How I Built a Slush Fund in South America (2)
I had always been the lucky type, even as a kid. More precisely, I had a good gut. On a five-choice question, if I could narrow the options down to two, I was almost guaranteed to pick the right one, and in high school I once called odd or even twelve times in a row — they started calling me the Odd-Even Ranger.
I put that talent to full use, riding the sacred art of multiple-choice guesswork all the way into the economics department at Korea University.
And that was not all. Where do you think the money for my American graduate education came from?
The Korean stock market — the one they called Hell Market.
While I was still at Korea University, I took the 37 million won I had earned tutoring and, after 108 trades, turned it into 370 million — enough to enroll in Duke's MBA program. Even I get chills thinking about how good I was. I even dreamed of becoming a fund manager for a while, but the idea of rolling other people's money never sat right with me, so I left for graduate school instead.
But even I, who had once fancied myself a meister of investing, felt infinitesimally small in front of the screen now staring back at me.
Twenty million dollars in principal, seventy percent of every dividend plowed back in, and the thing had ballooned into six and a half billion. An insane rate of return. Even the timing was a work of art — he had gone in right after the first oil shock, when the American market was in free fall.
"I-is this even possible?"
My jaw hung open. I could not believe what I was looking at.
He had held it for forty-nine years without selling? Through the second oil shock, through Black Monday in '87, through the collapse of the dot-com bubble, through the 2008 financial crisis — he had just sat on it?
"Ha... hahaha."
A hollow laugh escaped me. Old man Buffett's hypothesis — that if you bought the S&P 500 and simply never let go, you would get rich — had been proven to the letter. Now I understood how he had ruled San Marcos.
"This actually makes sense."
San Marcos was a typical economic minnow, a country that earned little and spent little. He had been plugging the deficit with the dividends off this thing. And with sums like these, passing envelopes of cash to ministers and senior generals would hardly have been a burden.
No wonder Major General Tiago came running without a shred of suspicion.
He must have known the slush fund existed.
That particular realization, though, left me a little hot under the collar.
"Why didn't I get any?"
A minister was a minister. I could not for the life of me understand why I had been left out.
"I like money too."
Anyway. That was not the point right now.
The actual owner of this account, President Juan, was dead and in the ground. He had been widowed young, and the one son he had was killed alongside him. I had heard that his relatives had all been captured and executed during the independence war.
Which meant the money in this account was a fortune with no owner. Blind money.
"...Should I take it and run?"
I was torn. Sit on it quietly and go back to Korea, or turn it over to the national treasury?
"Can I even take it if I wanted to?"
A few clicks later, I had the name on the account.
Tortilha Corporation
It matched the name on the documents from the USB drive.
Being a corporate entity made withdrawals a little complicated, but the paperwork looked airtight. It did not seem impossible.
That said...
"Why Tortilha, of all names?"
I had no idea, so I started digging through the files, and on the shareholder registry attached to the certificate of incorporation I found a name: Pessoas Marcos.
"The People... of Marcos?"
The sole shareholder, holding one hundred percent of the stock.
I sat with that for a moment, and then I understood why the company was called Tortilha.
Ah.
A tortilha was the staple food of San Marcos. In Korea, that would be a bowl of rice. Juan had named the corporation Tortilha because he had wanted to feed his people until they were full.
He had been poorly educated and short on ability, so he had never managed to put the thing to real use — he had only skimmed a portion of the dividends. But even that was something.
And he had an elite son. A young man who had graduated from Duke's economics department with honors, completed an MBA, and built a solid record of practical experience on top of it. When the time came, Juan would have passed this on to Ian and told him to make the vision real. Ian, young and capable, would have taken this fortune as his seed money and fulfilled his father's wish to see the people fed.
"I... can't take this."
No. I couldn't take it. How was I supposed to swallow money that had been made with a heart like that?
"Haa."
I sank deep into the chair, closed my eyes, and tried to shake off the turmoil churning through my head.
The next day, the moment eight o'clock arrived, Isabella woke me as she always did.
"Senhor Presidente, would you care for some coffee?"
She offered the same joke as always and held out a cup of coffee she had brewed herself.
"Nngh... thanks."
"You look tired, Your Excellency. It appears you did not sleep properly."
"I had things to think about, so I slept in."
Six and a half billion dollars. In Korean won, 9.25 trillion. How was anyone supposed to sleep after looking at an account like that? Greed kept surging up in me, and I had woken several times in the night.
Isabella, who knew none of this, spoke with genuine concern.
"Shall I inform the physician and have an IV prescribed?"
"An IV just because I missed a little sleep? I'm fine."
"Your Excellency is the hope of San Marcos. You must take special care of your health."
"...Come on. It's not that serious."
I downed the coffee and sat at the desk.
"Isabella, could you look at this for a moment? I have something to show you."
"Yes, Your Excellency."
She came around beside me, and the scent of roses came with her, but this was not the time to appreciate it.
Come clean. Come clean and get out from under this wretched torment.
I wanted the slush fund out in the open as fast as humanly possible. I wanted to be free of this thing chewing through my skull.
"Don't be shocked."
I let out a breath, logged into the account I had opened the day before, and put it up on the screen.
Crash!
I had told her not to be shocked, and Isabella dropped the coffee cup in her hand anyway, both eyes flying wide.
"W-what is this?"
"President Juan's slush fund."
"This can't be!"
"He put in twenty million dollars in '76 and never sold a single share. Every time a dividend came in, he reinvested seventy percent of it."
"......"
Isabella's mouth hung open. She had lost the power of speech.
"You didn't know, I take it."
"I had gathered that there was other money. I had no idea there would be funds of this magnitude."
"Well. He was so frugal..."
Unlike a certain someone in the northern half of the Korean Peninsula who rode around in a Maybach, this man had driven a twenty-year-old Lincoln. Once he had a suit made, he wore it for ten years at a minimum, and he ate the same food as any ordinary household.
What a piece of work. A villain who looked like a villain, acted like a villain, and somehow still wasn't one.
He had been a dictator, yes — but a dictator famous for his frugality, sitting on a fortune like this. Of course she was stunned.
Isabella checked the dates on the deposits and spoke.
"He purchased the securities almost exactly one year after independence."
"Now that you mention it. Where on earth did he get the money to invest?"
Twenty million dollars now and twenty million dollars in 1976 were heaven and earth apart. It was far too large a lump to have come from independence-army funds.
"I believe this money may have been part of the Portuguese governor's slush fund."
"Is that so?"
"Yes. My late father used to say that near the end of the war, when they occupied the governor's office, they discovered a considerable quantity of silver and gold, and that President Juan used it as seed money to establish the early government. I suspect he sold a portion of that gold to create this."
"Hmm... it doesn't add up any other way, that's for sure."
There was no other hole that kind of money could have come out of.
"What should we do with this money?"
"I would like to hear Your Excellency's thoughts first."
"Given how urgent things are at home, I was thinking we sell the securities quickly and fold it into government finances."
"Hmm."
It was the orthodox view, and Isabella shook her head.
"I do not think that is a good idea."
"What? Why not?"
"...Do you trust the bureaucrats of San Marcos?"
"Ah."
I understood at once. Martial law might have them pinned for now, but the civil servants of San Marcos were a tribe possessed of a miraculous arithmetic: hand them a budget of a hundred dollars and they ate half of it, spending fifty. Entrusting them with six and a half billion dollars was no different from handing a con artist a credit card.
"Then what do we do?"
"Rather, what if Your Excellency were to take possession of it?"
"...Excuse me?"
Take it? After everything I had put myself through to shake off that torment?
"Are you telling me to swallow this money whole?"
"I do not mean that you should misappropriate it for private use."
"Then what?"
"What if you used this money as capital to found a company?"
"A company...?"
"Yes. As you are aware, the economic structure of San Marcos runs primarily on primary industry."
"Right, it does."
And even that primary industry was more than half coffee-bean production rather than food, so whatever you earned went straight back out as the cost of cornmeal and wheat flour.
Sell the beans, buy cornmeal with the proceeds, and that is the whole loop.
No matter how you spun it, money did not get made.
"What if we used this money as the foundation for a company, and ran a labor-intensive business?"
"Create jobs and raise national income?"
"Precisely."
She was not wrong. If it succeeded, it was a chance to take unemployment and food self-sufficiency in a single stroke. If the business did well on top of that, corporate tax and earned-income tax would wipe out the fiscal deficit in one blow as well.
However.
"It's still a state-owned enterprise. Would it really be any different?"
You needed people to run a company, and whoever you hired would be the same old dish on the same old plate. That was the problem.
Isabella, though, was a more radical woman than I had given her credit for.
"If it were a state-owned enterprise, yes. A private company is a different matter. If we gather the talent scattered at home and abroad, and adopt the management methods of prominent foreign corporations, it can succeed."
"That's true enough, but... using the nation's money to create a private company sits a little wrong with me."
"And why would that not be allowed?"
Isabella tilted her head, as if she could not imagine why anyone would worry about such a thing.
"It's embezzlement, isn't it? There would be legal problems..."
"......"
I am the state. If the law is a problem, change the law.
My mouth fell open at a plan so outrageous it turned the heavens upside down. Isabella, who appeared to feel not the slightest difficulty with any of it, kept pushing.
"This is not the time to fuss over procedure or method. We must think of nothing but the reform and development of the nation — and act."
"Even so... wouldn't the people object?"
It was a practical concern, and Isabella answered with a face like a sheet of ice.
"Who would dare take issue with Your Excellency's course?"
"......"
"Let us move at once. This is your chance to become a man of power who possesses wealth as well."
"No."
What was I, an absolute monarch? Power and fortune, both of them, in a single hand.