London – who hasn’t dreamed of visiting this city while learning English while reading about Chase, Ian Fleming, Somerset Maugham, Graham Greene and other English writers from the original? We imagined streets covered in red double-decker fog, the Madame Tussauds wax museum, the Tower of London and of course the little flat in Baker Street. The time has come – and we started traveling to Europe for business or pleasure.
My visit to London in 1998 was not about entertainment. The task was to find real estate purchased by a well-known bank with the money of the company I was working for at the time, and to find that property and arrest it in order to sue the bank. It turned out that even in Moscow, according to an agency widely known in narrow circles, the bank bought a building in London for about $ 40 million, that is, for all the money that the company earned during its entire existence. . Many investigators, in uniform and plainclothes, say where this money came from. In order not to waste time in vain, two tables were always empty in the accounting department – one for the tax inspectorate, the other for the tax police (there was such a service, if you remember). Taxes were paid regularly, no optimization was made. The founders’ massive salaries were also heavily taxed.
My salary as financial director was small by today’s standards. And the chief accountant’s salary is ridiculous in terms of current salaries and is twice less than mine. I pointed this out to the founders more than once, but they simply ignored: come on, Petrovna is already happy, we bought her an apartment in a prestigious building. Then her older sister, a simple employee. At current prices, apartments cost 30-35 million, and the house and territory were prestigious. Petrovna, we must give him his due, we skillfully preserved the image of the savior of the company. After going to the tax office, he visited the founders and proudly said, “Today I got you out of jail again!” she said. I still do not understand which prison you are talking about – the company regularly paid taxes. God bless him.
Another thing is important – finance in small firms, as you know, is managed by chief accountants. And when the company grew and decided to implement a major investment project, a finance manager was needed. But an accountant deposited the free money and “in a very good bank”. Of course, such an investment policy of the company does not suit me. Even folk wisdom says: “Don’t keep all your eggs in one basket.” In 1998, no one thought of a positive relationship between assets and banking risks.
However, I have not been able to withdraw the $40 million earned over the years the company has been operating from the “good bank”. Under the obvious influence of the chief accountant, the indifferent founders said they could not disappoint a bank that was confident in their money. Yes, beautiful 90s! People started a business, entrusted it to all kinds of scammers and did not worry about anything. And why? After all, the chief accountant was a classmate of one of the founders of the company. Isn’t that a guarantee that he is the most honest person? All my hints that banks pay commissions to raise funds went unanswered, on the contrary, they caused a kind of conflict. Also, I started getting calls from the head of the security service of a “good bank” who insisted that I not make sudden changes in the firm’s investment policy. All I could do was convert the bank’s Ruble bills into foreign currency, because in the spring of 1998 it was already clear that devaluation awaited us. In addition, Boris Yeltsin firmly promised that there will be no devaluation.
It is now the owner who will take the trouble to get at least a basic business education to understand where employees can rob him. In that firm, anyone with at least some access to financial resources stole.
Buyers of cars, computers, and even office supplies and furniture received commissions. It was crazy for me – after all, before that I worked on a World Bank project in Moscow, and we could not even get a computer without the approval of the management – we worked on our own for several months. We assembled the tables and chairs ourselves from the ruins found in the basement of the office – and that’s our own budget of $50 million! According to the charter of the organization, it was possible to spend money only on consulting services and staff salaries. For all other purposes – with special permission. So for me, the freedom to spend the company’s money and still get commissions was brutal.
The “Black Swan” in American financier Nassim Taleb’s terminology arrived earlier than expected. in August 1998. Although by all accounts it should have been October, the traditional month of financial turmoil. The pyramid of short-term government bonds collapsed, burying the savings of investors, banks and businesses.
Investors from “unfriendly countries” were particularly affected – they only got back 13 cents for every dollar invested. In light of the blockade of Russian gold and foreign exchange reserves, I cannot say that I pity them. It was necessary to better calculate country risks – the oil market is very volatile. The budget was unable to maintain a stable ruble exchange rate, as it fell from $30 to $13 a barrel. The dollar reserves were allocated at the rate of 1 billion dollars for the purpose of foreign exchange interventions. The treasure was empty. The ruble was allowed to float freely – the fixed exchange rate was abolished. But Russian banks had to sell dollars to foreign banks at the old exchange rate, which was still 6 rubles per dollar under futures contracts. This would have ruined them, as the dollar was already worth 25-26 rubles on the market.
Thus, the government decree contained three important points: the fixed exchange rate of the ruble was abolished, and the Central Bank of the Russian Federation switched to a floating exchange rate; Russian credit institutions are prohibited from entering into forward contracts for the supply of rubles to foreign counterparties; The state short-term contracts themselves were subject to so-called. “innovations” – exchange for securities with a longer circulation period – federal loan bonds (5-10 years or more). At the same time, the Central Bank appointed a number of large banks as the primary dealers for GKOs – they needed to maintain liquidity in this market. Already in the summer of 1998, it is clear that most banks got rid of these toxic securities, but they told their customers that their money was invested in GKOs converted into OFZs, in a word, the demand is now. from the state.
It should be noted that the Bank of Russia was then run by Viktor Gerashchenko, a well-known banker from the Soviet era, who believed that the country’s banking system should be protected at all costs. Perhaps that is why he did not revoke the licenses of banks that were almost bankrupt – they did not make customer payments outside the bank, somehow immediately lost money or other property. Soon all real estate was rewritten to subsidiaries and the money was given in the form of loans to their own offshore companies. In short, the banking system was on the verge of collapse, at this threshold it was held by the strong hand of the head of the Central Bank, nicknamed Hercules in banking circles.
In Russia, we were only able to apply to “one good bank” to pay a $40 million bill through the courts, but it had no money despite not being declared bankrupt.
Our way lay in the city of London, where the bank bought a building for about the same amount according to operational services.
My call to a law firm known not only in the City but far beyond its borders caused a storm of emotions there. Yes, of course they heard about this bank and our company. Yes, they have a very experienced specialist on this subject. Where is it convenient for you to meet him? Oh, in your room at the Hilton on Regent Street? Fine, wait an hour.
There was a knock on the door of my cozy room. A clever-looking man walked in. The offer to drink Johnny Walker Blue Label was accepted, he just asked for soda. We don’t do that, I said, and there’s no ice. In general, after the first bottle of whiskey, it became clear that this bank is a client of this company and therefore cannot represent our interests due to conflict of interest. But the lawyer secretly told me that we hardly have a chance to sue this property. First, the money passed through a chain of offshore companies and changed hands several times. Secondly, even if we get an order from a Russian court to arrest the building as a precautionary measure in a case against a bank, it is far from certain whether that decision will be made by an English court. Thirdly, it is not clear whose money the building was bought – there were many such victims.
The lawyer asked: Has anyone been in jail after such fraud with the property of the depositors? What could I say? That the former bank manager later moved to a senior position at the Deposit Insurance Association?
The founders asked me to find the possibility of opening a personal account in a UK bank. I went around a number of well-known British credit institutions: HSBC, Royal Bank of Scotland, National Westminster, etc. When the clerk asked what country I was from, I replied proudly, like Vladimir Mayakovsky. The clerk immediately wiped the friendly smile off his face and announced that, at the behest of the Bank of England, they could not open accounts to citizens of Russia and Nigeria. News of the default on government bonds in Russia immediately spread throughout Europe.
But I must say a few words about “Nigerian letters”. In the early 90s, if you appeared somewhere on the Internet, you can receive a letter with the following content: “Dear Mr. Ivanov, I am the daughter of the Nigerian Minister of Health, I can transfer the money to your bank account. That my father hid it in a secret bank account in Switzerland while he was buying medical supplies. You have to pay $10,000 for a signed blank page with telegrams and bank details.”
In a final, murderous argument, a photo of an African beauty was added, barely draped in a modest swimsuit. What can I say, one or two Russian businessmen did not fall for this bait – after sending the necessary, they did not find in their account not only Nigerian millions, but also themselves. Meanwhile, many Nigerian friends, financiers and bankers warned me about such jokes. So the British put us on the same level as Nigerian scammers. Interestingly, five years will pass, and British bankers will line up for the money of the Russian business, which offers various services, such as Private Banking or Family Office.
The moral of this story is that we can’t become Warren Buffett just by investing in banking products or securities. The real sector underlies the emergence of the middle class in the country.
The author expresses his personal opinion, which may not coincide with the editors’ position.
Source: Gazeta
