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“It probably wouldn’t have happened if I had been on time,” said Richard, ignoring her comment. “Damn Major Abanjo.”
“Who is Major Abanjo?” asked Florentyna.
“A young army officer who was behind the coup in Nambawe today.”
“Why should a little African state stop you from being on time for William’s birthday party?”
“That little African state has an outstanding five-year loan agreement of three hundred million dollars that Lester’s led on in 1966 and the repayment is due in three months.”
“We are in for three hundred million dollars?” said Florentyna, flabbergasted.
“No, no,” said Richard. “We covered the first fifteen percent of the loan, and the remaining two hundred and fifty million was divided among thirty-seven other financial institutions.”
“Can we survive a loss of forty-five million dollars?”
“Yes we can, as long as the Baron Group remains our friends,” said Richard, smiling at his wife. “It’s three years’ profits down the drain, not to mention a severe blow to our reputation with the other thirty-seven banks and the inevitable drop in our stock price tomorrow.”
Lester’s stock dropped the next day by more than Richard had anticipated, for two reasons. The newly self-appointed President of Nambawe, Major Abanjo, announced that he had no intention of honoring previous government commitments made with any “Fascist regime” including America, Britain, France, Germany and Japan. Richard wondered how many Russian bankers were boarding planes to Central Africa at that moment.
The second reason became apparent when a reporter from The Wall Street Journal called Richard and asked him if he had any statement to make about the coup.
“I really have nothing to say,” said Richard, trying to sound as if the whole episode were about as troublesome to him as brushing a fly off his sleeve. “I feel sure the problem will sort itself out during the next few days. After all, the loan is only one of many that Lester’s is involved with at the present time.”
“Mr. Jake Thomas might not agree with that opinion,” said the journalist.
“You have spoken to Mr. Thomas?” said Richard in disbelief.
“Yes, Mr. Kane, he called the Journal earlier today and had an off-the-record conversation with our publisher, leaving us in no doubt that he would be surprised if Lester’s could survive such a demand on cash flow.”
“No comment,” said Richard curtly, and put the phone down.
At Richard’s request, Florentyna called a board meeting of the Baron Group to ensure enough financial backing so that Lester’s could survive a run on its stock. To Richard’s and Florentyna’s surprise, George was not at all convinced that the Baron Group should enmesh itself in Lester’s problems. He told them he had never approved of using the Baron stock as security for the takeover of the bank in the first place.
“I remained silent at the time, but I’m not willing to do so on a second occasion,” he said, his hands resting on the boardroom table. “Abel never liked throwing good money after bad, whatever his personal involvement. He used to say that anyone could talk about future profits and start spending money they hadn’t yet earned. Have you considered that we might both end up going under?”
“The sum involved is not that large to the Baron Group,” said Richard.
“Abel always considered any loss to be ten times the problem of any profit,” George told him. “And what outstanding loans do you have to other countries around the world which could be taken over while we are asleep in bed?”
“Only one outside the EEC, and that’s a loan of two hundred million to the Shah of Iran. Again we are the lead bank with a commitment of thirty million, but Iran has never missed an interest payment by so much as an hour.”
“When is their final payment due?” asked George.
Richard flicked through a bulky file that lay on the table in front of him and ran his forefinger down a column of figures. Although nettled by George’s attitude, he was pleased to be well prepared for any query that might arise.
“June nineteen, 1978.”
“Then I want an assurance you won’t involve the bank again when the loan comes up for renewal,” said George firmly.
“What?” said Richard. “The Shah is as safe as the Bank of England—”
“Which hasn’t proved to be so solid lately.”
Richard was beginning to look angry and was about to respond when Florentyna interrupted.
“Hold on, Richard. If Lester’s agrees not to renew its loan with the Shah in 1978, or involve itself in any further Third World commitments, George, will you in turn agree to the Baron Group’s underwriting the forty-five million loss on the Nambawe contract?”
“No, I’d still need some more convincing.”
“Like what?” Richard demanded.
“Richard, you don’t have to raise your voice. I am still the president of the Baron Group. Abel gave thirty years of his life to building the company up to its present position, and I don’t intend to see that achievement demolished in thirty minutes.”
“I’m sorry,” said Richard. “I haven’t had much sleep for the last four days. What would you like to know, George?”
“Other than the agreement with the Shah, is Lester’s committed to any other loans over ten million?”
“No,” said Richard. “Most major country-to-country loans are serviced by the prime banks like Chase or Chemical and we end up with only a tiny percentage of the cap
ital sum. Obviously, Jake Thomas felt that Nambawe, which is rich in copper and manganite, was as sure a bet as he could hope to find.”
“We already know, to our cost, that Mr. Thomas is fallible,” said George. “So, what other loans above five million remain outstanding at the bank?”
“Two,” replied Richard. “One with General Electricity in Australia for seven million, which is secured by the government, and one with ICI in London. Both are five-year loans with set payment dates and so far repayments have been met on schedule.”
“So if the Group wrote off the forty-five million, how long would it take Lester’s to recoup the loss?”
“That would depend on the percentage any lender required and over what period of time the money was loaned.”
“Fifteen percent over five years.”
“Fifteen percent?” repeated Richard, shocked.
“The Baron Group is not a charity, Richard, and as long as I am president it is not in business to prop up ailing banks. We are hoteliers by trade and have shown a seventeen percent return on our money over the past thirty years. If we loaned you forty-five million, could you pay it back in five years at fifteen percent?”
Richard hesitated, scribbled some figures on the pad in front of him and checked his file before he spoke. “Yes, I am confident we could repay every penny in five years, even assuming the African contract is a total write-off,” he said quietly.
“I think we must treat the contract precisely that way,” said George. “My informants tell me that the former head of state, King Erobo, has escaped to London and taken up residence at Claridge’s and is looking at a house that’s for sale in Chelsea Square. It appears he has more money stashed away in Switzerland than anyone other than the Shah, so I feel he’s unlikely to return to Africa in a hurry—and I can’t say I blame him.” Richard tried to smile as George continued. “Subject to all you have told us being confirmed by the Baron’s auditors, I agree to covering the African loan on the terms stated, and I wish you luck, Richard. I’ll also let you in on a little secret: Abel didn’t like Jake Thomas any more than you do, which is what tipped the balance for me.” George closed his file. “I hope you will both excuse me now as I have a lunch appointment with Conrad Hilton and he has never once been late in thirty years.”
