‘What’s happening, Knútur? Who is this man?’ She tore herself from his embrace. ‘What’s going on, Knútur?’
‘Oh God!’ he gasped. ‘I can’t do this any more.’
The woman turned to Sigurdur Óli.
‘Who are you?’
Sigurdur Óli looked at Knútur. He had come intending to apply the thumbscrews but had not anticipated a reaction like this. Knútur was at the end of his tether.
‘I’m from the police,’ he replied. ‘I’m afraid he’ll have to come with me, though you can accompany him to the station if you like. I imagine he’ll be staying in overnight.’
She seemed unable to grasp what he was saying. She could understand the words but could not connect them. Observing her incomprehension, Sigurdur Óli hoped that Knútur would come to his aid, but he did not react.
‘What does he mean, Knútur?’ asked the woman. ‘Answer me. Answer me, Knútur! Say something!’
Their little boy had come to the door of the office and was regarding Sigurdur Óli, his eyes still full of mistrust. His parents had not noticed him.
‘Say something!’ shouted the woman. ‘Don’t just sit there like a lemon! Is it true? Is it true what he’s saying?’
‘Mummy,’ said the little boy.
The woman did not hear him.
‘What for? What have you done?’
Knútur eyed his wife dumbly.
‘What have you done?’
‘He’s trying to talk to you,’ interrupted Sigurdur Óli. ‘Your little boy.’
‘Mummy,’ repeated the boy. ‘Mummy!’
At last she noticed him.
‘What? What is it, darling?’ she asked, trying to sound calm.
The little boy glared accusingly at Sigurdur Óli who had destroyed his evening.
‘The cake’s ready, Mummy.’
47
They had stayed, courtesy of the bank, at an expensive hotel near Piccadilly where the rooms were so large that they were almost suites, with their own office areas and two bathrooms apiece. Everything they ordered, everything they did, was charged to their expense accounts, even their trip to The Mousetrap which Sverrir had always wanted to see, and another West End play starring a famous Hollywood actress. He had enjoyed the theatre. Since both Sverrir and Arnar were of the opinion that British food was inedible, they ate at expensive oriental restaurants, including their particular favourite, Mr Chow, a Chinese place near Harrods, where they were accustomed to eating whenever they came to London on bank business, letting the waiter select their dishes for them.
The two conferences they attended, along with several dozen other middle managers and senior executives of international finance firms, were devoted to the risks and potential profit of trading derivatives in minor currencies, though two of the lectures were on tax havens. Sverrir and Arnar were especially interested as they had been involved in providing information about these to the bank’s wealthier clients. The process was perfectly straightforward and had many benefits. By registering a holding company in the British Virgin Islands, for example, and paying income into the account, it was possible to avoid paying tax, such as capital gains tax, in the country of origin. Many of the bank’s clients had taken advantage of this service.
At the end of the second lecture, Alain Sörensen had approached them and greeted them with handshakes. Sverrir knew him well, partly from other conferences of this kind but mostly because they had been in regular communication about the administration of Icelandic holding companies in tax havens. Sörensen had been employed by the bank as an expert in the field. Sverrir had caught up with him the day before at the conference and now introduced him to Arnar, telling him that Sörensen worked for an old, established bank in Luxembourg and took a keen interest in Iceland and its business sector.
Alain Sörensen asked if he could invite them out for some sushi.
Sverrir and Arnar exchanged glances. They had intended to eat at Mr Chow but sushi would be great.
‘OK,’ said Sverrir. ‘Sure.’
He took them first to a popular watering hole nearby where they drank gin and tonic and discussed everything except banking. Later in the evening they took a table at a Japanese restaurant recommended by Sörensen, although the Icelanders were suspicious of anything advertising itself as fresh fish in the centre of London. The waiters greeted Sörensen as if he were an old friend. After a pleasant chat about Iceland, during which Sörensen claimed he had always wanted to go there, he got down to business, specifically Iceland’s nominal interest rate.
He was extraordinarily well informed on the subject, so much so that they were rather taken aback by the depth of his knowledge of the Icelandic market, particularly the fact that Icelandic savers could achieve much higher interest rates than savers elsewhere in Europe. Interest on deposit accounts could rise to well over 10 per cent and the accounts moreover were pegged to the Icelandic inflation rate.
‘Absolutely,’ said Sverrir. ‘If inflation rises, the interest rate rises accordingly, and if the economy continues to expand, as it seems set to carry on doing, interest rates will rocket.’
‘I don’t understand why the Icelandic banks don’t take advantage of this wide margin by launching deposit accounts in Europe. They could offer much higher interest rates than anyone else.’
‘Actually, I think they’re already looking into it,’ said Arnar with a smile.
Then they came to the purpose of the meeting, which turned out to be a seriously tempting proposition. Alain Sörensen had his hands on forty-five million euros. Where the money came from was immaterial, he said, but it was deposited in an account on Tortola, the largest of the British Virgin Islands, one of the world’s most popular tax havens. He could lend them the money at very low interest via his bank in Luxembourg, opening an account that only they would know about. They could use this forty-five million to buy index-linked securities, such as government bonds, in Iceland, which would pay a high rate of interest. The interest would be paid to Sörensen, who would subsequently divide it up between them. Given the high yield in Iceland, the profit from such a sum would be substantial. And their share would be paid to a shell company registered by them in Tortola.
His speech was greeted by silence.
‘Where does this money come from?’ asked Sverrir eventually.
Sörensen smiled.
‘Are you talking about black money?’ asked Arnar.
‘I’m saying that you needn’t have any worries on that score,’ replied Sörensen. ‘I, or rather the bank I work for, will lend you this money as if it’s just an ordinary transaction, which it is, of course. The best return would be to convert it into Japanese yen and increase the interest margin still further.’
They had finished their meal and downed glasses of saki, before moving on to the sports bar next door. It was a Wednesday evening and there was live coverage of the Champions League. Alain Sörensen took a table by a screen showing the Arsenal game.
‘It’s a lot of money,’ remarked Sverrir.
‘I imagine you’ll find a way to transfer it to special accounts in your own names,’ said Sörensen.
‘Why us?’ asked Sverrir.
‘Iceland is an intriguing prospect,’ said Alain Sörensen. ‘We predict that Icelandic interest rates will continue to rise and net us a good return. All those construction projects in the interior coupled with the expansion in the banking sector and the high-risk investment using cheap borrowing will result in inflation to a level over and above the present high interest rates. I’ve done the sums for you, based on the present situation, and the figures aren’t bad, in Icelandic kronur. My bank will take care of setting up a holding company for you and could take care of its administration too, if you like.’