Death of a Financier

Chapter 1

It was Friday morning, the last working day before Christmas, when Stephen Parkly presiding over a special board meeting of West Mercian Finance, at its headquarters on Bank Street in the City of London, put his signature to the document approving the firm’s annual bonuses.

The announcement, scheduled for eleven, was impatiently awaited by the firm’s executives and staff, most of whom would be leaving at lunch time for the Christmas vacation, during which the offices were to all intents and purposes closed until January 2.

It had been a good year, perhaps not quite as profitable as 2006, but nevertheless good in spite of a slower fourth quarter. Parkly’s bonus was £250,000 – modest by some standards – West Mercian was not Morgan Stanley, but it was over a quarter of his £900,000 fixed annual compensation.

If things went well Parkly could, in the not too distant future, expect to appear on the Queen’s Honours List with perhaps a knighthood for his contribution to Britain’s glowing economy and more especially that of the City.

The only cloud on the horizon was a nagging question as to the extent of the firm’s exposure to certain mortgage backed instruments, a question that would be faced in January, after his return from the year end break and the completion of the provisional year end accounts. The next day he was leaving for India with Emma, his new and young wife, he had promised her sunshine to make up for all those long hours he had been putting in following the recent turbulence in the financial markets.

In spite of the billions lost and the trillions wiped off stocks, City bonuses were almost unaffected, some were a modest few percent lower than the previous year, others were equal to or even better since all in all the year had been a good year for the City in general.

City bankers, executives and traders had become used to stuffing their pockets with what was in effect their shareholders’ or customers’ money, ignoring the plight of many of their fellow citizens beyond the hallowed shrines of finance. More than five million Britons were living on benefits: the old, the sick and the poor, after a decade of unbroken economic growth, whilst the Government ran a huge deficit borrowing more than forty billion pounds a year.

Emma Parkly was almost twenty years younger than her husband; she was what Americans would have called a trophy wife. Emma, the daughter of a prominent newspaper editor, a sometime fashion model and TV journalist, wrote for Tattler; the kind of articles that described Madonna’s ‘romantic rural retreat in the English countryside’ or ‘Marella Agnelli’s enchanted villa and gardens in the Palmeraie of Marrakech’.

She had met Stephen at a party given by Karl Lagerfeld in Ramatuelle, near Saint-Tropez, to celebrate the launching of a new fashion line. She had been fascinated to meet a real City financier, from a world so different to that of the illusory fashion scene with its hollow personalities, a man who had arrived by private jet and helicopter, as for Parkly he was delighted to talk to a refreshing young woman about anything but finance.

That weekend, Parkly’s now ex-wife had been in Manhattan for the vernissage of an up and coming Spanish modernist painter with whom she had become infatuated. Parkly, normally an imperturbable individual, seriously riled by her antics, had accepted the invitation from one of his new highly geared City friends to fly down to the Côte for the party in his jet.

Stephen Parkly’s sudden rise to fame as CEO of West Mercian Finance came just four years previously, after the tragic death of the firm’s founder John Cameron in a helicopter crash, projecting Parkly to unexpected power and wealth. Until fortune smiled on him he had been the long standing right hand of the founder, who had transformed the West Mercian Permanent Building Society from a small regional mutual into a modern broad based banking and finance group based in the City of London.

Parkly was a good manager, but with neither the charisma nor the business flair of the late lamented Cameron. An accountant by training he had been taught impartiality, veering to disbelief vis-à-vis others, which had led to a certain reserve and some even said dourness of character. However, the housing market was already launched on its vertiginous climb, from an average home price of £121,000 in April 2002 to £230,000 at the last estimation, and the firm prospered as never before.

After the tragic loss of the founder, the board of directors, without any other ready made leader amongst them, a consequence of Cameron’s overwhelmingly dominant position, voted Parkly as the new CEO, there was no reason to risk a radical change. Parkly, credited with having been instrumental in guiding Cameron’s decision towards demutualization, had the confidence of the shareholders and was perceived as a steady hand at the helm.

As West Mercian surfed the boom, investing its funds in the new instruments that were invented and introduced by leading American investment houses, it went from strength to strength, borrowing on the financial markets to finance mortgage loans for the average Briton, since West Mercian was no longer a building society and savers deposits were insufficient to cover the growth of its mortgage business.

Building societies had originated in the 18th century, when working men pooled their savings in mutual societies from which members could borrow to build homes, once every member had achieved the goal of building his own home the society was wound up. However, some of these were transformed into permanent building societies, accepting savings deposits from members and offering not only traditional mortgaged linked home loans, but also other loans.

With deregulation many building societies were demutualised and floated on the stock exchange. Since then, the only major difference between most building societies and high street banks was that building societies mainly offered mortgage services. However, current, savings and business accounts, credit cards and loans were available from both, and both offered various kinds of investment opportunities via their unit trusts or mutual funds.

*****

Chapter 2

A freezing damp mist hung in the air with the watery glare of the yellow street lamps throwing strange shadows off the Christmas trees and holly piled against the stalls. It was six thirty in the morning and just seven more shopping days to Christmas. Three more market days including today, Karen reminded herself unloading the last of the cardboard boxes bulging with jeans and tee-shirts from her white Ford Transit. The stall was beginning to look ship shape and it was almost time for a good strong hot cup of tea and a bacon sandwich in the café across the market place before the early birds started to arrive.

It was Wednesday morning in Romford Market, market days were Wednesdays, Fridays and Saturdays. Christmas fell on a Tuesday, but if things went well, she together with her sister-in-law Sharon and their kids would be far from the rigours of the British winter and mistletoe by then.

Mi mum and dad will look after the stall on Saturday morning and whilst we’re away, she reminded herself. Everything depended on Harry, if he could get rid of Dave’s goods at a decent price then it would be a great holiday. It was a pity it was a bit late for the Christmas trade, but still the goods should move quickly with the holidays and there would still be plenty of money floating around until the New Year, still time to give a late present.

Karen’s brother-in-law, Harry, ran a garage under the Liverpool Street line railway viaduct, his business was second hand cars and repairs. From time to time he rebuilt a wreck, at least that was what it looked like. It was the only thing that kept the garage in business, but he had to be careful. He’d never had any real bother with the police, keeping in their good books. He ran what he liked to call a legitimate business, helped by servicing the cars of one or two of the local Bill for free and feeding them titbits of information on Romford dealers and the local druggies. Harry as a family man strongly disapproved of drugs.

However, Harry’s business was not entirely above board. He had a sideline involving everything from stolen cars to receiving, he was an old fashioned crook, keeping well clear of modern crime, which was to say drugs, serious violence, illegal immigration and tax fraud, yes, he paid his taxes and kept the books of the family business.

Terry, his brother, looked after the car recycling end of the business, buying badly damaged top of the range vehicles from a friendly breakers yard, not total write-offs, but cars with serious accident damage and no obligation to return the logbook to the DVLA. The V5 logbook with engine block and chassis VIN numbers were transferred to a stolen car of the same model. Then the stolen car was meticulously cleaned; the new number plates corresponding to that of the wreck added, the radio and accessories replaced, in brief no expense was spared and no corners were cut.

Harry’s policy was based on zero risk, he had learnt the lesson when he was a kid from his own dad, who seemed to have been in and out of the country like a yoyo, dodging the police, suspected of everything from receiving to attempted armed robbery.

Hubert, Harry’s dad, held a Dominican passport that he had acquired for a couple of thousand pounds, a small price to pay to escape the clutches of the Metropolitan Police, back in the seventies when the small island had just been granted independence. He was a respected citizen of the Commonwealth of Dominica, which convieniently lay between the French islands of Martinique and Guadeloupe – not to be confused with the Dominican Republic, where he had lived for several years until he had been forgotten by the Mets.

Since those days Hubert had reformed, on a day to day basis he helped run the Romford market stall, but his real job was caring for the family’s savings that were safely tucked away in an offshore account in Roseau, the Dominican capital. His knowledge of the Caribbean ensured that the disguised vehicles were legally exported as second hand cars to the different islands of the Eastern Caribbean States, where import taxes ran at forty percent, to be sold though a dealership run by Cecil Reed, Sharon’s ex, who was a Dominican and a Kalinago.

Alistair Darling, the then Transport Secretary, had introduced a new telephone and online car tax service at the Driving and Vehicle Licensing Agency, a heaven sent gift for Harry, making re-licensing easier, impersonal and quicker than ever before. The process could be completed in a matter of minutes thanks to the introduction of a new computerised vehicle licensing service. Motorists could renew their car tax, wherever and whenever they wanted, without the need to produce copies of supporting documentation such as insurance and MOT certificates. Tax discs were dispatched by post and received within a few working days.

Sharon’s friend, Dave, worked as a guard for a security firm and had been hired out to Safeway in Romford for the Christmas period. As a security guard he was one hundred percent above board and enjoyed a good reputation with his employers as a serious though rather introspective worker. He mostly worked as a temporary, that is to say whenever it suited him.

Dave also had side line in stolen goods and fencing, though never in connection with the companies where he worked as a security guard, or with their personnel. As a fence he worked alone, he trusted almost no one, except for close family. Dave was of average height, slightly built, quiet and if it were not for his sharp eyes and weaselly face, a casual observer could have been excused for thinking of him as almost sickly.

In the early hours of Wednesday, making his night rounds at Safeway, he had noticed a white Vivaro delivery van in the Dixon car park, separated by a wire fence from the Safeway loading bay. There was nothing unusual in that, but what caught his attention was the van’s backdoors were slightly ajar. He stubbed out his cigarette and waited in the shadow of a doorway, then after some moments he saw a movement, a figure appeared, pulled wide open the van door and unloaded a carton. Dave flashed his torch in the direction of the van, there was a heavy thud as the carton fell to the ground and the figure made off at speed to the nearby goods entrance where he pulled open the gate and made off in a waiting pickup.

Dave made his way out of the Safeway compound towards the Dixons’ goods entrance, which would have normally been locked. The only noise was that of the distant traffic, there was not another soul in sight, though Dixon’s security guard should have been making his rounds. Amateurs he thought as he cautiously approached the Vivaro and inspected its back doors, the packing case lay on the ground where it had fallen.

He walked around to the driver’s door, it was open, he flashed his torch inside, there was no key in the ignition. He returned to the back, replaced the packing case and quietly eased the doors close. Then slipping into the driver’s seat expertly pulled out the steering wheel surround, checked it for the alarm, which he short circuited, then with the starter wires made contact and the motor sprung into life. He drove towards the gate, stopped, pulled it open, drove through, stopped again and carefully closed it.

Five minutes later he parked the van on the street a couple of blocks away amongst other parked vans and goods vehicles and made his way back to Safeway. It was six in the morning when he signed off leaving his place to the day shift, there was nothing unusual to report, that is at Safeway.

It was still another two hours before daybreak when Dave drove the Vivaro into a rundown lockup under one of the railway arches, a short walk from the garage. He then called Harry and together it took them less than half an hour to unload the van. It was then abandoned in an M25 service station car park and Dave returned to the lockup with Harry who had followed him in another van.

It was their Christmas bonus, digital cameras, PC flat screens, laptops, mobile phones and other devices, all the goodies for the Christmas rush, worth tens of thousands of pounds to a fence.

Before midday, when Dixons finally discovered and reported the disappearance of the van whilst their security guard tried to explain the unexplainable – his coffee had been doped by a couple of Christmas temps who had fled, the goods had been off loaded to a couple of East London fences who would have it all moved up country by the end of the same day, way off the beat of the Mets. It was a ten grand windfall for the two lads and would more than pay for their Christmas in the sun with the girls and their daughters.

Earlier that same morning as Karen drank her coffee and ate her bacon sandwich she gave a friendly nod to a well dressed man taking a quick breakfast at a nearby table in the steamy café. It was not unusual for City office workers and other commuters getting off to an early start to stop for a coffee or a bite after dropping their cars in the multi-storey car park before taking the city train at Romford Station. Karen was an attractive girl, she could have done with losing a few kilos, but she had an attractive face and nice teeth, only her accent let her down. Tom Barton nodded back and a mouthed a hello, she smiled back. Barton had a friendly face and in his business his openness had always been an advantage.

‘Getting ready for the Christmas rush?’ he asked.

‘Yeah, at least mi dad is, the rest of us are off to the sun,’ she told him in a matter of fact way and without any sign of posing.

Barton envied the stall owners, they seemed from his position to have a trouble free life, sure it was hard work, but they earned good money. He knew Karen lived not more than a mile from his place in a very comfortably detached house.

‘Where are you off to then?’

‘We’ve booked a flight to India.’

‘India! That’s not exactly sea and sand.’

‘In the south, Kerala, some nice beaches, was there a few years ago, before Deana was born.’

‘Oh, I hope you enjoy it,’ he said looking at his watch. It was almost seven twenty and if he wanted to catch the fast train to Fenchurch Street he would have to step on it.

‘Have a nice holiday then, I must rush, and a happy Christmas.’

‘You too.’

Barton hurried down the High Street wondering why on earth someone would want to go to India for the Christmas holidays. He quickly put the idea out of his head, there were more urgent things to attend to, he had a busy couple of days ahead of him.

First on his list were the papers for an appointment with his solicitor, Michael Henderson, to settle some final details on the Canary Warf BTLs. Then there was the outstanding business in the office to be attended to, including the year end bonuses, and last but not least was a shopping expedition for his carefully planned disappearance.

*****

Chapter 3

Barton ran a finance and mortgage brokerage business in the City and the last five years had been the most profitable of his career. He had arranged mortgages and re-financing for countless families; for their dream homes, house extensions, holiday homes, cars and exotic holidays. He himself was mortgaged up to the hilt with an unnecessarily large status symbol home on the edge of Epping Forest.

He knew the time had come to get out when he realized he was beginning to believing his own spiel, a costly mistake. Only when the Northern Rock fiasco erupted the previous summer did the alarm bells start ringing. The subprime risk had been discussed by the contrarians for months, considered purveyors of doom by those with vested interests in the City, few were prepared to listen to them in the heady boom time when house prices rose daily. Then slowly but surely the market started to unwind in the States and Barton knew it was just a matter of time before the UK was affected. The game was up and it was time to call it a day.

Tom Barton’s prosperity had been based on a golden rule; don’t spend more than you earn, this rule had however already long been dumped overboard by a large segment of the British public, replaced by don’t spend more than you can afford to pay back, and of late by don’t spend more than the credit being shovelled day after day through your letterbox.

Barton had been a willing participant in the mortgage crisis, indirectly fuelling the house price bubble by encouraging all and sundry to make fraudulent declarations as to their revenues and invest in everything from BTLs to apartments on the Costa del Sol and even further afield for the wealthier. How could the punters lose? Home prices went up quicker than he could put a loan together, in the euphoria he not only leveraged his clients investments but also his own, acquiring even more property, pumping up the balloon faster than mortgage companies could invent more unbeatable deals for home owners.

It had reached a point where anyone who could hold a ballpoint pen and was not brain dead could sign up for a one hundred percent plus mortgage on almost any property after self certification. In the words of a friend, the director of a leading bank, it was one of the greatest credit bubbles ever seen.

The writing was on the wall, the music had stopped, whatever the cliché it was time to get out, and quick, but how? Prices had stalled and were even starting to fall, behind the hype it was difficult to move property. Barton’s worse deal was in Dublin, where prices had fallen ten percent in six months.

To his great regret, he had become involved in the development of a fancy Dublin Bay BTL project. After three months of unsuccessfully trying to let the flats profitably the bank had leaned on him, forcing him into lowering the rents to generate some badly needed cash flow. It was costing him as he pumped money into the Dublin business to cover the shortfall and keep the bank happy, a situation that could not last long and he had to find a way out. To top it all the Irish stock market had lost 26% over the previous twelve months, a bad sign, a very bad sign. The Irish banks had thrown enough money away to make the Northern Rock look like Scrooge.

The same scenario was unfolding at the Guadalmina Golf and Country Club development in Spain, where he was promoting the sale of luxury holiday homes to British buyers for the first and second phases of the residential development.

Like in many other businesses alarm bells, rather than tills, were ringing. After a ten year spending boom, hundreds of thousands of over indebted families were plunged into insolvency as their creditors caught up with them. The moment was ripe to move on, to where and into what he was unsure. Dubai looked good on paper, but in view of the quantity of new property the Arabs were putting on the market it was neither the Yanks nor your average Brit who were going to be putting their money there. In any case Tom did not feel happy with Middle Easterners, things could turn nasty out there with Iran just short hop across the water.

Then there was China, but he knew nothing about the country or its language, his only experience of the Far East was limited to the very friendly manager of an overly expensive local Chinese restaurant in Epping, whom he suspected would shake hands with anyone who could produce a valid credit card. As for Australia the shit had already hit the fan and homeowners, lenders and real estate agents were running for cover.

Though Tom had taken risks and enjoyed good living, he knew that inevitably all good things came to an end, past experience had taught him that when he had fallen back to earth, but he had always dusted himself off, picked up the pieces and started over again.

Now, older and wiser, he had had the foresight to set-up what he liked to think of as a disaster fund. He had, on the advice of a good friend at the West Mercian, opened a bank account in Luxembourg, into which he put a little money aside when ever the occasion arose. Barton congratulated himself on his prudence, since unlike Gordon Brown, who in better times had convinced the British public that the boom was all to do with his careful management, he had put something aside for a rainy day, and that day was now at hand.

That Wednesday morning Barton was about to unload a batch of BTLs he owned at a Canary Warf development. He had bought them off plan three years previously and the prices had more than doubled, even taking into account the unfavourable discount he was forced to concede to his buyer given the changed market conditions. It was a good deal, the BTLs were all occupied by young City executives, who for the moment were still paying their greatly exaggerated rents

The buyers were Indian investors who owned a chain of supermarkets and were paying cash, which Barton suspected was derived from some undeclared business in the Midlands, wherever it came from it was not his problem, business is business he thought, caveat emptor and the rest of it. Barton would make a cool three and a half million pounds profit after the outstanding loan to West Mercian Finance was deducted.

Michael Henderson, a serious man who stuck to the essential with few unnecessary questions, confirmed the purchase monies had been received and transaction completed that morning with the buyers’ solicitors. All that remained was the hand over of the keys, which Barton promptly produced wishing his buyers success and goodbye.

He