Saturday, 22 October 2011

"Fortune's Spear" by Martin Vander Weyer

The history of finance is, alas, replete with incidents of fraud, many of which figure prominently in English literature. One of the best known is probably the episode concerning the (fictional) Providential Reassurance which appears in The White Monkey, part of Galsworthy's series of novels which later became known as The Forsythe Saga. Readers may remember that Soames Forsythe becomes a non-executive director, only to discover grave financial irregularities committed by the general manager, who then flees abroad to escape justice and his creditors.

What is not generally realised is that Galsworthy based his story almost verbatim on the the factual fate a couple of years previously of the City Equitable and its general manager, Gerard Bevan. Literally only the names have been changed.

Fortune's Spear tells Bevan's story. In truth it is not an particularly exceptional one until the financial difficulties begin. Bevan was not a flamboyant, full-on conman like Horatio Bottomley (who ended up as a fellow convict in Maidstone prison) who ran elaborate schemes to raise money from the public, bought and sold newspapers and magazines, drank a pint of champagne every morning for elevenses, was an MP and was even talked about (briefly and chiefly by himself) as a possible Prime Minister. He was one of those low profile figures who beavers away, seemingly efficiently but unremarkably, until one day it emerges that it was all based on smoke and mirrors.

There are inevitable comparisons with Nick Leeson, and the author is not afraid to draw these expressly while seeking out Bevan's motivation for acting as he did. Like Leeson, he went on the run, though one feels with Leeson this was the equivalent of a panicked child hiding behind the sofa, whereas with Bevan it was allegedly an attempt to find eventual sanctuary in South America.

This is a well researched and well written book which will be of interest to anyone with even a passing interest in finance. Distressingly, some of the issues which it raises are still with us. Here, as with Enron, the auditors failed to look far enough behind the bald balance sheet numbers. Here, as with Maxwell, corporate governance entirely failed to control, or even detect, the actions of a dominant rogue director. Here. as with many prosecutions launched by the hapless SFO, people who seem to have been almost as culpable as Bevan were not convicted, and were allowed to go unpunished except by the collateral damage to their reputations.

This is essentially a human story, including Bevan's relationships with his somewhat glacial wife, and with his long term mistress who ended up looking after him after his release from prison. Actually the author misses a trick here, as an interesting parallel might have been drawn with John Stonehouse. However, he scores many points elsewhere. For example, one of Bevan's daughters married a self-styled major from the 12th Lancers who turned out to have been a dishonourably discharged trooper from the Royal Canadian Mounted Police. Evidence surely that daughters really do marry their fathers.

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