August 2002

Antonio the swindler

James Petras

Antonio showed real entreprenurial spirit at an early age. As an altar boy he sold the wine left over from Communion to a ne'er do well friend of the family before the priest could wet his lips. He was also a "bit devilish" one of the elder monseigneurs complained to his mother without going into details. The young lad innocently ignored the creeping hand of the man of god until it moved from his knee to his thigh and just a bit beyond – before he jumped up with a howl. The pious father was startled and tried soothing words, but the lad threatened to tell his confessor, a young priest vying to take the lucrative parish from the elder. The latter fearing a scandal and loss of his pension, was forced to supply the "little devil" with pistachio nuts, empanadas and little cakes, from Dona Maria, one of his devout parishioners, who wondered about the old priest's new taste for her specialties.

From altar boy young Antonio moved on to become a leader in the youth division of the Opus Dei, where he was active in fundraising and organizing retreats where business leaders and the new generation would meet for spiritual renewal. The Church fathers praised Antonio's organizing abilities and success in fundraising, though some Bishops raised some eyebrows on the bookkeeping, "miscellaneous expenses" accounted for one-third of the expenditures.

At the retreats, Antonio bent his knees and lowered his eyes at the most visible and appropriate moments, but spent most of the time chatting with bank executives, investment brokers and politically connected family members. At night during the social hour he zeroed in on the niece of a well known Bishop, though it was never clear whether it was her spirituality, bust-line or ecclesiastic ties which attracted Antonio. In any case, he managed it all well, starting with Thomas Aquinas, he finished with a romp in the high grass and an introduction to the Uncle Bishop, who had moved from saving souls to managing Church investments and property.

During his university days at the Jesuit business school, he joined the debating team, fiercely combating the crypto-Communist "Liberation Theology ", gaining the favor of the elderly hierarchs still grieving the death of Franco and the ' golden age of the Church'.

On his summer holiday, Antonio frolicked nude on the beaches of Mallorca, invited by his latest novia, Isabel, the daughter of a prominent leader in the Popular Party. "Just like Adam and Eve," he would joke, as they romped in the waves. He was artful in securing amorous relations without any strategic compromises, convincing Isabel that they could both go to confession after using a condom.

Antonio never completely abandoned either his well connected novias or his influential acquaintances, though it did affect his school work, resulting in rather low grades. "Who you know is just as important as what you know", he told one of his chums at school, ostentatiously flashing a Rolex watch.

Already in his third year at the university, Antonio was working at an investment house, doing research on investment trends. But he also made a point to observe the way in which newly entered funds were placed in overseas anonymous accounts and no due diligence was exercised on depositors of over 100 million pesetas. Antonio made a decent salary but it was not the money as much as the clients that interested him. He was deferential to the senior military officers and respectful of the high clergy and scornful of his fellow colleagues who spent their time going blind in front of computer screens.

"You never get rich working for someone else", his father advised him, a lifelong employee of the post office, "but you are never tempted to do the devil's work" his pious mother had added.

The day after graduation Antonio went looking for a new car, starting with a BMW and ending up with a Mercedes. The payments exceeded his monthly salary. He celebrated with his family at home for lunch and then took his latest novia, the daughter of a general in the Guardia Civil, to one of the most expensive restaurants in Madrid, where he suggested a weekend at a five star resort in the Canaries.

Antonio put out a flashy brochure on investment growth figures double that of his former employers, he solicited the names of prominent acquaintances for the letterhead advisory board and sent it out to individuals connected with prominent organizations. Then he rented an office in the financial district, convincing a wealthy widow to put up the rent for six months promising her 20% interest. Such was his confidence that he bought a magnificent mahogany desk and table, paying the equivalent of the yearly salaries of an army of floor cleaners in Barajas International Airport. But Antonio was not one to slouch on his leather couch admiring his furniture. He was on the phone, talking to and visiting potential clients. He got a list of the biggest charities and pension funds, located the directors and then began to phone friends or friends of friends in high positions. His current novia was the niece of the Minister of Health in the conservative government. He ran down the list of publicly-funded charities. He noted the Association of Mute, Deaf and Blind, the Pensioners of the Loyal Order of Falangist Combatants, and the Fund for Disabled Civil Guards. As a start, his novia set up an interview with the Minister of Health with whom he discussed his plans to privatize and make the charities "self- maintaining" on the bases of the earnings of his high-earning, low-risk investment funds which he called Fondos de Crecimiento y Seguridad ( FOCES ). "We lessen the burden of the State, bring in the Market but at the service of the traditional Christian virtues of charity and helping the poor." He went on the demonstrate his sincerity in pursuit of charity by promising special low charges in managing the funds – half the rate of established firms.

"The issue", counseled a successful fugitive US financier- now holdibng Israeli citizenship, " was to get the big bucks. Forget the fees - that's peanuts".

The Minister, a devout and practicing Free Marketer and Opus Dei member was impressed but wanted more information on the track record of FOCES. Antonio handed him a copy of FOCAS Report, which presented a chart showing an upward trend of 40% over the past year.

"Do you handle private funds:", the Minister queried.

"Only for friends and investors of over $50 million pesetas," Antonio answered. " My main concern is with institutional clients."

The Minister, whose own fund was rising a paltry 14% seized the chance. " Would you be willing to include me on your list of friends?"

"Of course," Antonio smiled.

Then and there the Minister signed a check for $20 million , " Just to see how it performs, I am a cautious person."

Antonio went directly to the bank and deposited the check in his personal account. That night he took his novia to a three star restaurant and ran up a bill of 50,000 pesetas. He also paid his back payments on his Mercedes. Antonio was off and running. The next day he made an appointment to see the Director of the Mute, Deaf and Blind Association. Having received a call from the Minister, he welcomed Antonio, who found him blind with greed and 'easy pickings'. The newsletter came out early, the check followed, even the private favor was included. Antonio extended his hand which was eagerly grasped by his new client. "Four hundred million pesetas is not a bad early morning business. " Antonio went back to his office and began to place his bets on the booming high tech and telecommunications sectors. Most of his market knowledge was based on his readings of the book covers of several academic treatises on the "New Economy" by US professors from prestigious universities and one highly quoted Catalan who wrote several tomes on the "scientific-technological revolution."

The phone rang three times before Antonio deigned to pick it up. It was Pedro the Gallego, whose fishing boats netted more cocaine and heroin than shrimps and bacalao.

"I would like to make an investment , Doctor Antonio. Come by my office after lunch around 5:30."

Antonio hesitated, "OK" – just to be polite.

Antonio was annoyed. After his big catch, he didn't feel like running to his office to pick up the dirty laundry.

He hesitated, "I will be able to squeeze you in, I'm running a tight schedule, make it 4:30."

The other said 5 and hung up.

Antonio looked at his list. What with the new conservative regime, the retired Falangists got a big boost in the state budget.

He dialed and spoke to the director. The young brusque voice mellowed when he mentioned FOCES. "Yes, how about tomorrow morning for breakfast?"

It went very smoothly. Antonio buttered him up with some reflection on the 'second wave' of Franquistas which greatly impressed the director, son of a former general in the National Army.

"You see, Franco reestablished order via the state, and provided security of property; the 'second wave' modernizes society by privatizing the economy, and puts the market at the service of our traditional values."

The director smiled, it gave a new meaning to his pursuit of wealth and virtue. The neo-Falangist was equally impressed by the newsletter and the list of clients which already subscribed to his FOCES funds.

"We have 400 million pesetas in pension funds of our courageous ex-combatants, can you handle that ?"

Antonio smiled, " That is the middle range of our institutional investors. I am starting a new diversified portfolio including high-grade US energy companies, in which the Falangist funds will be included, because of my family ties to the Movement from the beginning."

The Falangist eyed him for a moment. "Is there any commission for turning these funds over to FOCES?", he whispered.

Antonio stared at him. " Commission? My rate for our charities is half the rate of my competitors and one-third of what I charge the Catalans and the Basques. And you want a commission? No, my colleague, I cannot accept paying "commissions" that compromise the integrity of my House, myself and my other clients." The executive kept his cool.

"I was only testing you," he said, "as God tested Abraham."

Antonio was pleased he hadn't lost the account - preferring this kind of due diligence to an audit of his books. In compensation, Antonio agreed to pay him a "consulting fee" if he steered new business from affluent "second wave" Falangists.

In several months Antonio's investment fund made headlines in the financial pages of the leading dailies in Madrid and Catalunia. He was described as the "boy genius" of the New Economy. He gave lectures to the various business and savings and loan banks ('cajas') charging his usual fee of one million pesetas for a forty-five minute lecture and thirty minutes of questions. The major television networks interviewed him, and when the directors took him to lunch they discretely asked him for investment advice. The lines formed outside of the offices of FOCES even as Antonio rented two floors and hired dozens of young investment brokers fresh our of business schools, as well as a small army of secretaries, accountants and market analysts. Pension fund investors pleaded with him to take their money – religious orders of both sexes, the Guardia Civil, the Association for the Protection of Family, Tradition and Nation, grandmothers, widows, secretaries as well as the leading academics and of course, on the sly, the Royal Family. Antonio gave them privileged entry on a new offering of a US software company,, which provided access to hot stocks, soccer scores and upscale porn. The Queen invited him to the Palace where he met other celebrities from the world of film, high society and alas, the world of high finance.

Antonio was very busy traveling, mostly to the US, Russia and the Caribbean. He spent time in New York with the biggest and he best of Wall Street, consulting and investing according to he advice of the Big Houses – Solomon Brothers, Goldman- Sachs, Merrile-Lynch. The visceral anti-Semites in the Traditional Church abandoned their prejudices as their stocks soared ( "Those Jews are smart people", the investment manager told his pious clients", and " Antonio knows them all"). In Russia, Antonio was met at the airport by an entourage of burley men who drove him to the hotel. His business adviser was close to the inner circle of Yeltsin's closest advisers- so he said.

"The Big Man is very lucid, when he is sober", Ivan Schactman winked at Antonio. "And when he is sober, he signs off very lucrative bizness deals for the private sector."

Antonio was more impressed by the variety of hookers offered by the hotel managers, than by the financial directors, whose hands and accounts showed clear signs of excess laundering "without detergent". Antonio had dollar signs in his eyes but he hesitated when his adviser Schactman disappeared after an argument in the boardroom of GAZPROM, the oil and energy giant. When Antonio asked another investment adviser, he was told "he ran off with a sixteen year old Ukranian secretary to Marbella."

Antonio became cautious and frightened by the way companies changed hands over corpses. "It's safer not to invest here but there is room to move capital from Russia to Spain.", he thought. "We settle our disputes in courts of law, this is a lawless country of swindlers and assassins – unlike America," he commented on his way to the airport.

Antonio did not invest in Russian stocks, but he did return with several lucrative contracts to "invest Russian funds" for laundry purposes with a healthy 20% commission.

Upon his return Antonio gave a lecture at the University on "Globalization: The New World Order." He described how "globalization was the highest stage of capitalism – eliminating classes and generational conflict. Everyone gains, no one loses." Then as a gibe to the few sour-faced leftists professors he boasted "Our firm is recruiting more salaried and working people to our investment funds than all the leftist and trade unions in Spain because we make them rich now, not some pie-in-the-sky illusionary utopia of an unforeseen future."

Many students and professors crowded the podium after he finished, asking for jobs, for investment tips, for his autograph. Antonio smiled graciously and his aides gave out his business card and he left, the chauffeur opening the door of his Jaguar.

Antonio, called the office. "We have to have a meeting as soon as I get into the office. We have a huge untapped market – 'stakeholders democracy'. Invite some of the secretaries and cleaning ladies!"

Antonio walked into the meeting room. "Our focus has been too conventional, institutional." He tore off his tie and dropped his Armani jacket on the back of his chair. "Millions play the lottery and lose. We invest their funds and they become rich! We are the true revolutionaries: we will turn every Spaniard into a millionaire. How many of you secretaries have invested is FOCES funds?" Several hands went up. "Have you made money?"

"Yes!" they all shouted.

"Do you want to get rich?"

Everyone smiled. "Of course."

"Alright," Antonio was exalted, "tomorrow we call a press conference and you will be the center of attention. We are launching a massive organizing effort to secure the future welfare and current prosperity of every Spaniard who can lift his or her mattress!"

Everyone applauded.

"Our commissions will be raised since we can expect lots of clients with small sums. But remember, we are no longer a business operation, we are building an economic democracy, with investments and profits for all!" Antonio finished with a blaze in his eyes, almost shouting like a new convert to the market.

At the press conference, one reporter asked Antonio, "What would happen to the economy, if every secretary became a millionaire, who would work?"

"That will be a problem for the future. We will have to resolve the problem of leisure time and high culture. Perhaps we have to turn to Karl Marx and see what he says about organizing leisure time in a classless society," he answered jocularly.

"What if the economy plunges and the stock market goes down?" another journalist queried.

Antonio smiled. "That question is part of past conservative thought. In our time with the revolutionary New Economy there are no business cycles, as there are no smoking chimneys or formal dress. There is fiber optics, biotech, and above all information technology. All this means we will never again experience the rise and fall of markets. There is only one way and that is up. Yesterday 2000, today 3000, tomorrow 4000 – there are no limits to stocks, science and success!"

Antonio walked away as several journalists jostled for the call cards of his aides.

Two days later while Antonio was lounging in his silk pyjamas, his new novia, a princess from Silicon Valley called his attention to a news item on the collapse of a dozen dot.coms in Silicon Valley.

"I'll call my broker in New York and see what he says," Antonio yawned.

"Hello, this is Antonio from FOCES –FOCES in Madrid," Antonio took offense that the New York broker didn't immediately recognize his voice. "I want to know what you know about the collapse of those dot.coms in Silicon…"

"Nothing to worry about. A little shake out of marginal firms. It happens all the time after the explosion, there are mergers, buyouts and some losers. Then it starts up again. Nothing to worry about. If you had something in those companies, it wasn't much and the rest of the NASDAQ looks great. I advise you to buy in the dips and cream at the top."

Antonio hung up and smiled to his Silicon Princess, "He said this was a normal shake down – everything is fine."

She giggled, "I hope he meant 'shake out' and not 'shake down'."

Over the next three weeks more dot.coms went belly up. The market trembled and then dived abruptly. Antonio was perplexed. He was constantly put on hold by his brokers in New York, London, San Francisco.

When he spoke to them, they all advised him to hold-on, "it's a shake out"; or they warned "if you pull out on the bottom, you lose – wait for the recovery."

Antonio began to increase his "commissions" and take them "up front: -- and move them to anonymous offshore accounts. He called a meeting of all his staff, brokers and analysts.

"We have a necessary correction in the market. We have to inform our investors to hold tight, resist cashing in otherwise they will lose big. It's whats called on Wall Street an inevitable 'shake down', where the big firms take over the marginal firms."

Nevertheless the telephones, faxes and e-mails flooded the offices of FOCES. Outside the office lines of clients began to form. Antonio opened the doors and 'briefed' them: "Hold tight, don't panic, our investments are safe in the most advanced sectors of the new telecommunications."

But some investors started to pull out in a big way. Antonio called his brokers in the US – the IT market was falling at an accelerated pace: some million dollar stocks were cheaper than toilet paper; some billion dollar stocks couldn't pay his way to a bullfight.

He called a meeting of his accountants and auditors. "We need to cover out temporary losses," – everyone smiled – "its no joke, your jobs are next! " Antonio rasped. "We can 'take loans' on the 'financial transactions' from Russia and place large buy and sell orders for one stock with different brokers on the same day. This will inspire confidence in our investors as it will give the impression that FOCES is conducting a lot of business."

One of the accountants mentioned the growing hole in current accounts and the absence of new cash flows to cover it.

"Well, you operate with categories from the old economy. Our bonuses, and options are not really 'costs' – they are 'investments' – we are 'assets'. You need to put them on the other side of the ledger."

"What about our borrowing from the overseas banks?" a senior accountant interjected.

"That my dear colleague is the secret of our success. How we created investor confidence, paid handsome bonuses – how you bought your condo in Marbella and a 20 meter yacht – and bought into the high flying New Economy. The secret of our success is the secret loans – we didn't want to worry our investors about our borrowings, so we kept them off the formal reports."

"But Antonio, these are our debts, they are coming due and new capital inflows are drying up and our investments are crashing. What is to be done?"

The Armani auditors were worried – they knew better than anyone else that the ship was sinking and they didn't want to be left holding the bag.

Antonio raised his eyebrow, for the first time a slight crease of sweat formed on his forehead, despite the air conditioned room. " I will talk to our friends in the Finance and Health Ministries ,which cannot afford to let us sink, about a bridge loan."

The meeting ended.

That afternoon several Archbishops called as did the director of the Guardia Civil's pension fund. They all wanted a private appointment or threatened to pull their funds.

Antonio smiled as he reviewed their holdings. "Empty threats", he giggled nervously. "There's nothing left to withdraw."

He picked up the financial page of El Pais . "FOCES Investments in Crises?", he read. He called the editor to complain. The assistant editor answered that their "sources were impeccable: former auditors recently released."

"Alas, there is no loyalty in this world!" he moralized. "Only fair weather partners."

His secretary called to say that he had received a call from his Russian bizness associates who were on their way from Moscow for a private meeting. Antonio changed colors: from pink to pale yellow. The orphans and deaf and blind he could handle but the Russian mafia, he looked at his delicate fingers and a slight shiver ran down his back. "What if they bring their Albanian staff with them, they chop ears, they don't just break hands?"

Antonio grabbed his brief case, stuffed it wilh all his valuable papers and went out the back door, telling his secretary he was off on a business trip for the rest of the week.

He left his Jaguar at the office parking lot and rented a Peugeot. He called his novia and told her to meet him in 10 minutes in front of their apartment.

"I need a place to rest – a quiet villa somewhere, maybe Portugal."

"What about my clothes and shoes?", his sweetheart puckered her lips.

"We all need to make sacrifices," Antonio replied tersely.

"I promised to tell my mother whenever I leave the city," she simpered.

Antonio just drove out of the city and toward Extremadura.

The burly Russian business men pushed through the crowd of Spanish elite, showing neither respect nor consideration for the heavy gold crosses, or the Generals' medals, or the grandmothers in sunglasses and tennis shoes.

"Where is he?" the Mafia boss yelled in broken Spanish. The Spanish secretaries were badly frightened. The brokers and accountants fled into the cafeteria; one large-eared auditor decided to call the police when one of the Albanian staff stared at his auditory orifice.

The Guardia Civil poured out of the elevators and ran into the director of their pension fund, a melee ensued as the Guardia used their clubs to clear out the swearing Russians and their Albanians staff in order to put the director of their pension fund first in line. To no avail. Antonio was gone.

All the newspapers splashed the story on the front page, the television stations vied with the news of the latest charity or pension fund that was fleeced.

Meanwhile, Antonio was resting in a villa in the hills of Extremadura, waking to the sheep bells in the morning and enjoying the walks along the scenic mountain trails. He talked to few people and enjoyed the country air, preparing his next move.

"The United States of America – I took no money form them, instead I got the cucumber from them! Florida has an enjoyable climate, a certain Latin culture and is a center for flight capital from Latin America looking for promising investments."

His girlfriend smiled. "Anything is better than this god-forsaken place. But aren't you afraid of being extradited?"

Antonio smiled. "They don't extradite friends of the free market. I read where there are over one thousand ex-dictators, torturers, military and financial swindlers owning property and living normal lives in Florida. And I am just an investor whose investments went sour like millions of Americans. Pack your bags, my lovely lady."

As Antonio packed the car, three patrol cars rolled up the dusty road and blocked his way. Out jumped several Guardia.

"That's him!" exclaimed a shepherd. "He's the one who swindled the fund that was paying a 10,000 peseta pension to my deaf and mute son."

Antonio was led away. His girlfriend was yelling. "Don't forget to throw me the car keys."

In prison, his lawyers advised him not to seek bail, as a sinister-looking group of Russian and Albanian delinquents were hanging out at his office and condo.

A parliamentary investigation was launched, and most of the senior ministers of the Conservative Government claimed they were deceived by his letters of recommendations from the directors of the pension funds and charities, who in turn blamed the bishops who traced their letters to a forlorn monseigneur who claimed he remembered Antonio as a devilish altar boy.