A Matter of Compliance

 

A MATTER OF COMPLIANCE

 (Singapore, 2000)

 

                        I.TWO BANK OFFICERS

 

 

It was late in the morning when Norbert Schneider, Head of the Bad Loans Department of the X. Bank called to tell me that he was coming over with Frederic Steiner (nicknamed ‘Freddie’), the Bank’s compliance officer.

            The Bank was an important client of our firm. Further, Norbert and Freddie were friends of mine. This, of course, did not mean they were in one another’s good books. Despite their ostensibly amiable modus operandi, it was easy to spot the underlying antipathy. I had had pleasant luncheons with each. But never had they called on me together.

Our law firm had its premises in downtown Singapore. The walk from the Bank to the firm would take about five minutes. Whilst Norbert and Freddie were on their way, I reflected on their backgrounds and their respective posts.

Before he became a banker, Norbert Schneider had been an antiques dealer in Frankfurt. He opened his business shortly after graduating from a well-known German university. He specialised in prints and ceramics. Regrettably, the business did not thrive. In the early seventies, Norbert closed it down and joined a well-known German bank. Before long he revealed a talent for recovering “bad loans”.

In 1990 Norbert took up the post of Head of the Bad Loans Department of the X. Bank’s Singapore office. We met shortly after I retired from my professorship at the Law School of the National University of Singapore and joined a law firm as a consultant.

The friendship between Norbert and myself was nourished by our common interest in ceramics and, odd to say, by an understanding based on our respective experiences during the Second World War. Norbert, who was partly Jewish, had remained with his parents in Frankfurt during the Third Reich period. I do not know how they managed to survive. My parents had fled from Vienna and, in due course, migrated to Palestine. I grew up as a predominantly Israeli youth. Still, mother’s influence had directed my mind to German culture, literature and philosophy. All in all, I liked the subjects. So did Norbert.

Unlike Norbert, Freddie came from pure Aryan stock. His parents, though, were persecuted on political grounds. After the end of WWII, they settled for a while in East Germany but in due course migrated to Australia. Freddie grew up in Sydney but spoke German at home. After obtaining a law degree, he joined one of Australia’s local banks as a trainee. In 1994, when he was in his early thirties, he joined the X. Bank in Singapore as their compliance officer.

Freddie’s post made him an unpopular figure at the Bank. In this regard, he suffered the fate of most compliance officers. Their task was to expose loopholes or technical errors in bargains, such as the absence of a required signature on a contractual document or a failure to comply with a local Statute. In consequence, a compliance officer often frustrated deals on which an account officer had worked for months. When this occurred, the account office lost his anticipated commission and was unable to list the deal in his annual progress report.

Often a compliance officer was a thorn in the flesh of the staff dealing with the recovery of bad loans. Their task was to recover outstanding debts by legal means. Frequently, the compliance officer wrecked a settlement by discovering a loophole or an inadequacy. In such cases, the bad loans officer’s inclination was to proceed with the deal despite the irregularity. He hoped for the best. To do his job, the compliance officer had to exercise his veto.

This differences in tasks and in business philosophy would have been an adequate ground for the constant tension between Norbert and Freddie. But there were additional reasons for their mutual dislike. Norbert had managed to stay put during the Holocaust. He had remained culturally German. To my delight, he had read Kafka and Heinrich Böll. All in all, though, he remained a conservative and a believer.

Freddie had grown up as an Australian. His cultural ties with Germany were related to his parents’ home. But they were also cultural. He was attracted by German classical literature and, to my surprise, by the literature of East Germany. He had, for instance, drawn my attention back to Lessing and Kleist – both early nineteenth-century playwrights I tended to ignore – and to Völker Braun, a modern East German writer. Ideologically, Freddie remained a left-winger and an agnostic. 

These differences in outlook were, I suspect, of limited significance. Both Norbert and Freddie were tolerant men. The main problem related to my two friends’ characters and life philosophy. Norbert was a shrewd conformist. He knew how to handle difficult situations and was always in control of his temper. Freddie, in contrast, was a rebel. Quite often he spoke his mind even when common sense dictated silence. On such occasions Norbert was put off by Freddie’s plain words. Freddie, in turn, was repulsed by Norbert’s “live and let live” philosophy.

Their mutual differences did not affect their respective friendships with me. I was about twenty years older than Norbert. Freddie was my junior by some thirty-five years. Despite these age gaps, both found it easy to communicate with me. Lunch or morning coffee with either was never dull. Years of experience at universities and in law practice had taught me tolerance, discretion and, most importantly, to have low expectations in everyday life. I was, for instance, pleasantly surprised when Freddie lent me a rare edition of Kleist’s plays. A fine illustrated edition of Böll’s short stories, given to me by Norbert, has continued to grace my collection. So did a porcelain piece he sneaked out of Dresden before the fall of the iron curtain.

 

II.HENDRA

 

1.Hendra’s latest misdeed

 

When Norbert and Freddie arrived, the former was out of breath. Notwithstanding his energetic and imposing bulk, he found it difficult to keep up with Freddie’s youthful speed. In addition, Norbert was badly shaken. I suspected the two had had a row. My fears, though, were allayed when Freddie asked Norbert to raise the problem they had encountered. My heart sank when Freddie said, impulsively, “Curse that bastard Hendra; what a Schweinehund!”

“You’d better tell me all about his latest misdeed. That fellow is the limit!”

“He is. On this point, Freddie and I are in agreement,” muttered Norbert.

            I concurred. Hendra, whose real surname was one of those Indonesian tongue-twisting titular tags, was a man of about my own age. The nature of his business has remained unclear to me ever since we first met. I suspected he was a financial jack of all trades but, alas, never a master of his fortune. He kept hitting the jackpot only to squander his gains.

            Like many wealthy Indonesians, Hendra used Singapore as a base for his dealings. Over the years, the Bank lent him a substantial amount of money under the guise of shell companies and strawmen. All in all, Hendra and his nominees had some twenty accounts with the Bank. Each, except  an account in his wife’s name, was heavily overdrawn.

            Most facilities had been granted before Norbert took over the Bank’s bad loans portfolio. He was flabbergasted when he familiarised himself with the file. All his attempts to reason with Hendra failed. So did a visit to Hendra’s hometown of Surabaya. Hendra was not only a glib talker but also an excellent host. Norbert added two kilos to his bulk; but the accounts remained in debt. On a few occasions Norbert was even talked into sanctioning further credit facilities. No attempt was made to consolidate the accounts.

            The situation changed when Freddie took up his position. Some of the facilities had been granted without the formal approval of one of the members of the Bank’s credit committee. When this deficiency was brought to the new compliance officer’s attention, he went through the entire history of Hendra’s accounts.

            Freddie was outraged by the facts emerging from the file. Practically, a firm word with Norbert would have sufficed. Instead, Freddie referred the matter to the Bank’s head office in Germany.

The directors of the Bank reviewed the file. In the event, Norbert was instructed to pursue the matter “energetically and diligently” and to report back within three months. As always, he controlled his temper. Freddie’s name, though, had been entered in bold letters in Norbert’s bad books. Norbert did not like snitchers.

 

2.A set-off agreement

Shortly after that incident, Norbert decided to refer the file to me. Having discussed the details with Freddie, I concluded that the first step was to consolidate the accounts. To do so, we required a document known as a “set-off letter” authorising the Bank to “combine”. In theory, it was a simple step. Practically, we faced a quagmire. As was to be expected, Hendra had the right to transact any business in respect of each account. Legally, though, the ownership was vested in different parties. We needed the consent of all of them.

            In the event, I utilised a rough draft prepared by Freddie. Each party whose name appeared in the Bank’s ledger as co-owner or as joint holder of any account, was required to execute it.

The final document comprised two pages. One spelt out the set-off agreement and was executed by Norbert on behalf of the Bank. The second page was a schedule, which bore the signatures of all required parties. Attached to this were powers of attorney executed in Jakarta by all relevant parties. Hendra was given the authority to sign on behalf of each of them. Once executed, the agreement would be airtight.

            Initially, Hendra refused to execute the document. Two days later he caved in. The Bank remained the only financial institution prepared to deal with him; and Hendra required “further accommodation” of S$55,000. Norbert, who oversaw the file, refused to consider any further advance prior to the execution of the set-off letter. Reluctantly, Hendra agreed to sign on the dotted line.

            Freddie perused all the documents for regularity prior to the date of execution. After two hours of meticulous perusal Freddie confirmed that all was well.

Norbert summoned Hendra so as to proceed with the formal execution. Hendra, though, had many questions to ask. As Norbert was not prepared to invite Freddie to attend, he asked me to come over to the Bank.

It took me a while to allay Hendra’s feelings of unease. His main concern, I sensed, was his fear of the Indonesian tax authorities. Further, he advised that his wife was not prepared to consolidate “her account” with his. Norbert yielded and, to avoid difficulties, sent various documents for re-typing. When they were properly typed out, it was time for a break.

            Norbert and I accepted Hendra’s invitation to have lunch with him in a nearby Indonesian restaurant. Seeing that spicy food did not agree with me, Hendra ordered various dishes suitable for my unsophisticated European palate. Following the repast, I had to return to my office.  Hendra and Norbert walked back to the Bank.

 

3.subsequent events

 

            During the next few months, Hendra asked for several extensions and for extra credit facilities. Notwithstanding Freddie’s misgiving, Norbert approved them. The total indebtedness in the consolidated account stood at S$650,000. Despite the constant sceptical memorandums from head office, Norbert refused to take action. Sooner or later Hendra was going to settle his debts voluntarily.

Freddie disagreed. He feared that Hendra might declare bankruptcy. I shared his misgivings. Norbert, in contrast, remained confident. He was certain that ‘his client’ would not seek refuge in insolvency proceedings. Hendra’s main object was to keep going. Bankruptcy would cripple him for at least three years.

 

 

III.A MOBILE PHONE DEAL

 

1.Vanishing ink

 

“Well, what has Hendra done now?” I wanted to know.

“It all relates back to the consolidation of his accounts. You see, Peter, we have just received a remittance of S$500,000.”

“Why not set the amount off against his debt?”

“He has further instructed that S$400,000 be remitted to a numbered Swiss bank account. If we do so, the debt remaining after the consolidation and the remittance to Zurich will be some S$250,000,” advised Freddie.

“Better than a debt of S$650,000,” noted Norbert.

“I agree. But Peter, can we set-off?” asked Freddie.

“Why ever not? Surely, the set-off letter is airtight. I have a copy on file!”

“Have a look at the original.”

 

When Norbert produced the original, which had been kept in the Bank’s vaults, my eyes opened wide. The text typed on the Bank’s premises had remained fresh and clear. The signatures, in contrast, had vanished. Hendra, Norbert explained, had used his own pen to sign the document. The Bank’s secretaries, who had witnessed his signature, had used the same pen. Mesmerised, I breathed on the blank paper, held it up against the light, and let my fingers travel over it: all to no avail. The signatures did not reappear.

“We tried all that, Peter. We even summoned a specialist. He was prepared to give it a try. But the outcome is questionable. There are too many types of disappearing ink around. The signatures might be obliterated altogether if he went ahead.”

“How did this trick happen?” I asked, bewildered.

“I offered Hendra my own pen. He declined and insisted on using his, which – so he said – was the pen used by Sukarno when he executed the Treaty of Independence. I fell for it!”

“I, too, would have fallen for it,” admitted Freddie. “The question is: what shall we do?”

 

For a few minutes I was lost in thoughts. To clear the picture, I asked Norbert whether he had been present when Hendra had signed. When he nodded, I wanted to know whether he could identify the secretaries who had witnessed the signatures. It turned out that both had left the Bank. Still, their signatures as witnesses were displayed in full in the copies.

When I had digested the facts, I advised them to effect the set-off. If Hendra wanted them to remit any funds out, he would have to apply for a fresh overdraft. Norbert would know how to handle him.

“But how about the blank original?” asked Norbert.

“Freddie: what do you do when a document is lost or destroyed by accident, say, by fire?”

“Under Australian law, we can ask for the court’s leave to prove it by submitting a copy verified by us as true.”

“Our law is the same.  I have a photocopy, and Norbert can confirm its authenticity. So go ahead and set-off!”

 

2. the verification clause

“And if Hendra makes a fuss?” asked Freddie.

“Surely the Bank sent him monthly ‘statements of account’. I’m sure they include a ‘verification clause’.”

“They do. The clause is further spelt out in the terms and conditions executed by him.”

“If the worst comes to the worst, we can rely on them,” I assured them.

            The verification clause referred to was a standard term and condition used by most banks in Singapore. Under it, the customer was given a period of seven or ten days to object to any incorrect or false entry. If he failed to so, the statement would become conclusive evidence of the existing balance. The validity of the clause had been upheld  by local courts.

“I think Peter’s right, Norbert. In any event, do you think Hendra would dare to unveil the nature of his business practices? Nobody would touch him with a bargepole if he became known as a conman. Unfortunately, there is a separate problem. We have discussed it. And you, Norbert, can’t ask a compliance officer to close his eyes to it.”

“Another problem?” I wailed.

 

IV.A MONEY LAUNDERING ISSUE

 

Heaving a sigh, Freddie raised the issue of the funds remitted and Hendra’s order to pay out a substantial part forthwith. Bearing in mind Hendra’s nefarious conduct, Freddie suspected that the case might involve money laundering.

            A few years earlier, the issue would not have been a cause for concern. A bank’s function was to receive amounts payable to its customer and to execute his payment instructions if he had the requisite balance. The position changed in the wake of terrorist activities in the United States. Under American pressure, many governments in the Western World passed laws under which a bank was expected to freeze amounts suspected of coming from dubious sources and to notify the reserve bank. The funds would be unfrozen only if cleared by it.

The Republic of Singapore passed the required regulations in 2002. The money laundering provisions required a bank to advise the ‘Authority’ when the bank had ‘reasonable grounds’ to suspect that funds remitted to the credit of a customer could be traced to, or linked to, terrorist activities or laundering of illegal funds.  If a bank reported the receipt of such contraband funds to the Authority, the funds had to be frozen, and the customer could not be advised or ‘tipped off’. In consequence, the customer would not even know that the money involved was no longer available to him.

 

“Freddie, do you suspect Hendra is involved in terrorist activities or is a money launderer?”

“Surely that’s not the question, Peter!”

“What is it then?” asked Norbert.

“Freddie is telling us that the issue is the source of the money. If it’s black money, its payment to a numbered account in Switzerland would complete the laundering cycle.”

“Precisely!” Freddie spoke firmly. “And look, I can understand why Hendra arranged for the remittance of the money to his account in Singapore. If he had asked his ‘payer’, or ‘remitter’, to credit part of the sum directly to the payee’s Swiss numbered account, the payer could work out how much money Hendra was making.”

“So what?” I asked innocently.

“In future transactions, the remitter might manage to discover the payee’s identity and deal directly with him.”

“So why is the transaction suspicious?” asked Norbert.

“The remittance is coupled with an instruction to pay a similar amount out. That is suspicious. Further, I’m sure that Hendra would not care too much about the source of money paid to him! In his eyes, money doesn’t stink,” said Freddie vehemently.

“You are right about him,” conceded Norbert. “But then, Hendra told me he purchased some mobile phones cheaply and sold them at a huge profit. He rang me this morning to ask if his purchaser had paid up.”

“What did you tell him, Norbert?” I asked anxiously.

“I said I’d let him know as soon as the money comes in. I should ring him back before 4 o’clock. Up to now we haven’t credited his account. But look here, Peter: suppose we credit his account. Where is the risk? His balance will be short of the amount he wants us to pay out?”

“But the very crediting of the money is prohibited,” interjected Freddie before I had a chance to answer.

“Should we send it back then?”

“You can’t do that. There is case law in point, Norbert.” I interceded.

“So, what should we do?”

“Credit the money to a temporary account, I mean a ‘suspense account’, which includes a reference to the transaction. It’s the only thing to do,” insisted Freddie.

“Is it that simple?” asked Norbert.

“I am not certain,” I warned. “If the suspense account is then frozen until the matter is cleared up, Hendra could get a court order diverting the money to another bank as soon as it’s unfrozen by the authority. It could then be too late to exercise a set-off.”

“So, what should we do?”

“Why not contact the Authority and ask for a direction?”

“I did so earlier today. They advised me to refer the matter to our legal advisers,” chuckled Freddie. “Norbert rang you as soon as I showed him their email!”

“So we are back at square one,” I muttered unhappily.

            We continued to discuss the matter over our coffees. In point of fact,  the Bank faced an impasse. To sort the matter out, I volunteered to call on a former colleague who had taken a post in the Authority’s legal department. Hopefully, he would give me a hint respecting the policy in cases of this type.

 

V. CONTACTING THE AUTHORITY

 

 

1.My contacts

 

My contact was a former employee of our firm. When I had completed my narration, she pointed out that the matter was within the jurisdiction of another department. She didn’t wish to cross wires with them. Still, she rang up her counterpart in that department.

            To my pleasant surprise I recognised the incumbent. She had been one of my favourite students some twelve years earlier. At that time, she had been in her twenties; and she still looked the same.

“I haven’t seen you in ages, Prof.”

“Actually, I thought you were still with B & G. You were one of the three pupils they took on that year, Lynn.”

“I was. Later on, they made me a Legal Assistant and after another few years promoted me.”

“Why did you leave? Surely, the pay was good, wasn’t it?”

“It was. But then, they made heavy  demands on my time. Here I can usually leave at 5.30 or 6 o’clock. I can look after my two girls and spend some time with my husband.”

“When did you get married?”

“Shortly after I finished my law degree. And you know my husband!”

“Eh?” I let my surprise show.

“He works in the same department as you. His name is Paul.”

“Good grief. We work quite a bit together. He is a fine young man!”

“You mean ‘a young middle-aged man’, don’t you?”

“To me all of you look so young. How old are your daughters?”

“Four and six.”

            For a moment I was perplexed; then saw the light. She had taken my course on Banking Law when I was in my early sixties. For me, too, time had not stood still. I had by now become an old man: one of the very few academics of my vintage who had remained fully employed after their 65th birthday.

            To my regret, Lynn was unable to sort the case out. The issue was not purely legal – it concerned the fiscal policy of the Republic. On the one hand, we could not afford to invoke the wrath of the United States. They were too powerful and, in addition, one of our main markets. On the other hand, free trade and freedom of dealings in money were essential. If they were abrogated, our Republic might lose its hard-earned status.

 

2.The solution

            The only person who could give me a hint as to what was to be done was Lynn’s superior. Before I went over to his office, Lynn checked the details of the transaction. They were before him when I entered his posh office.

“You don’t recognise me, Prof!” he chuckled.

“Frankly, I don’t.”

“I took your course in 1964.”

“Are you by any chance R.?”

“Guilty as charged. You gave me a B1!”

“You did well. I remember your paper. But you know, you don’t look the same.”

“Of course not. I am a grandfather – twice over.”

“You must be close to retirement?”

“They’ve extended me. I’ll stop by the end of next year: before I make a mistake.”

“How will you occupy yourself?” I asked tactlessly.

“I’ll be looking after my grandchildren,” he announced victoriously. “My grandmother looked after me. My late mother was a businesswoman.”

“So, it is a sort of a cycle,” I mumbled.

“It is, Prof. Always has been.”

 

For a while we gossiped. For my part, I felt as if somebody was walking over my grave. For a reason unknown to me, I had made very few attempts to contact former students. I was relieved when R. turned to the case. He had checked the source of the funds and advised me, in confidence, that the remitters had no record. In plain language, their name was not included in any “red signal” or “black” list.

Neither R. nor any other officer of the Authority could take a clear stand. The regulations imposed the duty to disclose on the “bank”, provided it had “reasonable grounds” to suspect the source of the funds.

“The word ‘bank’ is not clearly defined,” I pointed out.

“It isn’t. In general, the word refers to the ‘officer in charge of the bank account’. The initial decision must be made by him.”

“Generally, then, not by a member of another department, for instance a legal officer or a compliance officer?”

“Not normally, unless the facts of a specific case raise his eyebrows.”

“Thanks,” I said and added: “So if the bank officer in charge of the matters OK’s it, the ‘bank’ can go ahead?”

“In strict confidence, this is the position.”

             

            Before I left, R. suggested that my Bank consider the risk of the United States’ intervention. The American authorities had the power to seize our Bank’s balances in New York. I was aware that some local banks had burned their fingers and had needed the Authority’s tacit support to clear their name.

“Off the record, our policy is simple, Prof. We have to avoid any clash with our American colleagues. All the same, we must protect our freedom of trade policy.”

“I thought that was also the orientation of the United States?”

“I believe, it is.”

 

VI.EXCERCISING A SET OFF

 

            Back at the X. Banks premises, Norbert told us the he had examined the transaction and was satisfied it was an ordinary trade deal. In the circumstances, we decided he could go ahead. Both Freddie and I felt relieved.

At 4 pm, Norbert rang up Hendra. He confirmed the receipt of the funds but added that the bank had exercised its set-off. In consequence, the account balance was well below the amount Hendra had ordered the Bank to remit.

            Hendra exploded but, after some empty threats, fixed an appointment to discuss the matter. When he arrived, Norbert and I were ready to face him. At this stage, our compliance officer – Freddie – thought it best to keep out of the picture.

            To my relief, Hendra did not query the Bank’s right of set-off. He did not ask us to produce the original of the set-off agreement. Further, Hendra acknowledged that he had received his monthly statements. Without any tussle, he asked Norbert to approve the ensuing overdraft.

            “I can’t grant you such an amount. Two hundred and fifty thousand dollars is well above my authorised margin. And you know:  your account has been the subject of concern.”

“But if I don’t pay up, the supplier of the phones may try to seize them before they are unloaded. I must pay!”

“But then, Bang Bang,” Norbert addressed his client informally, “why don’t you remit the money from your wife’s account? You have moved it to another bank. But we know you have a substantial credit balance there.”

            Hendra didn’t claim that the money belonged to his wife rather than to himself. He knew we were familiar with his trading patterns. Instead, he told Norbert candidly that this money was required for his ongoing dealings. If he lost control over these funds he would be “commercially finished”.

“I understand, Bang Bang. And you know I always try to help you. But the head office would chop my head off if I authorised the remittance. Why don’t you give us a cheque for, say, S$200,000?”

“I can’t, Norbert: honestly. It would be my ruin. You can’t let this happen, my friend. How about a cheque for S$75,000?”

For a while they haggled. Hendra tore his hair and pretended to break down. Norbert did his best to appear supportive and understanding; but the twinkle in his eye remained unchanged throughout the scene. I was relieved when, after some twenty minutes of pantomime, Hendra agreed to give us a cheque for S$125,000. Norbert promised to order the remittance of the funds as soon as the cheque had cleared. Smiling supportively, he proffered Hendra his own pen.

“This was used to sign the ASEAN Treaty, Bang Bang,” he advised proudly.

“Can I have it?” asked Hendra eagerly.

“Of course!” said Norbert magnanimously, whilst I hid my face in a sheaf of papers and did my best to suppress a fit of laughter.

            To my relief, Freddie was happy with the arrangement. All in all, it meant that Hendra’s overdraft was reduced to some S$125,000. Like the rest of us, Freddie knew that to win some you could not help losing others. In the instant case, the loss was moderate. The head office, too, was satisfied.

 

 

VII. HENDRA SETTLES WITH THE BANK

 

 

1.Part payment

The Hendra affair did not disrupt my good relations with Norbert and Freddie. And strangely enough, the tension between them eased. In a sense, the affair brought them together.

            Hendra remained a thorn in the Bank’s side. On quite a few occasions, as I passed by the building housing the Bank, I saw Hendra proceeding happily on to Collyer Quay. I had no doubt that, on each occasion, he had managed either to extend or to replenish his overdraft.

            Bang Bang Hendra greeted me warmly whenever our paths crossed. On two occasions he invited me to have lunch with him, assuring me that he had just discovered a restaurant with “suitable dishes”. I reciprocated. In due course, we became acquainted with one another. As was to be expected, informality replaced the cold business protocol.

Bang Bang manifested an interest in my obsession with eighteenth-century porcelain. I, in turn, was impressed by his activities as a breeder of exotic fish. When he discussed his hobby, he shed his image of a questionable business entrepreneur and talked about his subject with a fervour verging on devotion. It was difficult to associate this aficionado with the financial charlatan who used disappearing ink in his contractual transactions.

            Soon it became clear to me that he wished to shed that unsavoury image. One morning he came over to my office and asked me to help him in his latest dealings with the Bank. His overdraft stood at that time at S$180,000. He wanted the Bank to accept payment of part of the amount in full settlement. Effectively, he was asking the Bank to waive part of his indebtedness.

“But how can I help you in this matter? As you know, I am one of their legal advisers. I can’t take a position that conflicts with their interests.”

“Oh, I know this, Peter. But you see, Norbert is prepared to settle. His main fear is that Freddie will make a fuss.”

“But surely, Bang Bang, this matter is up to the Head of the Bad Loans Department. It has nothing to do with compliance.”

“Norbert and I know this. But Freddie was involved in some … earlier dealings.  Norbert wants to forestall any further unpleasantness.”

“So how do I fit into it?”

“Norbert says you are Freddie’s good friend. He thinks that a gentle word from you might do the trick.”

“I think, Bang Bang, that the best way is to have a frank word with Freddie. I suggest you call on him in person. But you know, Freddie will ask why they should accept part payment.”

            Hendra was aware of the need to show cause. To explain his position, he produced a memorandum prepared by his accountant. It showed that, over the years, Hendra had paid a great deal of money by way of penalty interest and bank charges. He would have been better off if a rate of 8.5 per cent had been charged on his median debit balance over the period.

“But surely penalties and charges are not part of a bank’s profit?” I averred.

“Not in theory. But all in all, the total amount is paid out of my own pocket and is received by the Bank! What I am saying, Peter, may be wrong in theory. But commercially it’s sound. After all, I am poorer by the total sum paid by me for obtaining banking facilities and their extensions.”

“You may find it difficult to convince Freddie. But, Bang Bang, I take your point.”

            To my relief Freddie, too, was impressed by the figures. They demonstrated that if the Bank accepted payment of some S$90,000 in full settlement, it would end up with a small profit. True, it would have been accrued through the imposition of penalty interest and charges. All in all, though, the Bank would not have lost money.

 

VIII. THE AFFICTIONADO

 

A few days later, Hendra advised that a settlement had been reached. He had met Norbert and Freddie and, after some haggling, gave  them a cheque for S$100,000. He was pleased with the arrangement. A chat with Freddie confirmed that the Bank, too, was satisfied.

            In due course, I invited Hendra for lunch. My object was to find out what had induced him to settle. After all, the Bank was unlikely to issue a writ as long as the balance remained steady.

“I have my pride, Peter. I am not prepared to escape through the back door. And you see, I have decided to quit the financial markets. I’m fed up with them and, honestly, I’ve made too many mistakes.”

“But you are younger than your age. How will you occupy yourself, Bang Bang? You can’t give up like this. I can’t see you just sitting at home.”

“I won’t. Don’t you worry.”

“What will you do?”

“I’ll devote the time left to me to the breeding of tropical fish. I’m good at it: much better than with currencies and shares.”

“How splendid!” I replied.

            Bang Bang Hendra smiled with satisfaction. He then gave me a copy of a book on fish breeding he had published in Jakarta. As I had no command of Indonesian, I was unable to read it. Nevertheless, I knew I was viewing a magnum opus. The colour plates, which I perused with fascination, demonstrated Hendra’s love of and devotion to his hobby.

            I had no doubt the publication had cost him a fortune. He would, of course, be unable to recover his investment. The photography alone had taken many hours of patient observation, good planning, and time spent studying techniques for taking pictures of this type. I was also certain that he had spent a great deal of money on the acquisition of cameras and various other pieces of equipment.

Obviously, Hendra had changed his focus. He had left his unsavoury dealings behind him. It might have been a narrow escape. All the same, he had managed to break away. After many a fall, he had finally landed on his feet and had resolved to devote himself to an activity he found interesting. In this sense, he had been smiled upon by Fortuna.