundproofed glass walls and floor-to-ceiling venetian blinds – as the managers’ offices. A giant blank screen for teleconferencing took up most of the end wall, looking down on to a big oval table of pale Scandinavian wood. As Hoffmann entered the room, all but one of the table’s eighteen chairs was occupied either by the principals or their advisers; the only spare place was next to Quarry at its head. Quarry’s gaze followed his progress round the edge of the room with evident relief. ‘Here he is at last,’ he said, ‘Dr Alexander Hoffmann, ladies and gentlemen, the president of Hoffmann Investment Technologies. As you can see, his brain’s so big we’ve had to let out his head to give it some breathing space. Sorry, Alex, only joking. I’m afraid he took a bit of a knock, hence the stitches, but he’s fine now, aren’t you?’

They all stared. Those nearest to Hoffmann twisted in their seats to look up at him. But Hoffmann, hot with embarrassment, avoided eye contact. He took his position next to Quarry, folded his hands on the table in front of him, and stared fixedly at his interlaced fingers. He felt Quarry’s hand grasp his shoulder, the weight increasing as the Englishman rose to his feet.

‘Right then, we can at last get started. So – welcome, friends, to Geneva. It’s almost eight years since Alex and I set up shop together, using his intelligence and my looks, to create a very special kind of investment fund, based exclusively on algorithmic trading. We started with just over a hundred million dollars in assets under management, a big chunk of it courtesy of my old friend over there, Bill Easterbrook, of AmCor – welcome, Bill. We made a profit that first year, and we’ve gone on making a profit every year, which is why we are now one hundred times larger than when we started, with AUM of ten billion dollars.

‘I’m not going to boast about our track record. I hope I don’t need to. You all get the quarterly statements and you know what we’ve achieved together. I’ll just give you one statistic. On the ninth of October 2007, the Dow Jones Industrial Average closed at 14,164. Last night – I checked it before I left my office – the Dow closed at 10,866. That represents a loss over more than two and a half years of almost one quarter. Imagine that! All those poor saps with their retirement plans and their tracker bonds have lost about twenty-five per cent of their investment. But
you
, by placing your trust in
us
over the same period, have seen your net asset value increase by eighty-three per cent. Ladies and gentlemen, I think you’ll agree that bringing your money to us was a pretty smart thing to have done.’