The Prince of Risk Read online

  Lee shook his head in false modesty while waving an admonishing finger. “No, no, Mr. Ping. Such a position is surely beyond my capabilities. There are many candidates far more qualified than I.”

  Lee was lying, and everyone in the room knew it. Face demanded that he not appear too convinced of his election. In four days the members of the Chinese Communist Party would gather for a once-in-a-decade congress to choose the country’s next leaders. Besides the president, the party would select the ten-member Standing Committee to head up the more important ministries. It had been Lee’s fervent dream to be appointed vice premier of finance one day. Every action he had taken in the past ten years had been directed to this end. Some, like the creation of the China Investment Corporation, were known to all and formed the basis of his public record. Others were more impressive but known to only a few. The few, however, sat at the pinnacle of the government and ruled over the army, the Ministry of State Security, and of course the Ministry of Finance. It was these actions, not his stellar investment returns, that would guarantee he achieved his long-desired goal.

  “And besides,” Lee went on, “where would I have enough money for such a card?”

  The meeting continued. The next man discussed investments with U.S. private equity firms and hedge funds. Again the returns were impressive, as were the CIC’s investments in corporate bonds.

  The CIC’s investments were not only made for financial gain. Each held strategic considerations as well. Companies who counted the CIC, the investment firm, as an important shareholder tended to support policies beneficial to China, the country. Such policies included favorable tariffs on Chinese imports; support, or at least silence, on the issue of reunification with Taiwan; and a steadying hand on the issue of revaluation of the Chinese yuan.

  This last issue was especially important to Magnus Lee. He had been shocked by the trade representative’s announcement that the country would continue following a policy of currency appreciation. China was currently suffering a severe slowdown in economic activity. While officially it was announced that the economy was growing at over 9 percent per annum, he knew better. The undoctored reports showed the economy puttering along at an anemic 7 percent, a disastrous figure in a land where over 100,000 people joined the workforce each day. As a trained economist, he knew that only by boosting the sagging export sector could his country reinvigorate its fortunes. And to do that it must make its goods more attractive to foreign markets. There was only one solution: depreciate.

  Lee had another reason. Like all government officials, he had personal interests in the private sector, namely real estate development. Everyone knew the bottom had fallen out of the housing market. No one better than he. Until the economy picked up, he would have no buyers for his many luxury projects. There was far more to it than that, but Lee forced himself not to think about it. All would be better in a matter of days.

  The last director rose and spoke for ten minutes about the council’s ambitious forays into real estate. The most recent land deals included purchases of 200,000 acres of prime farmland in Colombia, 50,000 acres in Peru, a million acres in Chile, a gold mine in South Africa, a silver mine in Australia, a diamond mine in the Congo, and a parcel rich with uranium in Australia. There were also purchases in Namibia and Pakistan, and even in the United States of America.

  “I must report some bad news,” announced the director of real estate and natural resources. “I am sad to say that two of our esteemed country managers were killed in Zambia during the past week. On a visit to one of our gold mines, the men were trapped by miners demanding an increase in pay from four to six dollars a day and a decrease in weekly hours from eighty to sixty. Naturally, our managers refused. The miners beat them to death with their pickaxes.”

  “Savages,” said Lee.

  With that, he declared the meeting adjourned. As he shook hands and wished his directors a good day, he reviewed the meeting’s highlights. Ever larger stakes in ever more companies in the U.S. and Europe. Ever more purchases of mineral-rich land in countries around the globe. Ever more bond purchases of U.S. Treasuries, increasing America’s reliance on China. Each year his country was growing stronger and the rest of the world weaker.

  It was only the beginning.

  10

  The New York Stock Exchange stood at the corner of Wall Street and Broad in Lower Manhattan. Built in 1903, the building hearkened back to the Parthenon, with six Corinthian capitals (or columns) supporting a broad marble pediment. Since 9/11, it had been customary to drape an American flag over the breadth of the building’s façade. Astor’s father had worked here for six years. In that period Astor had visited the floor a dozen times, but never once had he thought to contact him. Setting eyes on the building, he considered how easy it would have been to give him a call, to say hello and suggest they meet for a drink around the corner at Bobby Van’s.

  How very easy…

  Astor slowed his pace, then stopped altogether. A rueful smile crossed his lips. No, he reminded himself, it wouldn’t have been easy at all. His father had never liked unannounced visits.

  “Robert, is that you?”

  Astor took another step into the room and tried to stand taller. The year was 1987, early October. He was fifteen and five feet, eight inches tall and prayed nightly that he would keep growing. His father’s birthday present was wrapped and tucked under his arm. He was dressed in his school uniform—blue blazer, gray trousers, white shirt, and striped tie—and it dawned on him that he had made a mistake in wearing it.

  “Hey, Dad. Happy birthday.”

  Fifty or so well-dressed, rosy-cheeked men and women crowded the three tables in 21’s private upstairs dining room. Though not acquainted with most of them, he recognized many of the faces. He saw the mayor and the chief of police and a famous newscaster. There were several prominent executives from Wall Street. He spotted the head of a big investment bank and, seated at a table across from him, the man he had replaced a year earlier. As one, the faces turned toward him. The women smiled. The men waited for their cue.

  “I brought something for you,” said Astor, clutching the gift. “To help you celebrate.”

  Edward Astor stood up laboriously, making no move to approach and welcome him. “Today is Thursday, is it not?”

  “October fifteenth,” said Bobby Astor. “At least, I hope.” A few guests chuckled. He chuckled, too, pleased to have broken the ice, his eyes flitting nervously from face to face, marshaling support.

  “Still at Deerfield, young man?” It was the mayor. Astor recalled hearing his father denounce him in terms that would make a marine blush. Yet here he was, seated at his father’s side and somehow aware that Astor had attended Deerfield Academy. Astor saw his father’s eyes flash. The mayor could not have asked a worse question.

  “No, sir,” answered Astor. “I didn’t—”

  “He was kicked out,” Edward Astor stated, in the same stentorian baritone. “My son the pyromaniac.”

  Astor tried to grin. The effort was painful. “It was just a paper fire…in my trash can…bad grade on a test.”

  “A paper fire that enveloped the curtains and severely burned one of your fellow students.”

  “Just his hands. Only second-degree. He’s fine.”

  A silence fell on the room. All the bonhomie and goodwill present when he’d entered had vanished as if sucked out through a pressure grate. The smiles vanished, too.

  “My son attends the Kent School at present,” said Edward Astor.

  Astor tucked the birthday gift back under his arm. It didn’t matter what he had brought. It wouldn’t be enough. “For the moment, at least,” he added sheepishly, hoping to win back the crowd. “I’m getting a math test back tomorrow.”

  There was a guffaw and a few chuckles. His father cleared his voice and the laughter stopped. “Speaking of tomorrow, there is school?”

  “Yes, sir.”

  “Pray tell, Robert, how did you get leave to join us this Thursday at
nine o’clock in the evening?”

  Astor hadn’t expected the question. Or if he had, he’d expected it man-to-man, when he could make up a bullshit story about getting permission from the dean of students. He was a good liar, but he was punching above his weight with the chief of the New York City Police Department staring at him. He looked at his father, standing there like a statue in a three-piece suit, hands tucked into his waistband, eyes boring into him as if he’d been caught stealing someone’s wallet.

  “I…uh…” Astor considered leaving. The door was right behind him. A rapid about-face and he could be gone before anyone could say a word. His pride might be tarnished, but he’d have time to stop at Trader Vic’s in the Plaza for a mai tai and still make the 11:04 to Westport.

  “We are waiting,” declared his father, a judge demanding a confession.

  It would be the truth, then.

  “I bribed my proctor,” said Astor.

  “Ex—excuse me?”

  It was the closest to a stammer Astor had ever heard come out of his father’s mouth.

  “My house proctor,” he went on. “I took him for fifty bucks playing poker before football practice. I knew he needed the money to take out his girlfriend this weekend. I told him I’d forget about the dough if he’d let me come into New York for the night.”

  “And he agreed?”

  “He wants to get laid, doesn’t he?”

  At that, the entire room burst out laughing. The chief of police covered his mouth and looked away, but he was smiling. So was the mayor. Astor waited long enough to see his father’s eyes narrow, his jaw set, then added, “I explained that it was your birthday, of course.”

  Edward Astor waited until the room quieted. “Very amusing, Robert, as always. I’m sure we’ll all be equally amused when you are expelled for leaving campus without permission.”

  “Don’t worry, Dad, I’m going now. I just wanted to bring you this.” Astor made his way between the tables and handed his father his present. It was slim and the size of a sheet of paper.

  Edward Astor dropped it on the table.

  “Don’t you want to open it?”

  “The only present I want from you is a decent report card,” said his father. “Hopefully without an F.”

  Astor came closer so that they were face-to-face and could speak without the entire room overhearing them. “It’s a paper I wrote for school. It’s about the stock market. You see, I think that something’s going to happen—”

  “Do you? I’m glad. Something always happens in the market.”

  “I mean, I think there’s a bubble. Prices are too high, given earnings.”

  “And what would you know about any of this?”

  “I’ve been doing some trading. Not real, just on paper…you know, at school.”

  “Trading or gambling? There is a difference.”

  “Yes, sir. I know that.”

  “You can’t bullshit the market, Robert.”

  “I’ve been doing well. Trading. Like you taught me.”

  “A rising tide lifts all boats.”

  “I don’t think it’s going to continue. In fact, I think something bad is going to happen. Like a crash. And soon.”

  Edward Astor turned from him and spread his arms to the guests. “My son the fortune-teller. Not content to play hooky from school and embarrass me in front of my dearest friends, he’s now giving me advice on the market.”

  “Dad, just let me finish…”

  “You just did.”

  Astor stared into his father’s eyes, wondering how he could have come from this man, how he could share any part of him. Without another word, he made his way from the room and continued downstairs to the cloakroom. He looked at his watch and saw that the time was coming up on ten. He knew the doorman at the Limelight. He forgot all about the 11:04 and school tomorrow and the consequences that his absence would unleash.

  “Young man, wait a moment.”

  Astor turned. It was the head of the famous investment bank. “Yes, sir?”

  “What was your hand?”

  “Excuse me?”

  “When you were playing poker this afternoon and you beat your proctor, what were you holding?”

  Astor put on his overcoat. “Me? Nothing. I was bluffing.”

  11

  The sound of a truck grinding to a halt nearby returned Astor to the present. Fifty yards away, a large van with NYPD markings stopped at the entry to Exchange Place, the pedestrians-only square fronting the Exchange. A dozen men clad in black assault gear—helmets, vests, boots—jumped from the van, machine guns cradled to their chests. He recognized them as members of the NYPD’s elite Hercules detachment. The Stock Exchange building was one of the city’s prime “hard targets.” Nothing better represented all that was good and bad about America’s brand of capitalism. Living in Manhattan made everyone at least a little bit of an expert in counterterrorism.

  Astor presented himself to the uniformed guard at the 2 Broad checkpoint. A blond, ruddy-cheeked man dressed in a blue suit stood a few steps away. Hearing Astor’s name, he came forward. “Sloan Thomasson,” he said, extending a hand. “My condolences. I handled security for your father. Come with me.”

  Thomasson led the way into the building. Astor cleared the metal detector, and the two continued to a bank of elevators. “Have you visited before?” asked Thomasson.

  “Only the floor.”

  “Your father’s office is in 11 Wall. The Exchange complex comprises eight buildings that take up the entire block. It’s a real labyrinth.”

  The elevator arrived and Thomasson pressed the button for the seventeenth floor.

  Astor waited for the doors to close, then asked, “Did you know my father was planning on going to D.C. this weekend?”

  “No, sir, I did not. I’m only required to provide security here at the Exchange and for official trips. I spoke with your father Friday morning as he was leaving the office. He told me he was spending the weekend at his home in Oyster Bay.”

  “Taking off on a Friday morning? That doesn’t sound like him. Did he seem preoccupied with anything? In any way out of sorts?”

  “It’s not my place to say, but as far as I could see, no. We had a trip planned to Atlanta early in the week. Your father didn’t much like dealing with the new owners. Nothing special about that. But preoccupied? No.”

  In December 2012, the New York Stock Exchange had been purchased by IntercontinentalExchange, or ICE, a giant multinational concern active in the trading of futures and derivatives. Astor didn’t think the new owners were the problem. It was his father’s arrogance. Edward Astor didn’t like reporting to anyone but himself.

  The elevator slowed. The doors opened. Thomasson zigged and zagged down a series of corridors. Astor stayed at his shoulder. It was his first time in the executive quarters of the Exchange and he was feeling like a rat navigating a maze. Thomasson was right to refer to it as a labyrinth. The corridor emptied into a large, high-ceilinged anteroom with blue carpeting and photographs depicting the Exchange’s history.

  “Here we are,” said Thomasson. “Your father’s office is inside. Mrs. Kennedy, his secretary, is expecting you.”

  “Thank you.” Astor shook hands. “Tell me something, what did you do before taking this job?”

  “Twenty-five years in the Secret Service. My last post was heading up the PPD—the presidential protective detail.”

  “Still have friends in the service?”

  “Lots.”

  “You know what went down last night. What happened?”

  “Word is that the driver lost control of the vehicle.”

  “The car was making a run across the South Lawn. That’s a little more than jumping a curb and running into a tree.”

  “Yes, sir, it is.”

  Astor thought Thomasson knew more than he was letting on. “Well?”

  Thomasson leaned in closer, as if vouchsafing a secret. “When I said ‘lost control,’ I didn’t mean that he wa
s driving too fast or that it was in any way his mistake. I meant that the driver was no longer able to control the vehicle in any way, shape, or fashion.”

  “Then who was?”

  Astor waited for an explanation, but Thomasson said nothing more. Before Astor was able to press him, a petite, birdlike woman emerged from her office, walked directly to him, and hugged him. “I’m so sorry for your loss,” she said.

  Astor returned the hug gently. He could feel her sobbing and he held her until she stopped.

  “Please, excuse me,” she said, stepping back and wiping her eyes. “I’m Dolores Kennedy. I worked with your father for the past five years.”

  Kennedy was a kindly-looking brunette with short hair and a schoolmarm’s inquisitive gaze.

  “I’m afraid we weren’t close,” said Astor.

  “Oh, I know,” she said, as if the estrangement pained her. “But he talked about you.”

  Astor didn’t comment. He didn’t think he’d like to learn what his father had had to say. He thanked Thomasson, then followed Dolores Kennedy into a large suite of offices. “May I look around?”

  “The FBI phoned first thing. They requested that none of his belongings be disturbed until their team arrives.”

  “I won’t touch anything.”

  The secretary shot a glance over his shoulder. Thomasson nodded. “Very well,” she said. “Right in here.”

  The office was palatial, with high molded ceilings, dark carpeting, and a desk that would have done a robber baron proud. Photographs of his father ringing the opening bell with various businessmen, entertainers, athletes, and political figures crowded the credenza, vying for space with Lucite blocks announcing the latest companies to list their shares.

  The New York Stock Exchange was a business like any other, and its first priority was to turn a profit. It made money in several ways. First, and most important, it charged a fee on every share of stock bought and sold. The amount had plummeted over the years, from dimes to nickels and then lower. These days the Exchange charged fractions of a penny per share traded. It wasn’t a high-margin business. On the other hand, the volume of shares traded had skyrocketed. A normal day saw well over a billion shares change hands.