1
THE TWO MEN struggling on the floor of the Clerks’ Room differed widely in appearance: one young, of slender build, dressed in cotton and denim, with honey-coloured hair worn rather long and a pleasing delicacy of feature; the other perhaps in his sixties, tending to plumpness, wearing a pinstriped suit, with the round, pink face of a bad-tempered baby and very little hair at all. They rolled this way and that, as it seemed inextricably entwined, uttering indistinguishable cries and groans, whether of pain or pleasure I could not easily determine. A ladder was also involved in the proceedings.
I concluded after a few moments that their entanglement was neither hostile nor amorous, but of an involuntary nature on both sides, the result, very possibly, of an accidental collision between the older man and the ladder at a moment when the younger was standing, perhaps imperfectly balanced, on one of its upper rungs.
“Sir Robert — Sir Robert, are you all right?”
Selena’s voice, as she ran forward to assist the older man to his feet, conveyed a tactful mixture of deference, apology and concern — it seemed likely that he was one of her clients. If so, this was not the moment to lay claim to her attention: I withdrew, thinking that a pleasant half hour or so could be spent in visiting Julia Larwood in the Revenue chambers next door.
At 63 New Square I found Julia sitting at her desk, surrounded by papers, tax encyclopedias, half-empty coffee cups, and overflowing ashtrays, more than ever resembling in appearance some particularly dishevelled heroine of Greek tragedy. I concluded that she was working on a matter of some importance.
“Yes,” said Julia, waving hospitably towards an armchair. “Yes, I am. I’m writing a letter to my aunt Regina. She is in urgent need of my advice.” She spoke a trifle defensively, no doubt aware that I would find the claim improbable.
Julia’s aunt Regina, having spent several periods of her life in more distant parts of the world, had now chosen, as I recalled, to settle in Parsons Haver in West Sussex — a charming village on the banks of the Arun or the Adur, I forget which, of the kind that Londoners are usually thinking of when they dream of the pleasures of rusticity. Having at one time in the Middle Ages flourished as a seaport, it has long since been deprived by the changing coastline of any commercial importance; but its cobbled streets, its knapped flint cottages and its fine Norman church continue to attract the discerning tourist and those in quest of an idyllic retirement.
Regina Sheldon herself, whom I had once or twice had the pleasure of meeting, had also struck me as having something about her appearance which savoured of the mediaeval. As a girl, I suppose, she would rather have put one in mind of a good-looking pageboy at the court of one of the Plantagenets; now, though her figure was no longer boyish and the dark auburn of her hair must have owed less to nature than to her hairdresser, one could still imagine her as the same pageboy, grown up to be an ambassador or a rather worldly cardinal. Having married four husbands and brought up two sons, she professed to have retired from matrimony: the chief outlet for her talents and formidable energies was a small antique shop, adjoining the discreetly modernised cottage in which she lived.
There were few areas in which I could imagine her requiring the benefit of Julia’s wisdom and experience.
“She has a tax problem,” said Julia. “If you’d like to read about it, while I finish writing this—”
She offered for my perusal a letter running to several pages, written in distinctively elegant but perfectly legible manuscript.
24 High Street
Parsons Haver
West Sussex
Monday, 14th June
Dear Julia,
Now do please read this properly as soon as you open it, instead of putting it somewhere safe and forgetting about it. There’s something I need your advice on — I think it’s the kind of thing you’re supposed to know about — and it’s much too complicated to explain by telephone.
It all started in February last year, when Maurice and Griselda and I were sitting in the Newt and Ninepence. And don’t be tiresome, Julia, you know perfectly well who Maurice and Griselda are, or if you don’t it’s quite disgraceful of you.
Maurice Dulcimer is the vicar at St. Ethel’s. Well, in a manner of speaking — the Church Commissioners decided that St. Ethel’s was too small to have a full-time vicar to itself, so he’s been rationalised into an assistant curate — but they let him go on living at the Vicarage and everyone still calls him “Vicar.” I always invite him to dinner when you’re down here and you usually seem to amuse each other.
And you certainly ought to remember Griselda — Griselda Carstairs, my neighbour, who does people’s gardens and has cats. The first time you met her she was weeding my rose bed and you spent ten minutes flirting with her before you realised she was a woman, not a young man. And I do think, Julia, though of course I wouldn’t like you to be the sort of girl who’s obsessed with sex, that you ought to be able by now to tell the difference. Just because Griselda has short hair and was wearing trousers—
Well, as I say, there we were in the Newt, as we usually are on a Saturday morning, helping each other to finish our crosswords and talking of this and that. And it turned out that we were all a little bit richer than usual, to the tune of four or five hundred pounds each. Maurice had written an article on Virgil for one of the up-market papers, and been quite well paid for it. Griselda had been left a small legacy by someone whose garden she used to look after. And a charming American tourist had walked into my antique shop and bought some things I’d quite despaired of selling.
So we had an extra round of drinks to celebrate and talked about how to spend the money. By and by, though, we began to realise that it wasn’t actually quite enough. Not enough, I mean, to do anything exciting with. When Maurice and I were your age, five hundred pounds was a very large sum of money — it could almost have changed one’s life. And even when Griselda was your age, which isn’t nearly so long ago, it would still have been pretty substantial. But nowadays — and yet it seemed a shame just to put it in the bank, and let it trickle away in everyday expenses.
“It would be awfully nice,” said Griselda, “if it were about twice as much.” Which summed up our feelings in a nutshell.
Maurice thought we might put it on deposit, and leave the interest to accumulate for a while. We were working out how long it would take for us to double our money in that way, and getting a bit depressed about the answer, when Ricky Farnham came in.
Do you remember Ricky? Square shouldered and brick coloured, with a handlebar moustache to show he was once in the RAF, and a rather lively taste in ties? He came to dinner once when you were down here, and took a great fancy to you — I think not reciprocated. Not your type at all, poor Ricky, even if he weren’t thirty years too old — you like them willowy, don’t you, and he definitely isn’t that. (I dare say Maurice would have been your type when he was younger — he must have been very willowy.) Still, Ricky’s not a bad chap, as long as one’s firm with him. I’m quite fond of him really, though over the past few months—
But that’s neither here nor there. The point is that until he retired he’d spent most of his life looking after pension funds and investment trusts and things like that, so he seemed like the very man to advise us about our problem. He wasn’t at all keen on the deposit idea.
“Booze,” he said, “I can understand. Expensive restaurants I can understand. Fast women and slow horses, God knows I can understand. But throwing your money away on bankers — that’s what I call sheer senseless waste.”
What we wanted, said Ricky, was equities, by which he seemed to mean shares in companies. And as what we were talking about wasn’t our life savings, but a little windfall that wouldn’t do us any good anyway unless we could make it grow a bit, not shares in the big companies that everyone’s heard of, but in what he called “double or quits” companies. By which he seemed to mean that they either do very well very soon or go bust. And he happened to have just heard of one which might be the very thing for us.
It was pure chance that I was the one who actually bought the shares. Ricky had told us, you see, that one of the disadvantages of investing small sums was the high cost of dealing, so we’d decided to pool our resources and invest all the money as a lump sum. And as I had some banking business to deal with anyway on Monday morning, I said I’d arrange about the shares at the same time.
We looked in the paper every morning to see how they were doing, and for a week or two nothing happened at all. Then suddenly the price began to go up quite quickly — something to do with a takeover, I think. When they were worth nearly twice what we’d paid for them, Ricky said it was time to sell, but if we wanted to reinvest the proceeds he knew of another company which looked rather promising. So we did, and more or less the same thing happened — the second company didn’t do quite as well as the first, but well enough to encourage us to go on investing.
After we’d reinvested three or four times, Maurice began to have scruples — I suppose it comes of being a clergyman. Giving all those sermons about not laying up treasure on earth is bound to have an effect on one, isn’t it? He seemed to feel the whole thing was becoming too important to him, and distracting his mind from higher things.
“When I find I’m reading the financial page before I’ve even looked at the crossword,” he said, “I think it’s time to stop.”
Griselda and I didn’t feel quite the same about it. I paid Maurice his share of the money, and reinvested ours in a company called Giddly Gadgets, which was Ricky’s latest tip. It didn’t do nearly as well as the others, though, and we hardly made any profit at all. We began to wonder whether it might be some kind of warning that we were being too greedy, or a sign that Ricky was losing his touch, and we were still trying to make our minds up what to do when I found out that Ricky—
But that, as I say, is neither here nor there. The point is that we decided to stop. We just took the money and — well, spent it.
Maurice had already spent his. He has a weakness for old books and manuscripts, and he’d gone up to London for the day and fallen into temptation. An illuminated frontispiece for a copy of some poems of Virgil — Venetian, fifteenth or sixteenth century, illustrating a scene he says is from one of the Eclogues — it really is quite lovely. (He’s longing to show it to you, by the way — he says it’s just your sort of thing.) But then he had a bad conscience about spending so much on purely personal pleasure and made a large donation to the fund for maintaining St. Ethel’s. And then he realised that St. Ethel’s also gives him personal pleasure, so he gave the rest to a charity for the homeless — poor Maurice!
Griselda spent most of hers on a rather splendid greenhouse and new baskets for the cats, and I had new central heating put in. After that, and a few presents and celebrations, I had just enough left to go to Paris and stay with your aunt Ariadne for a week — which, as you know, is about as long as we can spend together before we quarrel about politics.
And if that were the end of the story it would be an extremely satisfactory one from everyone’s point of view. But it isn’t.
I had a wonderful time in Paris, eating and drinking too much and seeing old friends from art school, and came back feeling ready for anything. I thought that I ought to make the most of it, so I sat down straightaway and did my accounts, so that I could put in my tax return. (No, Julia, it would not be better if I had a professional accountant — the accounts of the antique shop are childishly simple, and I’m damned if I’m going to pay someone to do something I can do perfectly well myself.)
When I’d finished, I took the accounts along to the income tax people in Worthing — it’s always better to do it in person, so that one can explain anything they don’t quite understand — and just to be helpful I took my bank statements as well. I handed everything over to a young man in horn-rimmed glasses, who seemed at first to be perfectly sensible and obliging, and he noticed an entry in my statement arising from one of the share sales. And when I explained what it was, he asked me to send him a list of all the shares I’d bought and sold during the past year. Which I did, that same afternoon.
And now he wants three thousand pounds.
When I first got his letter I thought it was just a mistake. I rang up and explained to him that shares are capital, not income, and I shouldn’t have to pay income tax on them. But he said it made no difference, and he was very sorry if it came as a shock to me.
It’s all very well for him to say he’s sorry — which I don’t believe he is at all — where does he think I’m going to get three thousand pounds from?
Well, I know, of course, that when I tell Maurice and Griselda they’ll raise their share of it somehow, and so shall I. But we’re all going to find it a bit difficult — it’s twice as much as we had in the first place, and, as I say, we’ve spent all the money, mostly on things we can’t get it back for. I dare say Maurice could sell the Virgil frontispiece, but I think it would break his heart.
So before I spread alarm and despondency, I’d very much like to know whether you agree with me, or with the beastly young man in horn-rimmed glasses. I enclose a copy of the list I sent him and of his beastly letter. I’m almost bound to see Maurice and Griselda in the Newt on Saturday, so I’d be most grateful if you could let me know by then what you think.
What makes me so furious is that if I hadn’t been trying so hard to be helpful the beastly young man would never have known anything about it.
With very much love,
Reg
I felt a trifle anxious on Julia’s behalf: knowing that she would wish to take that view of the question becoming to the duty and devotion of a niece, I feared that some provision or other of the Taxes Acts might prevent her doing so. Little as I know of such matters, I had the distinct impression that there was a tax called capital gains tax: it seemed all too likely that it was chargeable on capital gains.
“Yes,” said Julia, leaning back and drawing deeply on a Gauloise. “Yes, you’re quite right, Hilary, there is such a tax as you mention, and by some oversight on the part of the legislature my aunt Regina is not exempt from it. I am happy to say, however—”
Her remarks were interrupted by the arrival of Selena, who had noted my brief appearance next door and guessed that she would now find me with Julia. Having handed me the keys to Timothy’s flat, she sank with perceptible weariness into the remaining armchair. Her pale blond hair, normally brushed to polished smoothness, was rather engagingly tousled and there was a smudge of dust on her nose: she had the expression of a Persian cat which has been having a difficult afternoon.
In response to Julia’s sympathetic enquiry, she described the incident which I had lately witnessed in the Clerks’ Room: the young man who had fallen from the ladder was the carpenter recently engaged by her Chambers to install new cupboards and bookcases — he had experienced, it seemed, a sudden impulse to measure something; the gentleman on whom he had fallen was her most valued client.
“The carpenter?” Julia looked anxious. “Do you mean the young man with the eyelashes and the Renaissance mouth? Oh dear, I do hope he didn’t hurt himself.”
“The carpenter,” said Selena, “is a fit and agile young man who spends half his time climbing up ladders, and the other half, I dare say, falling off them again. A more suitable object of your concern would be my unfortunate client, who is a merchant banker in his midsixties, with very limited experience of being fallen on.”
It was plainly regrettable that such a person, no doubt frequently in need of the advice of Chancery Counsel and no doubt with ample resources to pay for it, should incur the smallest inconvenience in the precincts of 62 New Square. Still, he did not appear to have suffered any serious harm: neither Julia nor I could believe that he would deprive himself, on account of so trifling a misadventure, of the benefit of Selena’s advice.
“Hmm,” said Selena, wrinkling her nose, seeming to draw little comfort from our encouraging remarks.
It soon became clear that the true cause of her dissatisfaction with the afternoon was not the incident with the carpenter and the ladder, which had merely, as it were, added a final flourish to its vexations. Her conference with her client had gone badly: that is to say, she had been unable to assist him with the problem on which he had sought her advice. She felt that he was disappointed in her.
“What kind of problem was it?” asked Julia, preparing to be indignant on her friend’s behalf.
“He wants to retire from the chairmanship of his bank, and doesn’t know whom to nominate as his successor.”
“Oh, but that’s absurd — it’s obviously not a legal question. How can he expect you to advise him about that?”
“Well, there’s slightly more to it than that. He has reason to believe that one of the two potential candidates — this is all, I need hardly say, in the strictest confidence.” She paused to settle herself more comfortably in the armchair and looked, for some reason, rather severely in my direction. “Well, I shall name no names. My client, whom I shall refer to as ‘my client,’ is the Chairman of a small but highly respected merchant bank, which I shall refer to as ‘the Bank.’ On his retirement, his voice will be decisive in the appointment of his successor. There are two possible candidates, both already members of the board of directors, whom I shall refer to as ‘A’ and ‘B,’ though those are not their real names. My client has reason to believe that one of them has been guilty of… rather serious misconduct.”
She again fell silent — the details were apparently almost too shocking to be spoken of. Julia raised an eyebrow, inviting her to continue.
“The business of the Bank, as you’d expect, includes advising on takeovers — if one company’s thinking of taking over another, it goes to the Bank for advice on how to go about it and how much to offer. In theory the client company makes the final decision, but in practice the Bank’s advice is almost always acted on. And, as of course you know, the announcement of a takeover bid is usually followed by an increase in the price of the shares of the target company — sometimes quite a dramatic increase. So you see, Hilary, one way for you to get very rich would be to find out in advance what the Bank was going to recommend.”
“My dear Selena,” I said, “it’s most kind of you to think of it. I suppose there’s a snag of some kind?”
“Well, the snag is that the Bank goes to a good deal of trouble to make sure you don’t. It operates, as my client likes to put it, on the basis of a need-to-know system. So buying ice cream for the office boy or chocolates for somebody’s secretary, or even dinner at the Savoy for a senior executive, won’t do you any good, because they won’t have the information you need. My client, until a week ago, believed these systems to be entirely effective, and lived, in that belief, a happy and contented man. But then …”
“But then?” said Julia, perceiving some further encouragement to be expected.
“But then one of the Bank’s computer people, having nothing better to do and some exciting new software to play with, decided to do an analysis of the takeovers which the Bank had been involved in over the past two years. And the results were rather disturbing, because they showed that in at least eight cases there had been a significant increase, immediately before the bid was announced, in the buying of shares in the target company.”
“Phew,” said Julia. “And no one had noticed? Not the Stock Exchange or the Department of Trade or anyone?”
“Well, not so far. It’s really rather a lesson in the value of moderation. You see, if you look at each case separately, the amounts involved weren’t enough to set any alarm bells ringing — never more than one hundred thousand pounds. It’s only when you notice that it’s happened several times to the same bank—”
“Once may be a misfortune, twice looks like carelessness, and eight times—”
“Really must be insider dealing — which of course is not only most improper but a criminal offence. And the only people who knew about all eight takeovers, apart from my client himself and his personal assistant, who has been with him for twenty years and can be trusted, he says, absolutely, are his two potential successors. That is to say — A and B.”
The discovery placed her client in the most painful dilemma. Could he leave the Bank, at the conclusion of a long and honourable career, in hands which might be guilty of such a crime against the laws of England and commercial honour? Unthinkable. Equally so to instigate any official enquiry by the Stock Exchange, which might well of itself prove ruinous to the Bank’s reputation and interests. The only solution to his problem was to identify the person responsible; but in this Selena had been unable to assist him.
“And I suppose one might say that it’s unreasonable of him to expect me to. But you see, he first came to me about a fairly minor matter that I happened to be able to help with and he was evidently rather impressed. Since then he’s behaved as if asking my advice is an infallible solution to every problem, which is the sort of attitude one likes to see in one’s clients and has had a very invigorating effect on my bank balance. So I don’t want him to be disillusioned with me.”
“So far as I recall,” said Julia, “the specialities mentioned under your name in the Law List do not include clairvoyancy You are, it is generally agreed, unrivalled in our generation in your knowledge of the Companies Acts, but you are not Madame Louisa.”
“No,” said Selena. “Who is Madame Louisa?”
“Madame Louisa writes the astrology column in the Daily Scuttle and has amazing gifts. She predicted this morning, I remember, that you might have frustrations in the workplace.”
“I would say,” said Selena, “that her gift is for understatement. What did she say about you?”
“That I might feel anxious about a business transaction, perhaps involving a relative, and that legal advice would be helpful. That too turns out to be an amazingly accurate prediction, though I’m hoping that in this case the advice in question will be my own.” Julia related the disagreement between her aunt and the unhelpful young man from the Revenue.
“But Julia,” said Selena, looking puzzled, and with the diffidence of one perhaps trespassing on a friend’s area of expertise, “what about the individual exemption? Aren’t the first six thousand pounds of capital gains in a fiscal year exempt from tax?”
“Yes, of course,” said Julia. “That’s why people so often forget that capital gains tax exists — the gains of the small private investor are usually covered by the exemption.”
“But then—”
“The claim to tax is on the gains over six thousand pounds. Unfortunately, all the gains were realised in the same financial year.”
“On an initial investment of fifteen hundred pounds?”
“Yes, about that.”
“But Julia, that means that the gains over the year must have been of the order of one thousand percent.”
“Yes,” said Julia. “Yes, when you look at it like that, it’s rather impressive, isn’t it?”
“Over the same period,” said Selena, “the most successful of the investment trusts made gains of just under thirty percent. How on earth did she do it?”
“Just a minute, I’ll show you the list of the shares she bought.” After a relatively brief search among the papers on her desk, Julia found what she seemed to be looking for and handed it to Selena. “But she obviously didn’t tell the man from the Revenue that she was investing on behalf of herself and two other people. If she’d told him that, I don’t see how he could dispute that they’re entitled to three exemptions. So as long as Maurice and Griselda haven’t incurred any other chargeable gains, and as long as the chap from the Revenue doesn’t try to say—”
Selena was looking at the sheet of paper in her hand with an expression of perplexity, one would almost have said of dismay.
“Julia, are you quite sure this is the list your aunt sent you?”
“Yes,” said Julia. “Why shouldn’t it be?”
“Earlier this afternoon, my client handed me a list of the companies which appeared to have been the subject of insider dealing. And all the names on her list are also on his.”