The First Billion (9 page)

“You’re right, sir. We have only nine years behind us. I hope many more will follow.”

“I am sure of it. Absolutely positive,” Kirov declared collegially, but the next moment he was wincing, lowering his eyes. The reassuring hand returned to its owner’s armrest. “But so much is at risk. It is a critical moment for my country. For so long, we have been held back, our heads pressed beneath the water. Now that we are free, I fear we are terribly greedy. We want to suck in great mouthfuls of this oxygen we call liberty. We claim democracy as ours. We crave progress. Personal progress. Progress measured on the human scale. A phone for every house. Running water. Showers that function. Toilets that flush. Proper medical care. Hospitals stocked with adequate antibiotics, surgical dressings, and sufficient blood. We demand the latest technology.

“You see, technology is our lifeline to the West. We cannot afford to fall farther behind. The Russian people are smart and curious. They are voracious in their hunger for knowledge. We are not a nation of peasants. We are a nation of Ph.D.’s, of scientists, of doctors, and businessmen. Every new PC brought into an Eastern European household is a soul saved from our autocratic past. Every home that logs onto Red Star has a window into the future. And once they see it, they will not let go.” Kirov leaned closer, his eyes sparkling with hope. “In the past, weapons and ignorance kept East and West apart. But the arms race is finished. It is time technology and the quest for knowledge bring us together. The race to advance humankind has begun, and its progress will be measured in computers, not missiles. Over time we will evolve into a single empire, a democratic union of all peoples. . . .” Abruptly, Kirov stopped. He was breathless, and a sheen of perspiration clung to his forehead. His forgotten cigarette had burned down to his fingertips, a two-inch section of ash drooping precariously toward the carpet.

Gavallan found he was breathless, too. Kirov had spoken into his heart. He had addressed all his unsatisfied selves: the conscientious benefactor, the penitent sinner, the advocate of change happiest when striving. He had touched not only his dreams but his desire to dream, which was even more important. In a world scarred with cynicism, Kirov dared to have ideals.

The Russian fixed him with a challenging gaze. “Do you believe, Mr. Gavallan?”

“Yes,” said Gavallan, without hesitation. “I do.”

Kirov said nothing for a few seconds, his black eyes burning into Gavallan. He had the gift of silence, of dignifying thought for thought’s sake. Just then, he noticed the cigarette and rushed to put it out. He smiled, embarrassed, and the evangelist became once more the man. “I’m sorry to say you have put me in a difficult position,” he said. “I have very much enjoyed our chat, but I have a late dinner with the president of one of those big names we Russians so like. He has flown in from New York to see me. I think he will promise me the moon if I ask him.”

Gavallan sighed as he scooted toward the edge of the chair. Pitch over. Business lost. Next. Despite himself, he acknowledged a jab of disappointment and had to sit straighter to keep his shoulders from sagging. He knew he had had no right to count on winning the business, but he truly believed that Black Jet could do the best job for Kirov.

“Don’t let me keep you,” he said. “I’ll be in the office tomorrow if we might answer any questions for you. If you have a free hour, I’d enjoy showing you around the firm.” He rose. “But, Mr. Kirov, I want you to know one thing.”

“Yes?”

“I do believe.”

Kirov rose from the chair, but a moment later sank back down into its cushioned folds, motioning Gavallan to sit. “I will make you proposition, Mr. Gavallan. We are close to finishing the buildout of our central Russian operations. Kiev, Minsk. These are large cities; maybe a hundred thousand subscribers each. Unfortunately, we need fifty million dollars to complete the construction.”

“Fifty million?”

“I am thinking a loan to be repaid from the proceeds of the IPO. It is uncommon?”

“Not at all,” said Gavallan, unable to keep the excitement from his voice. Part of him wanted to jump at the chance, another to take a step back. A fifty-million-dollar loan would exhaust Black Jet’s resources and leave it perilously exposed to the market’s vagaries. It was a tremendous risk. Yet, the fees the deal would bring promised to be tremendous, more than anything Black Jet had ever earned on a single transaction. Add to that the interest on the loan, and of course the prestige . . . My God, Gavallan said to himself, the prestige alone would do wonders for the company.

He looked at Kirov, doing his best to size him up. The personality contest went both ways. The man was controlling, vain, and at least a little bit of an egomaniac. But his conceit was his strength. How else could he muster the energy, the dedication, the tenacity to build a company like Mercury? Who but the vainest sort of individual would dare talk of aiding his country in such grandiose terms?

Gavallan turned his thoughts to the bigshot flying in from the Big Apple on his big Lear or big Cessna or big Gulfstream. Inside, he smiled. It was a delinquent’s smile, an outsider’s smile, and it reveled in the pique and fury and disbelief that the overconfident executive would feel when he learned that Black Jet had won the two-billion-dollar mandate to bring Mercury Broadband public. Nothing came easier to a Texas farmboy than spitting in the eye of his betters.

Maybe the Russians weren’t the only ones with an inferiority complex.

“Tell you what,” said Gavallan. “Cancel that dinner engagement. Let Black Jet take you public and I’ll write you a check first thing in the morning for fifty million dollars. Prime plus seven to be repaid out of the proceeds of the IPO.” He stuck out his hand.

Konstantin Kirov hesitated, searching Gavallan’s eyes. “I can trust you with my baby? It is not just for me, but for my Russia, too.”

“Yes, you can trust me.”

“Prime plus five and we repay within thirty days.”

“No,” said Gavallan, tasting the deal, wanting it more than anything, but never so much as to make a poor agreement. “It has to come from the proceeds.”

Giving a fateful shrug, Kirov rose laboriously from his chair and grasped Gavallan’s hand. “Yes, we shall work together. You are a believer. I see it in your eyes.” He laughed richly. “I tell you something. Between us, I never like BMW anyway. But you must promise to call me Konstantin. In Russia, business is family.”

Gavallan stood, and though the handshake was awkward and formal, he found himself laughing with his new client, new friend, and new family member, Konstantin Romanovich Kirov.

9

They’d moved into a conference room down the hall. A “working room,” they called it, and it was fitted for the late nights and early mornings that claimed so large a part of an investment banker’s existence. Besides the glass table and low-backed chairs, there was a refrigerator stocked with Coke, Mountain Dew, Red Bull, and, as if an afterthought in their caffeinated universe, Evian. One cupboard held chips, cookies, and candy bars, and another, rumor had it, fresh fruit—though Gavallan had never seen anyone munching so much as a grape. Next door there was a pantry with a microwave oven, a freezer, and a coffeemaker. A paper plate bearing the remains of Gavallan’s sausage and egg burrito sat half in, half out of the trash can. A pall of cigarette smoke hovered below the ceiling. Let mortals worry about ulcers, colitis, and quadruple bypasses. They weren’t subject to daily deadlines that could cost a firm tens of millions of dollars and their own paychecks that extra, all-important zero.

Gavallan leaned back in his chair, balancing on its rear legs. He’d already gone over the Private Eye-PO’s most recent message and its accusations of misrepresentation and fraud. Reluctantly, he’d let everyone in on Grafton Byrnes’s secret visit to Moscow and his failure thus far to report in. He did not, however, feel it necessary to tell them about Byrnes’s early checkout.

“Listen, people, our back’s up against the wall here,” he said. “We need to take a close look at our deal books and see if we can find any holes that correspond to the areas the Private Eye-PO is attacking—namely, the Moscow network operations center and Mercury’s hardware purchasing. I don’t think we will, but I’m not going to my grave like the captain of the
Titanic
saying, ‘She’s unsinkable.’ No one’s leaving this room until we decide just what the heck we’re going to do.
Comprende?
”

His eyes moved from face to face, waiting for someone to pick up the baton. Bruce Jay Tustin, Tony Llewellyn-Davies, Sam Tannenbaum—or “Shirley Temple,” as Tustin had christened the blond, ponytailed lawyer—and Meg Kratzer. He was waiting for someone to share his outrage, but outrage, he knew, implied responsibility, and the Mercury deal had been his and his alone from the beginning. Finally, Meg Kratzer chimed in—Meg, for whom silence was an accusation of laziness.

“Look,” she said. “We handled all customer and managerial questions in-house. If something weren’t kosher about Mercury’s Moscow operations, we would have heard about it from one of their customers. Financial, accounting, and operational issues were completed by Silber, Goldi, and Grimm in Geneva. If there were a problem with Mercury’s physical plant and inventory, they would have found it—guaranteed! I don’t know a bigger tight-ass in the business.”

“I do,” said Tustin, rolling his eyes and lofting a thumb in Meg’s direction.

“I appreciate the compliment, Mr. Tustin,” she responded. “It’s hard to be more thorough than a Swiss with a microscope and a mandate to inspect. Coming from someone who’s such a renowned tight-ass himself, that’s very high praise indeed. I will thank you, however, to keep that greasy kid stuff in which you drown your last three remaining hairs off my deal books. I needed a whole bottle of Mr. Clean to get it off last time.”

“Very funny,” retorted Tustin, above the nervous laughter. “Just so you know, it’s
pommade
. That’s French, for ‘classy.’ ”

Meg Kratzer circled the table, passing out a thick red three-ring notebook to everyone present. She was a vital, animated woman, short, stocky, and neatly attired in an olive Valentino two-piece. Her red hair was pulled back into a severe bun. Her blue eyes glimmered with healthy determination. At age sixty-three, she was a mother of four, a grandmother of ten, and self-appointed godmother to Jett Gavallan. She’d put in twenty-five years at a well-known securities house, only to be told when she turned fifty that her shelf life had expired. The termination letter called her “irascible, opinionated, and obstinate,” and said she was “unable to meet the rapidly evolving dictates of the financial arena.”

Gavallan saw those same qualities as forceful, experienced, and demanding, and found her as up-to-the-minute on all matters financial as the most arrogant graduate of Harvard Business School. She was also articulate, responsible, and possessed of a wicked sense of humor.

As the firm’s head of investment banking, Meg had supervised the due diligence performed on Mercury. Its being an initial public offering, this involved the systematic deconstruction and analysis of the client company. Balance sheets were audited; bank balances verified; company officers interviewed (and often investigated); clients telephoned and questioned about their relationship with said company; corporate strategies parsed; and physical assets inventoried down to the last pencil and paper clip. It was a strip search really. With rubber glove and all.

Gavallan pulled the deal book closer, glancing at the Mercury name and logo that adorned the cover. The notebook had to weigh five pounds, and inside it was all the information Meg and her team had collected as part of their due diligence on Mercury.

“Let’s start with clients,” he said, flipping the notebook open. “Section one.”

Section one contained single-sheet summaries of over 150 telephone conversations conducted with Mercury’s clients in the Czech Republic, Ukraine, Germany, and Russia. Leafing through the pages, he kept a sharp eye out for those customers based in Moscow. He thumbed past the Czech Ministry of Communication, the Kiev Education Committee, Alpha Bank (Minsk branch office), the Dresden Youth League. All declared themselves satisfied with Mercury’s product and services. Finally, he arrived in Moscow: the Moscow Municipal Transportation Service, the Moscow State University department of telecommunications, NTV (one of Moscow’s larger television networks). Again, all were satisfied. There were more: Romanov Bank, the Greater Russian Health and Casualty Insurance Company, Nezhdanov Construction, Imperial Aluminum Smelting and Manufacturing.

It’s bullshit, Gavallan thought, perusing the summaries. Everything the Private Eye-PO had said is patently false. Unadulterated garbage. And again, he wondered who the man could be, why he was trying to savage Mercury, and why he was making the issue so personal, repeatedly mentioning Gavallan’s pride.

When they’d finished with section one, Meg directed them to section three, titled “Company Infrastructure,” which contained questionnaires filled out by Mercury’s management. In an expectant silence, Gavallan and the others read one job description after another, all dictated by the eager and capable executives who worked at Mercury Broadband. Finally, he came upon one provided by a man he knew, Václav Panič, Mercury’s CTO—chief technical officer—of European operations, a Czech-born doctor of electrical engineering, formerly a professor of computer science at Brno University.

Gavallan had toured Mercury’s Prague office in Panič’s company. In his mind, he saw the cool marble floors, the legions of busy workers glued to their workstations, the aisles of servers, routers, and switches housed in trim glass cabinetry. One wall in the office’s conference room displayed a map of Mercury’s European operations and highlighted its expansion plans. Red fairy lamps depicted network operations centers, white lines denoted the cable or satellite connections, blue lights indicated cities with over twenty thousand subscribers, and green lights showed areas where service was to be offered within twenty-four months. Mercury was driving west to Berlin, south to Budapest, north to the Baltic republics, and east to the oil and mining boomtowns of Siberia. Standing there, Gavallan had felt the company’s pulse as surely as if it were his own.

“There’s not a scrap in here,” said Tony Llewellyn-Davies. “Mercury’s as clean as a whistle. Bravo, Meg. Well done, Jett. There’s absolutely nothing to worry about, at least nothing we could see.”

“That doesn’t excuse us if we’re wrong,” cautioned Gavallan. “Our name’s still on the prospectus.”

“Not my name, Jett,” Bruce Jay Tustin pointed out frankly. “She goes south, you’re on your own.”

“Thank you, Bruce. You’re comforting as usual.”

“My pleasure,” replied Tustin. “Naturally, I do expect to get your office while you’re doing your time in the pokey—oh, excuse me, I mean the men’s correctional facility. I’ve always loved the view.”

“Please, Bruce,” cut in Tony Llewellyn-Davies, his cheeks pink with anger. “You’re being exceptionally rude, even for yourself.” He offered Gavallan a look of perfect exasperation, then turned back to Tustin. “You know damned well we agreed I was to get the office.”

“No, me,” said Meg. “The office is mine. Age before beauty, gents.”

Everyone laughed, and the tension in the room was cut by half.

“Thanks, fellas. Thanks, lady,” said Gavallan. “I appreciate your efforts. Now if we can finish up, I believe we’re scheduled to talk to Silber, Goldi, and Grimm.”

Meg Kratzer punched some numbers on the phone. “I’ve got Jean-Jacques Pillonel, their MD, on conference when we’re ready”—“MD” in this case meaning “managing director.”

Gavallan reached a hand over the notebook and activated the speakerphone. “Jean-Jacques, it’s Jett Gavallan. Good morning.”

“Bonjour, Jett. Ça va?”

“We’ve got a minor problem over here. Just a headache, I’m sure. Meg tells me she’s gone over it with you. Can you help?”

“Jett, this is nonsense. I read this web page already. Mercury is here in Geneva with us. We spent a week camping in their offices. Certainly there’s no question of revenues; we’ve got the bank statements from UBS and Credit Suisse.”

“Jean-Jacques, no one is questioning the revenues. It’s a matter of the physical assets.” Gavallan leaned over to Meg Kratzer and whispered, “They handled that too, right?” She nodded, and he said into the speakerphone, “Who did the on-site inventory?”

“Mostly, we hired independent specialists,” Pillonel replied. “Systems engineers, information technology guys, you know. I supervised the project myself. A favor for my American friends. I know this is a big deal for you.”

“Thank you, Jean-Jacques,” said Meg, as Gavallan and everyone else at the table rolled their eyes.

“Jett, listen, no worries, my friend. We checked Mercury up and down. We even look in their shorts and count their pubics, you know. Forget this guy on the Net.
Je te dis, ça va.
”

Tustin lobbed an arm across the table and punched the mute button. “
Ça va, ça va.
Same thing the fuckin’ frogs said about the Maginot Line.
It ees inveencible!
Look how that turned out.”

“He’s Swiss, Bruce,” Meg pointed out.

Tustin shrugged. “Swiss. French. Whatever. A frog’s a frog.”

The room tittered nervously and Tustin turned off the mute.

“And Moscow?” asked Gavallan. “Who did you send?”

“I went myself.”

“You?” It was odd, not to say completely out of the ordinary, for a senior partner of an internationally prominent accounting firm to hole up in a client’s offices and physically inventory its assets. That was a job reserved for “newbies.”

“With my associates, of course,” Pillonel added quickly. “We have a new office in Moscow, so it was a side trip. Like I say, a favor.”

“And you saw all their operations, including the network operations center?”

Suddenly the Swiss adopted a belligerent tone. “Hey, Jett, we put our signature on the offering memorandum. Last time I checked, our name still meant something—or do you pay just
anybody
two hundred fifty thousand dollars for their help?” The voice regained its diplomatic flavor. “You are worried for nothing. How can Mercury earn so much money without having the equipment to do so? You can’t harvest wheat without a thresher—know what I mean? Mercury is doing a hell of a good job, I tell you. Look at their metrics: over four million hits a day. You know I have an order with you to buy a lot of shares.”

“And we’ll see you get filled,” said Gavallan. “Thank you, Jean-Jacques.
Au revoir.
”

“Au revoir, tout le monde.”

For a moment, there was only silence. The sound of pens tapping the table. Legs crossing. Meg Kratzer lit a cigarette and took pains to direct her smoke toward the ceiling.

There it was, Gavallan told himself. The managing director of Europe’s largest accounting firm had just confirmed that Mercury’s Moscow operations were up and running. Gavallan asked himself why he hadn’t called Jean-Jacques Pillonel in the first place.
Because you can only trust your own,
a cynical voice reminded him.
Because people lie.

More and more, he was certain the Private Eye-PO had to be someone he knew, someone with a personal ax to grind.

“So, are we back at square one,” he asked his colleagues, “or did we just cross the finish line?” Unspoken, but hanging up there near the ceiling with Meg’s cigarette smoke and the lingering scent of his half-eaten burrito, were the words “postpone,” “shelve,” and “cancel.”

“Where the hell is Byrnes?” griped Tustin.

“Give him time,” said Llewellyn-Davies. “He’ll get back to us.”

“It’s ten o’clock in Moscow. How much time does he need?”

“Relax, Bruce,” said Meg. “I’ll take Jean-Jacques’s word over the Private Eye-PO’s anytime. I’m sure Graf will only confirm what we already know.”

“Maybe,” said Tustin grudgingly. “But I still want to hear from him.”

So did Gavallan. Every minute that passed without word from Byrnes fueled his worry over his friend’s well-being. Still, he was pleased with the give-and-take of the discussion. If there were any doubts about Mercury, it was best that they surfaced within the confines of the office.

“So, Sam, what’s your call?”

“Tough one.”

Tannenbaum was the firm’s resident bohemian. With his tight jeans, flannel shirt, and flowing blond hair, painstakingly groomed and tied into a ponytail, he looked like a refugee from Big Sur. “We seem to be stuck between believing in ourselves and believing the Private Eye-PO. From what I can gather, Mercury is everything we say it is. You think so. Meg thinks so. Jean-Jacques thinks so. Jupiter Metrix says so. It’s a ‘go deal.’ At the same time, we feel compelled to trust the Private Eye-PO because he’s been accurate in the past.”