The Bancroft Strategy Read online

Garrison sought and obtained a glance of approval from Drucker. “Stay here. We’re both going to have questions.”

  Gomes stepped into the office with a chastened, summoned-to-the-principal’s expression. It took another impatient gesture from Drucker before he sat down on one of the green—somewhat green, had been green, more green than anything else—chairs.

  “What’s our move here?” Drucker asked Garrison.

  “You get kicked in the balls, you double over. That’s the move.”

  “So we’re screwed.” Drucker, the winds of outrage having gusted out, now looked as worn and battered as everything else in his office, and he was by far the newest thing in it, having held the position of D.O. for just four years.

  “Royally screwed.” Will Garrison was perfectly cordial around Drucker, but he could not be called deferential. He had more years on him than any other senior Cons Ops manager, with an accumulated store of experience and connections that, just often enough, proved invaluable. The years had not mellowed him, Gomes knew. Garrison had always been a hard-ass by reputation, and if anything, he was only more so now. Around the shop, people liked to say that if there were a Mohs scale of hard-assedness, he’d pretty much top it out. He had a long memory, a short temper, a jut-jaw that jutted more when he was irate, and a temperament that started out at the setting “Vaguely Pissed” and got worse from there.

  When Gomes was in college, at Richmond, he once bought a used car that had a broken radio: The frequency dial was stuck on a heavy-metal station and the volume dial was stuck at the halfway point, so that it could only be turned louder. Aside from the heavy-metal part, Garrison reminded him of that car radio.

  It was just as well that Drucker had little interest in any org-chart rituals of subservience. The bureaucratic nightmare, Gomes’s colleagues all agreed, was the classic “kiss-up, kick-down” kind of guy. Garrison might kick down, but he didn’t kiss up, and Drucker might kiss up, but he didn’t kick down. Somehow it worked.

  “They took his shoes off, too,” Drucker said. “Dumped on the side of the road. So long, GPS transponder. They’re no fools.”

  “Mother of Christ,” Garrison rumbled, and then, shooting a glance at Gomes, he charged, “Who?”

  “We don’t know. Our man at the scene said—”

  “What?” Garrison jumped.

  Gomes felt like a suspect under interrogation. “The asset said the captors barged in on a meeting that had been set up between—”

  “I know all about the goddamn meeting,” Garrison snapped.

  “Anyway, it was a hood-and-hustle job. The bad guys threw him into a van and disappeared.”

  “The bad guys,” Garrison repeated, dyspeptic.

  “We don’t have much on the captors,” said Gomes. “They were fast and they were brutal. Shot up everybody else in sight. Headdresses, automatic weapons.” Gomes shrugged. “Arab militants. That’s my opinion.”

  Garrison stared at the young man the way a butterfly collector with a long needle stares at a specimen. “Your opinion, huh?”

  Drucker turned to the OIC. “Let’s get Oakeshott in here.” He barked the order over the intercom.

  “I’m just saying,” Gomes continued, trying to keep the tremor out of his voice.

  Garrison folded his arms on his chest. “Our boy got snatched in Beirut. You venture Arab militants were involved.” He spoke with exaggerated precision. “I bet you were Phi Beta Kappa in college.”

  “I didn’t do the Greeks,” Gomes muttered.

  Garrison made a sibilant pfut. “Goddamned greenhorn. Somebody gets snatched in Beijing, you’d announce you think a Chinaman did it. Some things go without saying. If I ask you what kind of van, don’t tell me ‘the kind with wheels.’ Com-fucking-prende?”

  “Dark green, dusty. Curtained windows. A Ford, our guy thought.”

  A tall, reedy man with a thin face and a nimbus of graying hair stepped into the office. A herringbone tweed blazer draped loosely around his narrow torso. “So whose operation was this?” asked Mike Oakeshott, the deputy director for analysis. He dropped himself on another of the more-green-than-not chairs, folding up his long, attenuated arms and spindle shanks like a Swiss Army knife.

  “You know damn well whose,” Garrison growled. “Mine.”

  “You’re the officer-in-charge,” Oakeshott said, with a knowing stare. “Who designed it?”

  The burly man shrugged. “Me.”

  The senior analyst just looked at him.

  “Me and Pollux,” Garrison amended, with a concessive shrug. “Pollux, mainly.”

  “Another Tour de France of backpedaling, Will,” said Oakeshott. “Pollux is a brilliant guy when it comes to operations. Not a guy for needless risk. So factor that in.” A glance at Drucker. “What was the game plan?”

  “He was undercover for four months,” Drucker said.

  “Five months,” Garrison corrected. “Legend was ‘Ross McKibbin.’ An American businessman who walked on the shady side of the street. Supposedly a go-between, scouting out laundering opportunities for narco-moohla.”

  “That’s the right kind of bait if you’re after minnows. He wasn’t.”

  “Damn right,” Drucker said. “Pollux had a slow-infiltration strategy. He wasn’t after the fish. He was looking for the other fisherman. The bait just got him a place on the wharf.”

  “I get the picture,” Oakeshott said. “It’s George Habash revisited.”

  The senior analyst did not need to elaborate. In the early 1970s, the Palestinian resistance leader George Habash, known as the Doctor, hosted a secret summit in Lebanon for terror organizations around the world, including ETA in Spain, the Japanese Red Army, the Baader-Meinhof gang, and the Iranian Liberation Front. In the years that followed, Habash’s organization, and Lebanon generally, became a place where terrorists from all over came in search of armaments. The Czech-model Skorpion machine gun that was used to murder Aldo Moro had been acquired in the Lebanon arms mart. When the leader of Autonomia, the Italian revolutionary group, was arrested with two Strela missiles, the Popular Front for the Liberation of Palestine actually claimed the missiles as their property and requested their return. By the fall of the Berlin Wall, though, the Lebanon arms markets, the relay systems through which extremist organizations from around the world could buy and sell the tools of their deadly campaigns, had settled into a long decline.

  No longer. As Jared Rinehart and his team had confirmed, the nexus was being revived: The circuits were buzzing again. The world had changed—only to change back. A ballyhooed new world order had grown old fast. The intel analysts recognized something else as well. Armed insurrection did not come cheap; the State Department’s Bureau of Intelligence and Research estimated that the Red Brigade spent the equivalent of a hundred million dollars a year maintaining its five hundred members. Extremist groups today had extreme needs: plane travel, special weaponry, marine vessels for transport of munitions, the bribery of officialdom. It added up. Plenty of legitimate businessmen were desperate for a quick cash infusion. So were a small but significant number of organizations devoted to organized mayhem and destruction. Jared Rinehart—Pollux—had devised a strategy to get into the buy-side of the equation.

  “Espionage ain’t bean bag,” Drucker mused softly.

  Oakeshott nodded. “Like I said, Pollux is as smart as they come. Just hope he didn’t outsmart himself this time.”

  “He was getting close, making good progress,” Garrison said. “Want to get in tight with the banking community? Start making loans and they’ll come around soon enough, just to take a look at you. Pollux knew that one of the guys at the meet was a banker, with fingers in a lot of pies. A rival, not a supplicant.”

  “Sounds pretty elaborate, and pretty expensive,” Oakeshott said.

  Garrison scowled. “You don’t get into the Ansari network by filling out an application.”

  “The penny drops,” said Oakeshott. “Let me see if I’ve got this right. The same night that Ansari�
�s supposed to be in his citadel of evil, finalizing a three-hundred-million-dollar chain deal for midsized armaments—the same night that he’s dotting t’s, authorizing digital signatures, and stowing a shitload of cash in one of his numbered accounts—we’ve got Jared Rinehart, a.k.a. Ross McKibbin, sitting down with a roomful of greedy shopkeepers in Beirut. Then he’s snatched by a band of towel-heads with Kalashnikovs and attitude. Same night. Anybody think that’s just an accident?”

  “We don’t know what went down,” Drucker said, gripping the back of his chair as if to keep his balance. “My gut says that he played the part of the rich American businessman too well for his own good. The guys who bundled him off probably figured he was worth a lot as a hostage.”

  “As a U.S. intelligence agent?” Oakeshott sat up very straight.

  “As a rich American businessman,” Drucker persisted. “That’s what I’m saying. Kidnapping is pretty common in Beirut, even now. These militant bands need cash. They’re not getting it from the Sovs anymore. The Saudi royals have pulled back. The Syrians are turning into skinflints. My guess is that they took him for the guy he claimed to be.”

  Oakeshott nodded slowly. “Puts you all in a pretty pickle. Especially with what’s happening on the Hill.”

  “Christ,” Drucker muttered. “And tomorrow I’ve got another meeting with that goddamn Senate oversight committee.”

  “They know about the op?” Garrison asked.

  “In general terms, yeah. Given the size of the budget item, there was no way around it. They’re probably going to have questions. I sure as shit don’t have any answers.”

  “What kind of a budget item are we looking at?” Oakeshott asked.

  A bead of sweat on Drucker’s forehead pulsed along with the vein beneath it, glinting in the sun. “Half a year means major sunk costs. Not to mention the manpower involved. We’ve got considerable exposure here.”

  “Pollux’s chances are going to be better the sooner we do something,” Gomes said earnestly, breaking in. “In my opinion.”

  “Listen to me, kid,” Garrison said with a baleful stare. “Opinions are like assholes. Everybody’s got one.”

  “The Kirk Commission finds out what’s gone down,” Drucker put in quietly, “I’m going to have two. And I don’t mean opinions.”

  Despite the shafts of midday sun, the room had come to seem shadowed, gloomy.

  “I don’t mean to be out of line, but I’m confused,” Gomes said. “They took one of our guys. A key player, too. I mean, Jesus, we’re talking about Jared Rinehart. What are we going to do?”

  For a long moment nobody spoke as Drucker turned toward his two senior colleagues and silently canvassed their opinions. Then he gave the junior officer a styptic look. “We’re going to do the hardest thing of all,” the director of operations said. “Absolutely nothing.”

  Chapter Two

  Andrea Bancroft took a hurried sip of bottled water. She felt self-conscious, as if everyone were staring at her. As a glance around the room confirmed, everyone was staring at her. She was in the middle of her presentation on the proposed deal with MagnoCom, widely seen as an up-and-coming player in the cable and telecom industry. The report was the biggest responsibility the twenty-nine-year-old securities analyst had been given so far, and she had put a great deal of time into the research. This wasn’t just another backgrounder, after all; it was a deal in motion, with a tight deadline. She had dressed for the presentation, too, in her best Ann Taylor suit, with a blue-and-black plaid pattern that was bold without being forward.

  So far, so good. Pete Brook, the chairman of Coventry Equity Group and her boss, was sending her approving nods from his seat in the back. People were interested in whether she had done good work, not in whether she was having a good-hair day. It was a thorough report she was delivering. A very thorough report, she had to admit. Her first few slides summarized the cash-flow situation, the various revenue streams and cost centers, the write-offs and capital expenditures, the fixed and variable expenses that the firm had incurred over the past five years.

  Andrea Bancroft had been a junior analyst at Coventry Equity for two and a half years, a fugitive from grad school; to judge from Pete Brook’s expression, she was in for a promotion. The qualifier “junior” would be replaced with “senior,” and her salary could very well hit six figures before the year was over. That was a lot more than her fellow grad students were going to see in academe any time soon.

  “It’s clear at a glance,” Andrea said, “that you’re looking an impressive ramp-up in revenue and in customer base.” A slide with the upward-sloped curve was projected onto a screen behind her.

  Coventry Equity Group was, as Brook liked to put it, a matchmaker. Its investors had money; the markets had people who could put that money to good use. Undervalued opportunities were what they looked for, with a particular interest in PIPE opportunities—private investment in public equity, or situations where a hedge fund like theirs could acquire a bunch of common stock or equity-linked securities at a discount. Those typically involved distressed firms with a serious need for a fast cash infusion. MagnoCom had approached Coventry, and Coventry’s investment-relations manager was excited by the prospect. It seemed in surprisingly good shape: MagnoCom, as its CEO explained, needed the cash not to weather a bad patch but to take advantage of an acquisition opportunity.

  “Up, up, up,” Andrea said. “You see that at a glance.”

  Herbert Bradley, the plump-faced manager for new business, nodded with a look of pleasure. “Like I said, this ain’t no mail-order bride,” he said, looking around at his colleagues. “It’s a marriage made in heaven.”

  Andrea clicked to the next side. “Except what you can see at a glance isn’t all there is to see. Start with this write-off list of so-called onetime expenses.” These were numbers that had been buried in a dozen different filings—but, when gathered together, the pattern was unmistakable and alarming. “Once you drill down, you find that this firm has a history of disguising equity-for-debt swaps.”

  A voice from the rear of the conference room. “But why? Why would they need to?” asked Pete Brook, rubbing his nape with his left hand, as he did when he was agitated.

  “That’s the one-point-four-billion-dollar question, isn’t it?” Andrea said. She hoped she was not coming across as cheeky. “Let me show you something.” She projected a slide showing revenue intake, then superimposed another slide showing the number of customers acquired over the same period. “These figures ought to be in a tandem harness. But they’re not. They’re both rising, yes. Only, they’re not rising together. When one zags down in a quarter, the other might zag up. They’re independent variables.”

  “Jesus,” Brook said. She could tell from his crestfallen expression that he got it. “They’re shamming, aren’t they?”

  “Pretty much. The acquisition cost per household is killing them, because the service is so deeply discounted for new customers and nobody wants to renew at the higher rate. So what they’ve done is run two flattering figures up the flagpole: customer growth rates and revenue growth rate. Assumption is, we’re going to look at the big picture and see cause and effect. But the revenue is smoke and mirrors, ginned up by equity swaps, and by hiding the money they’re losing on growing the customer base through all these supposed onetime charges.”

  “I can’t believe it,” Brook said, slapping his forehead.

  “Believe it. That debt is a big bad wolf. They just put it in a dress and a bonnet.”

  Pete Brook turned to Bradley. “And they had you saying, ‘What lovely big teeth you have, Grandma.’”

  Bradley fixed Andrea Bancroft with a stern gaze. “You sure about this, Miss Bancroft?”

  “Afraid so,” she said. “You know, I used to do history, right? So I figured the history of the company might shed some light on things. I looked way back, back before the DyneCom merger. Even then, the CEO had a habit of robbing Peter to pay Paul. New bottle, old wine. MagnoCom has a b
usiness plan from hell, but the financial engineers they hired are pretty brilliant, in a twisted way.”

  “Well, let me tell you something,” Bradley said in a level voice. “Those pissers met their match. You just saved my goddamn ass, not to mention the firm’s bottom line.” He grinned and started applauding, having calculated that a quick surrender to the winning argument was the better part of valor.

  “It would have all come out on the Form Eight-K,” Andrea said as she gathered her papers and started to walk back to her seat.

  “Yeah, after the deal was inked,” Brook interjected. “Okay, ladies and germs, what have we learned today?” He looked around at the others in the room.

  “Get Andrea to perform your due diligence,” one of the traders said with a snort.

  “It’s easy to lose money in cable,” another one cracked.

  “Give it up to Bangin’ Bancroft,” called out another would-be wit, this one a more senior analyst who hadn’t caught the flimflam in his first pass through the PIPE proposal.

  As the meeting started to break up, Brook came over to her. “Solid work, Andrea,” he said. “More than solid. You’ve got a rare talent. You look at a stack of documents that looks completely in order, and you know when something’s off.”

  “I didn’t know—”

  “You sensed it. Then, even better, you worked your ass off to prove it. There was a lot of ditch-digging behind that presentation. I bet your spade banged against bedrock more than once. But you kept digging, because you knew you’d find something.” The tone was of assessment as much as commendation.

  “Something like that,” Andrea admitted, tingling slightly.

  “You’re the real deal, Andrea. I can always tell.”

  As he turned to speak to one of the portfolio managers, one of the secretaries approached her, clearing her throat. “Miss Bancroft,” she said. “A call you might want to take.”

  Andrea floated back to her desk, hydroplaning on relief and pride. She had kicked ass, just as Pete Brook said. His look of gratitude was genuine, and so was his praise afterward; there was no doubt about that.