Free To Trade

CHAPTER 9

August is always a dead month in the eurobond markets. There are plenty of reasons for this. The Continentals are all on holiday, as are the bureaucrats who work in the government agencies that issue eurobonds. The summer heat in Bahrain and Jeddah dulls even the most hardened Arab's gambling instincts, and many of them travel to London, Paris and Monte Carlo, often to play with chips instead of bonds.

Of course many of the traders and salesmen in London are unmarried, or at least have no children. There is nothing they would like to do less in August than join the screaming families at the beach. But the month is a good time for a rest. There is an unspoken pact not to rock the boat, not to create the volatility that would require us all to spend the month thinking hard about work. The market recharges itself, everyone making plans for what they will do in the first week of September.

Normally, this seasonal pattern irritates me. But this time my mind was on other things, and so I was glad for the cover that August brought.

Specifically, I was thinking about Debbie. And Joe.

It had seemed to me obvious that Joe had lain in wait for Debbie that night, and thrown her into the river. He was there, and he clearly had the capacity to kill. But why did he do it? Even someone like Joe didn't just wander round London murdering his old girlfriends on a whim. He must have had a reason. What could that be?

And then there was the business of the shared taxi taken by Joe and his two friends just after I had seen him leaving the boat. It was possible that his friends were covering for him, but the police believed that they were telling the truth. If the police were right, how did Debbie die?

I didn't believe she just fell into the river by mistake. And I couldn't believe that she killed herself. I refused to believe it. So who else might have wanted Debbie dead?

As I mulled over this problem, my thoughts turned to Piper. Debbie's knowledge of the Bladenham Hall case was of real concern to him. He did not sound like the most upright of citizens. If he were to lose his licence from the Gaming Commission, then his plans for the Tahiti would have to be shelved. At best, he could try to sell it; it would be difficult to recoup most of his costs. Another dangerous enemy.

Then there was also the investigation into the Gypsum company share price. Was that in some way connected to Debbie's death?

I needed to find out more.

I searched the pile of prospectuses on my desk for the information memorandum for the Tahiti. Before I came to it I uncovered the prospectus for Tremont Capital. I stopped my search and picked it up. It was thin and innocuous. No logos, certainly no pictures. I began to read it. Carefully.

Tremont Capital NV was a shell investment company set up in the Netherlands Antilles as a means for wealthy individuals to shelter their tax. The company invested in securities, about which there were no details. The company had issued a $40 million private placement of bonds through Bloomfield Weiss. De Jong & Co. had bought $20 million of these. What had made an investment in the bonds of such a flimsy offshore vehicle attractive was the guarantee from Honshu Bank Ltd. Honshu was one of the largest banks in Japan, and had the top rating of AAA assigned to it by the credit agencies. Investors didn't have to worry about the details of the structure, or what Tremont Capital invested in, as long as they had that guarantee.

But Debbie had worried about details.

I read the whole prospectus through carefully. Lots of tedious legal language, but nothing out of the ordinary that I could see. The sole shareholder of the shell company was listed as Tremont Holdings NV. That didn't tell me anything, and I guessed that under the Netherlands Antilles secrecy laws that would be the most I would ever find out about the ownership structure.

Still nothing strange.

Then I noticed a telephone number pencilled in the margin under the section entitled 'Description of the Guarantor'. I recognised the dialling code as Tokyo. It must be the number for Honshu Bank. I looked at my watch. It was late in Tokyo, but I might still catch someone. I tried the number not knowing what it was I was supposed to be asking.

After a few false starts, I was finally put through to someone who understood English.

'Hakata speaking.'

'Good afternoon, Mr Hakata. It's Paul Murray from De Jong & Co. in London speaking. I wonder if you can help me. I am inquiring about a private placement you have guaranteed for Tremont Capital.'

'I am very sorry,' said Mr Hakata.

Damn, I thought. Just when I needed someone helpful. 'I would very much appreciate some information, Mr Hakata. You see we are a major investor in this private placement.'

'I should like to help, Mr Murray, but we have no record of giving such a guarantee.'

'No, you don't understand. I have the prospectus in front of me. And someone from your bank spoke to a colleague of mine, Miss Chater, about it last week.'

'It was I who spoke to Miss Chater. And I spoke to a Mr Shoffman about it a few months ago. We are quite sure we have given no guarantee to this Tremont Capital. Indeed, we have no record of such a deal existing. If you have some information on this company, we would like to follow up. We don't like people misusing the name of our bank.'

'Thank you very much, Mr Hakata. I will send you some information if I can. Goodbye.'

This didn't make any sense. How could Honshu Bank be unaware of a guarantee they had given? Hakata had clearly checked his files quite carefully. Still, Honshu Bank was a very big bank. Perhaps the guarantee had somehow got lost. Unlikely, but just about possible, I supposed.

If Honshu Bank hadn't heard of the issue, then Bloomfield Weiss certainly should have. I decided to call them. I didn't call Cash. If Debbie was right and there really was something wrong with this issue, I didn't want to alert Cash to it at this stage. So I rang the Bloomfield Weiss library, which would have complete information on every bond issue they had ever managed.

A young woman's voice answered the phone, 'Library.'

'Good-morning. It's Paul Murray from De Jong here. Can you please send me all the details you have on a private placement you led for Tremont Capital NV. It was about a year ago.'

'I'm afraid we have no details on that issue,' the librarian replied immediately. No pause to check files or cards.

'But you must have. Can't you check?'

'I have checked. Your colleague Miss Chater rang last week. We have no details on the issue. And the reason is that the issue does not exist.'

'You must have made a mistake. You can't be so sure. Please check again.'

'Mr Murray, I have checked very thoroughly.' The librarian's voice rose. She was obviously not a woman who liked her professional pride to be questioned. 'Miss Chater was just as insistent as yourself. The issue just does not exist. Either our records are wrong, or yours are. And we have spent hundreds of thousands of pounds on modern relational database retrieval systems. No mention of Tremont Capital anywhere. When you have found the correct name of the bond you own, please call. We will be delighted to help.' With that the librarian hung up, sounding anything but delighted to help.

I leaned back in my chair, stunned. How could the lead manager and guarantor have no knowledge of this bond? Did it really exist? I thought for a moment. Because it was a private placement, it didn't have to be listed on any stock exchange. But there were always lawyers involved in these sort of transactions. I grabbed the prospectus and leafed through, looking for the name of the law firm who had put the transaction together. I quickly found it. 'Van Kreef, Heerlen, Curacao.' Odd. I would have expected a London or New York firm. A few more minutes' examination of the prospectus showed me what I was looking for. 'This agreement shall be interpreted under the laws of the Netherlands Antilles.' None of the customary mention of English or New York law.

Why hadn't this been picked up before? I supposed that if everyone was busy, the documentation might not have been read as thoroughly as it should have been. After all, the Honshu Bank guarantee had probably made it seem unnecessary to check the fine print.

But there was no Honshu Bank guarantee. De Jong & Co. had lent $20 million to a shell company we knew nothing about. We didn't know who owned it. We didn't know what had been done with our money. We certainly didn't know whether we would ever get it back. The legal documentation was probably full of holes.

I made a quick phone call to administration to check to see whether we had received our first interest coupon payment. We had. At least we hadn't lost any money yet. Whoever had set up the company would probably pay at least some interest in order not to arouse suspicion. It looked very much as though we were victims of an elaborate fraud.

I couldn't ask Cash about it directly. If he were implicated in some way, it might tip him off, and I couldn't risk that. But I somehow needed to find out more about Bloomfield Weiss's involvement. I had an idea. I picked up the phone and punched out a number.

"Allo. Banque de Lausanne et Geneve.'

'Claire, it's Paul. Are you free for lunch today?'

'Oh, what a nice surprise. Of course, I should love to have lunch with you.'

'Great. I'll see you at Luc's at quarter past twelve.'

Claire had worked at Bloomfield Weiss until six months ago. She ought to be able to tell me something about Tremont Capital, and Cash's involvement with it. Besides which, it was nice to have an excuse to take her to lunch.

I got to Luc's Brasserie early and was shown to a table by the window. The restaurant was on the second floor of a building in the midst of Leadenhall Market. The sun streamed in through the open window, bringing with it the noise of the shoppers below. The restaurant was only half full; it tended to fill up around one o'clock with underwriters from nearby Lloyd's.

I had been waiting only a couple of minutes when Claire arrived. The loud clack of her high heels on the black and white floor, the tight short skirt hugging her thighs and the trace of expensive but subtle perfume following her captured the attention of every man in the room. As she came to my table, held out her hand in greeting, smiled, and sat down opposite me, I could not help feeling a touch of pride at the envious glances in my direction. Claire was not classically beautiful, but she was desperately sexy.

We ordered, and shared complaints about how quiet the market was. After a few minutes, I came to the point. 'Claire, I did actually have something specific to talk to you about. But it's very delicate, and I would be very grateful if you wouldn't mention it to anyone.'

Claire laughed. 'Oh Paul! How exciting! A secret! Don't worry, I won't tell a soul.'

'It's about Cash.'

All trace of laughter disappeared from her face. 'Oh, Cash. That bastard!'

'Why do you call him that? What has he done?' I asked.

'Perhaps I shall tell you a secret first.' She looked down at the table, picked up a knife and began to fiddle with it. 'As you know, I worked for Bloomfield Weiss for two years before I moved to BLG,' she began. 'Well, after a year or so I built up a good group of clients. I was doing lots of business. I was happy, the clients were happy, Bloomfield Weiss was happy. Then Cash Callaghan arrived from New York. He had a big reputation and a big salary to live up to, and he didn't have any existing clients in Europe. So he stole them.'

'How did he manage that?' I asked.

'Subtly at first. He would work out which of the big accounts salesmen did not have enough time to cover properly. He would "help them out". Eventually, the client would end up wanting to talk to Cash rather than his original salesman. I suppose in a way that was not too bad, the client got better coverage and the firm did more business. But then Cash began to use more drastic methods.

'In my case he had his eye on my two or three largest customers. If ever I was out of the office, he would call them. But they were loyal, they wanted to stay with me. So then he began a rumour about myself and a client. I am afraid I cannot tell you his name.'

'What was the rumour?'

'He said that I was sleeping with this client, and that the client was giving me all his business because of it,' she said, her voice burning with anger. 'It was ridiculous. Completely untrue. The reason my client did most of his business with me was that I gave him good ideas and he made money out of them. I would never have an affair with a client. Never. It would be completely unprofessional.'

She looked up at me, her eyes alight with fury. Then she laughed. 'Oh Paul, don't look so disappointed.'

I could feel my face redden with embarrassment. Her declaration of professional conduct with clients had shattered some half-hope at the back of my mind. I had no idea that my disappointment had shown.

She went back to her story. 'I didn't know anything about this. Nor did my client. But everyone else was talking about it, or so I am told. It became one of those stories that circles around and around, so that after a month or two you have heard it from several different sources and it has to be true. I am sure my boss must have heard about it, but probably only whispers. Of course I could not deny it. I didn't know there was anything to deny.

'One day Cash went to my boss. He said that my "affair" was making Bloomfield Weiss the laughing stock of the City. He had some numbers, which he claimed came from a source inside my client's company, that showed that my client was doing 95 per cent of his business through me. Cash must have fabricated those numbers. I know my client did a lot of business with other brokers.

'So I was called into my boss's office and told I could either resign, or my boss would have to suspend me pending the launch of a formal investigation. He said this would probably damage my client as much as or more than me. I was shocked. Then I am afraid I lost my temper. I shouted and screamed at him, called him every foul name I could think of, and told him what he could do with my job. BLG had being trying to hire me for months, so I started a new job with them within a week.'

'But wouldn't it have been better to be a bit calmer? You could have cleared your name. Cash wouldn't have been able to prove anything.'

'The damage was already done. I wasn't prepared to have my integrity questioned in public, and my personal life examined under a microscope, just for the privilege of continuing to work with scum like that.'

'I see,' I said, feeling anger rise myself. 'You're right. What a bastard. This business is rotten. So many people running around making so much money. They think they are geniuses, but half the time they might just as well have stolen it. If they all just got on with doing their job in a straightforward, principled way, there would still be plenty for all of us.' I could not keep the anger from my voice, and I could feel the words coming faster and louder.

Claire laughed. 'Oh Paul! You are so sweet. So concerned. So idealistic. But the world doesn't work the way you want it to. You have to be tough to do well. The biggest bastards earn the biggest bucks. I'm OK. I am doing the same job for better people at a higher salary.' Her big, liquid eyes smiled at me beneath long lashes. 'But you were going to tell me your secret.'

I calmed myself down. 'I'm afraid I can't tell you the exact details yet, partly because I don't know them myself. It is important, though, that nobody finds out what I have been asking about.' I lowered my voice. 'Last year De Jong bought a private placement from Bloomfield Weiss, issued by Tremont Capital. It was Cash who sold it to us. Do you know anything about it?'

'Tremont. Tremont Capital,' Claire murmured, her forehead knitted in concentration. 'The name sounds familiar but I don't… One moment! I know! Wasn't the deal guaranteed by the Industrial Bank of Japan?'

'Not quite, it was Honshu Bank. But you are close enough,' I replied.

'Yes, I do remember it vaguely. It was only a small deal, wasn't it?'

'Forty million dollars,' I nodded. 'Did you sell any?'

'No. It was one of Cash's "special deals". I think he cooked it up himself. None of the rest of us got a look in at selling it. All the commission went to him.'

Special deals. Special customers. Cash did a lot of special business. 'Do you know anything at all about the company?'

'Tremont Capital? Nothing at all. I have never heard of it before or since.'

'Would anyone else?'

'No. When Cash put together deals, he kept them to himself until they were finished and he could proclaim them from the mountain-tops.'

'He must have had some help from someone in the firm, to do the documentation, or structure the deal,' I suggested. 'Was there anyone in Corporate Finance he used to deal with?'

'Not in London, I don't think. But he did talk to someone in New York on some of his special deals. I met him once when he was over in London. A short fat guy. Waigel. Dick Waigel, I think his name was.'

'Can you remember who bought the rest of the issue?'

'Yes, I think I can. I remember hearing Cash selling it to De Jong. It didn't take him very long. And then he just made one other call and sold the deal straight away. I remember thinking how amazing it was to be able to sell a whole deal in just two phone calls. I detest Cash. But I have to admit he is a good salesman.'

'Who was the other buyer?'

'I knew you would ask me that,' she said. 'Let me think… I know! It was Harzweiger Bank.'

'Harzweiger Bank? That's a small Swiss bank, isn't it?'

'Not necessarily small. Certainly low profile. But they manage a great deal of money very confidentially. Cash deals with them a lot.'

'Who did he talk to there?' I asked.

'A man named Hans Dietweiler. Not a very nice man. I spoke to him a couple of times.'

I had found out all I was going to find out from Claire. At least about Tremont Capital.

'One more question,' I said.

'Yes?'

'Who is Gaston?'

'Gaston? I don't know any Gaston.' Then she chuckled. 'Oh, you mean Gaston my boyfriend in Paris? I am afraid that was just a story for Rob.'

'That was cruel. He was very upset.'

'He was very persistent. I had to put him out of his misery somehow. This seemed like the best way. And he is strange that one.'

'Strange?'

'Yes. There is something about him. He is so intense, he seems unstable. You don't know what he will do next.'

'Oh, that's just Rob,' I said. 'He's harmless.'

'I don't know about that,' said Claire. 'I am glad I got rid of him.' She shuddered. 'Besides, I told you. I never sleep with my clients.'

As she said this she sipped her wine and looked over the rim of the glass at me. She seemed to smoulder, her lips very red, her eyes very dark. My throat was dry.

'Never?' I said.

She held my eyes for several seconds, sending messages whose precise meaning I could not decode. 'Almost never,' she said.

After that lunch it was difficult to focus on work. With an effort I managed to put to one side thoughts of what sex with Claire would be like, although they kept on trying to re-emerge. I had to make a phone call to Herr Dietweiler.

I looked up Harzweiger Bank in the Association of International Bond Dealers Handbook, and found the number. It had a Zurich code.

A woman answered.

'Can I speak to Herr Dietweiler?' I asked.

'I am sorry, he is not in now. Can I help you?' The reply was in excellent English.

'Yes, perhaps you can,' I said. 'My name is Paul Murray, and I work for De Jong & Co. in London. We hold a private placement which I believe you also bought. Tremont Capital eights of 2001. We would like to buy some more, and wondered whether you were interested in selling.'

'Oh, Tremont Capital! Finally we find someone who will trade in it. I don't know why we bought it. The Honshu Bank guarantee is very good, and the yield was nice, but nobody trades it. We are supposed to have a liquid portfolio here, not this garbage. What is your bid?'

This was tricky. The last thing I wanted to do was end up buying more of the bloody bond. This woman sounded as though she would sell it at any price!

'It's not for me, it's for one of our clients,' I lied. 'He was interested in buying our bonds, but they are not for sale. Before I can go to him to see at what price he would buy them, I need to be sure that you are a seller.'

'I see. Well, we had better wait for Herr Dietweiler. He bought the bonds originally. He should be back in an hour or so. Why don't you call back then?'

'That sounds like a good idea. Tell him to expect my call.'

Good. It was Dietweiler I wanted to speak to.

Exactly an hour later I rang the Zurich number again.

A gruff voice answered the phone, 'Dietweiler.'

'Good-afternoon, Herr Dietweiler. It's Paul Murray from De Jong & Co. here. I rang your colleague earlier about a bid for the Tremont Capital eights of 2001 that you own. I wonder if you would be interested in selling?'

'I am afraid you are mistaken, Mr Murray.' The heavy Swiss accent sounded less than friendly. 'I do not know where you obtained your information. We do not own that bond, nor have we ever done so.'

'But I spoke to your colleague about that very bond,' I said. 'She said you had it in your portfolio.'

'She must have been mistaken. She probably confused it with another Tremont Capital bond. In any event, we view the contents of our portfolio as highly confidential information which we never disclose. I have just reminded my colleague of that. Now goodbye, Mr Murray.'

As I put down the phone I felt sorry for the friendly Swiss girl. I was sure she had not enjoyed being reminded of her duties by Herr Dietweiler. A nasty piece of work. And not a good liar. There were no other Tremont Capital bonds. Harzweiger Bank owned the same bonds we did.

But why didn't they admit it?

This was serious. There was a good chance that De Jong had lost $20 million. Unless we found the money, it could cripple the firm. I supposed that we would not be legally bound to recompense our clients whose money we had lost, but I was sure they would not remain our clients for much longer. I had to tell Hamilton what I had discovered. He wasn't at his desk. Karen said he was out all afternoon and wouldn't be in until late the next morning.

He came into work at lunchtime the next day. I watched him go over to his desk, take off his jacket and turn on his screens. He sat down in front of them and stared.

I strode over to his desk. 'Excuse me, Hamilton,' I said, 'have you got a minute?'

'It's now one twenty-seven. The unemployment figures come out at one thirty. I have three minutes. Will that be enough?' he asked.

I hesitated. What I had to tell him was important. But I didn't want to rush it. If Hamilton said he only had three minutes, he only had three minutes. 'No, I'm afraid it will take a little longer,' I said.

'In that case, sit down. You might learn something.'

Stifling my impatience, I did as he said.

'Now tell me what's been happening to the treasury market.' Hamilton meant the market for US government bonds, the biggest, most liquid bond market in the world, and the one that most investors use to express a view on long-term interest rates.

'It's been going down for the last month,' I said, 'people are looking for yields to go higher.' As treasury prices fall, their yields go up, reflecting an expectation of higher interest rates in the future.

'Why has it been going down?'

'Everyone is frightened that the US may have reached full employment. Last month's unemployment figures were 5.2 per cent. Most economists think that it will be impossible for unemployment to get much below 5 per cent and that once it gets down to that level inflationary pressures will build up in the system. It will get more difficult for businesses to find workers, and so they will have to pay higher wages. Higher wages mean higher inflation, which means higher interest rates. So treasury prices go down.'

'So what's going to happen after the figure?' Hamilton asked.

'Well, the market expects that the unemployment number will be down to 5 per cent. If that happens, lower unemployment will mean higher inflation. The market will sell off yet again.'

It always seemed to me ironic that what was good for jobs was bad for the bond market. I could remember the day I had been on the trading floor of one of the big brokers. On the announcement that a few thousand more people had lost their jobs than expected, a huge cheer had risen round the room, and the treasury market had roared ahead. Talk about an ivory tower!

'You are right that nearly everyone thinks that the number will be 5 per cent and that the market should sell off. So what should I do about it?' Hamilton asked.

'Well if we had any treasuries left, we could sell them,' I said. 'But since we sold what we had a month ago, I suppose we can just sit and watch.'

'Wrong,' Hamilton said. 'Or at least you can sit and watch.'

The green television screen in front of us showed where the market was trading at that instant. A dense array of little green numbers winked as bonds were bought and sold, and prices changed. The key treasury bond we were looking at was the thirty-year bond otherwise known as the 'long bond'. Its current price was 99.16, meaning 99 and sixteen thirty-seconds, or 99 and a half.

With one minute to go until the release of the figure, the green numbers stopped winking. Nothing was trading. Everyone was waiting.

The minute seemed to last for ever. All over the world, in London, New York, Frankfurt, Paris, Bahrain, even Tokyo, hundreds of men and women were sitting hunched in front of their screens, waiting. The bond futures pit on the floor of the Board of Trade futures exchange in Chicago would be silent, waiting.

A muffled beep came from our Reuters and Telerate screens. A second later a little green message flashed up, 'US July unemployment rate falls to 5.0 per cent versus 5.2 per cent in June.'

Two seconds after that the number 99.16 by the long bond flashed to be replaced by 99.08, meaning 99 and eight thirty-seconds, or 99 and a quarter. I was right. It was a bad number and the market was falling.

Two more seconds, and our phone board was dotted with flashing lights. The salesmen did not know what Hamilton was thinking but they knew he was thinking something.

Hamilton picked one up. I was listening on the other line. It was David Barratt.

'I just wanted to let you know our views on…' he began.

'Offer me twenty million long bonds,' Hamilton cut in.

'But our economist thinks…'

'I'm glad you have an economist who thinks. Now get me that offer!'

David shut up, and went off the line. He was back five seconds later. 'We would offer them at 99.04. Watch out, Hamilton, this market is crashing off!'

'I'll buy twenty at 99.04. Bye.'

The green number by the long bond on our screen was flashing constantly. It now read 99.00. I didn't know what on earth Hamilton was doing but I knew he knew exactly what he was doing.

Hamilton picked up the next line. It was Cash. 'Offer me thirty million long bonds.'

Cash didn't argue. Someone wanted to buy thirty million bonds in a falling market, that was fine with him. 'Our offer is 99.00.'

'Fine, I'll take them,' Hamilton said. He put down the phone and stared at the winking screen intently. So did I.

The price kept flashing, but it was no longer plunging straight down. It was wobbling between 99.00 and 99.02. Hamilton and I sat motionless in front of the screen. Every time the number 99.00 flashed, I found myself holding my breath, expecting to see 98.30 follow it. We could lose a lot of money on a fifty-million-dollar position. But the 99.00 level held. Suddenly it flashed up at 99.04, then 99.08. Within seconds the price had moved up to 99.20.

I exhaled. Hamilton had done it again. We had managed to buy fifty million long bonds at what appeared to be the lowest prices for months. And it looked like the market was going back up. I studied Hamilton closely. He was still staring at the screen. His expression was unchanged. He wasn't smiling, but I thought I could detect a slight relaxation of his hunched shoulders.

The price flashed up to 100.00.

'Shouldn't we sell now?' I asked.

Hamilton slowly shook his head. 'You don't know what is happening here, do you?' he said.

'No, I don't,' I said. 'Tell me.'

He leaned back on his chair and turned to me. 'You have to be one step ahead of what the market is thinking,' he said. 'Market prices move when people change their minds. The market will go down if people suddenly decide that they would rather not buy or hold bonds, they would rather sell them. This often happens when there is a new piece of information. That's why the market often moves when an economic figure is released. Are you with me?'

'Yes,' I said.

'Now, over the last couple of months a lot of people have been changing their minds, deciding to sell. As each piece of bad news has come out, more and more people have sold, driving prices ever lower. The situation has got so bad that by this week everyone expected more bad news and a further fall in the market.

'When the bad news came out, it was just what people had expected. Sure, the dealers moved their prices down, but all the sellers had sold long before. Like we did a month ago. There were no sellers left.'

'OK, that explains why the market didn't go down for more than a minute or so, but why is it going up?' I asked.

'Well, when a market is falling, natural buyers tend to delay their purchases until they think all the bad news is out of the way,' Hamilton said. 'And there are people like me who are tempted to buy bonds at low prices.' Hamilton talked slowly and deliberately, and I hung on every word, trying to extract the maximum amount of knowledge I could from what he had to say.

'But what about the economic fundamentals? What about the threat of inflation if the US has full employment?' I asked.

'That fear has been in the market for at least a month. Prices have been discounting that for weeks.'

I thought about what Hamilton had said. It did make some kind of sense. 'So one of the reasons the market went up was because everyone was so pessimistic?'

'Precisely,' Hamilton said.

'One last thing I don't understand,' I said. 'If all that was the case, why did the market wait until the release of the figure before moving up?'

'Before taking the decision to buy, investors wanted to wait until the last major uncertainty was out of the way. Once they saw that the unemployment figure, although bad, was no worse than expected, they had no reason to put off their decisions. They bought.'

I had a lot to learn in this business, I thought. I knew you needed a cool, calculating mind to be a good trader. But Hamilton was more than just an expert at analysing numbers or economics. He analysed human nature, weighing up the exact balance between fear and greed amongst the thousands of individuals who collectively make up 'the market'. And he was very good at it.

'I think we can leave this market to its own devices now,' Hamilton said. 'You wanted to see me about something.'

I told Hamilton everything that Debbie and I had found out about Tremont Capital. I told him it looked to me as though we would never see our $20 million again.

In all the time I had worked with Hamilton I had never seen him shaken. He was shocked now. He had lost control, a rare feeling for Hamilton.

'How could that happen? Didn't we check the documentation?'

I shook my head slowly.

'Why didn't I get Debbie to check the documentation?' he muttered, biting his bottom lip. 'That bastard Callaghan! He must have known about it all the time!'

'I heard Cash sold you the bonds?'

'He certainly did. At the time those bonds were yielding 1½ per cent more than US government's. Not bad for bonds with a triple-A guarantee. They were the cheapest bonds around at the time.'

'And you think he knew that the guarantee was worthless?'

'He must have done,' said Hamilton bitterly. 'If the library at Bloomfield Weiss knows nothing about the bonds, you can bet no one else there does. He must have set this thing up himself. I do my best never to rely on that man. I can't imagine how I let him get away with it.'

'Couldn't Cash have been passing on the bond prospectus in good faith? Perhaps someone in his corporate finance department is behind this? Claire mentioned a chap named Dick Waigel.'

'Maybe. But I don't think so. I think it's Callaghan.'

I hesitated. I wasn't sure whether to mention what was in my mind. Quietly I asked, 'Do you think Cash had something to do with Debbie's death?'

Hamilton looked at me, puzzled. 'That was an accident, wasn't it? Or suicide? Surely not murder?'

'I'm not sure what it was,' I said. 'Remember I told you that I saw a man just before Debbie's death?' Hamilton nodded. 'Well, that man turned out to be Joe Finlay, Bloomfield Weiss's US corporate trader. Now, I told the police this, but it appears that Joe had a couple of friends who said they shared a taxi with Joe immediately after they all left the boat.'

'Joe Finlay?' said Hamilton. 'I've met him. He's not a bad trader. But from what you said, the police have ruled him out?'

I sighed. 'Yes, they are going to put Debbie's death down as an accident. But I just don't believe it.'

Hamilton looked at me for a second. 'I suspect the police know what they are doing. In any event, I doubt that Cash had anything to do with it.' He lapsed into silence, an unusual fire in his cold blue eyes. Then, slowly, he began to relax. He rhythmically stroked his beard. He was back in control. Thinking. Calculating all the angles.

'What shall we do?' I asked. 'Shall we confront Cash? Go to the president of Bloomfield Weiss? Go to the police?'

'We shall do nothing,' Hamilton said. 'At least not for a while. My guess is that Tremont Capital will continue to pay interest for several years so as not to arouse suspicion. It is the principal we will never see again. So we have time. It is our turn not to arouse suspicion. As soon as Cash finds out we are on to him, then the money will be gone and we will never see it again. So we act as though nothing is amiss.'

'But we can't just do nothing!'

'We won't just do nothing. We will get our money back.'

'But how?'

'I'll find a way.'

And somehow, I thought he would.