Mid-March, 1990.
Lower Manhattan, New York. U.S. District Court for the Southern District of New York.
The heavy oak double doors were pushed open, and the noisy chatter from the hallway instantly flooded into the solemn hearing room.
Arthur Vance sat on a wooden bench in the plaintiff's section. His usually straight back was slightly hunched now, and his dark gray suit jacket was wrinkled from hours of sitting.
He reached out both hands and rubbed his bloodshot eyes hard.
In his line of sight, the defense area had been buried under a mountain of documents.
Exactly twelve Wall Street partner-level lawyers, in expensive custom suits with meticulously groomed hair, stood beside waist-high document carts.
The open case files and leather briefcases bore logos enough to give any multinational corporation's legal department a headache.
Skadden, Sullivan & Cromwell, Davis Polk. These top-tier White-shoe law firms had, unprecedentedly, formed a joint defense front at the same table.
These legal mercenaries, who normally billed over a thousand dollars per hour, now worked with clear division of labor and ruthless efficiency.
The lead defense attorney picked up a legal filing five hundred pages thick.
"Your Honor." The lawyer's voice was loud and oppressive, echoing under the high ceiling of the empty courtroom. "Regarding the emergency freeze order issued by CFIUS invoking Section 721 of the Defense Production Act of 1950, the Exon-Florio Amendment. We formally submit the thirty-fourth Application for Objection to Transnational Jurisdiction and Judicial Review of Unconstitutionality."
The lawyer tapped his index finger heavily on the thick cover.
"Absolute control of these funds belongs to an independent trust in the Cayman Islands, protected by the highest local offshore trust laws. The nominee institution for the fund transfers is located in Luxembourg. Legally speaking, CFIUS's domestic administrative jurisdiction has no right to extend to offshore SPVs outside U.S. territory."
The lawyer spoke extremely fast, rattling off statutes like a machine gun.
"More importantly… the administrative agency, without obtaining a legal search warrant from a federal court, directly used coercive power to intercept legitimate commercial wire transfers at the physical gateway. This act seriously violates the Fifth Amendment of the U.S. Constitution regarding no person shall be deprived of private property without due process of law."
"We request that the court, based on Rule 65 of the Federal Rules of Civil Procedure, immediately initiate an independent hearing procedure for the constitutional review of the freeze order. Until the hearing is concluded, the SEC and any federal administrative agency shall have no right to access any underlying look-through data of these offshore accounts."
The judge sat high on the bench, looking at the mountain of documents that blocked his view, and rubbed his temples tiredly.
Arthur Vance's jaw tightened, his masseter muscles bulging.
He knew exactly what the other side was doing.
This group of lawyers earning astronomical hourly wages had no intention of proving the innocence of the funds in court. They were merely exploiting the extremely tedious procedural justice within the American judicial system, using millions of pages of confidential defense applications, jurisdictional disputes, and endless requests for independent hearings to legally drag the SEC's investigative resources into a quagmire.
As long as the court was still hearing these vast procedural objections, Arthur's investigative team could not obtain a legal search warrant to further penetrate the offshore fund account groups.
The one billion dollars was indeed locked tight in the clearing center's accounts.
But Arthur Vance was also locked tight in this hearing room by the litigation quagmire of that billion dollars.
On the other side of the Pacific, global financial media had completely boiled over.
The Wall Street Journal, the Financial Times, and Japan's Nihon Keizai Shimbun all ran front-page headlines tracking this transnational financial sanction.
Superpower's Thunderous Strike: Saionji Zaibatsu's Overseas Funds Face Comprehensive Freeze
Legal Hardship: S.A. Investment Mired in New York Litigation Quagmire, Transnational Expansion Grinds to a Halt
To the outside world, this rising Japanese zaibatsu that had been rampaging for the past few years had finally suffered a devastating administrative crackdown for provoking Washington. Those hundred or so lawyers running themselves ragged in court were ironclad proof of the Saionji Family's weakness and panic.
Of course, to the outside world, the Saionji Family was the weaker party no matter what.
Arthur looked at the lawyers opposite him who wore professional smiles, his hands slowly clenching into fists on the table.
This sanction, widely hyped by global media, perfectly released an extremely lethal false signal. All the spotlights were drawn to this billion-dollar tug-of-war.
Meanwhile, the short-selling main positions hidden in the deep sea, with a notional principal of up to three hundred billion dollars, were completely concealed in the blind spots of all regulatory radars under the perfect cover of this illusion of weakness, quietly waiting for the moment of eruption.
---
Tokyo, Chiyoda Ward, Nagatacho.
House of Representatives First Members Office Building, Room 508.
Inside the spacious Secretary-General's office, the air was thick with the strong scent of Cuban cigars.
Osawa Ichiro was sunk into a deep red leather sofa. His legs were crossed, and his right hand held a thick cigar that was half-burnt.
A large color television on the wall was broadcasting the midday news.
It had been exactly half a month since the Osawa Faction forcibly introduced the proposal to repeal the Large-Scale Retail Store Law in Parliament, which had triggered a physical brawl. For the past half month, Nagatacho had remained in a state of continuous turmoil and bickering. But at this moment, the news focus was entirely on the other side of the Pacific.
The screen switched scenes. Outside the steps of the U.S. District Court for the Southern District of New York, Saionji Group's massive transnational legal team was being besieged by countless American reporters. The legal elites in their suits looked grim as they struggled to squeeze into cars under the escort of security personnel, appearing to be running themselves ragged.
Osawa Ichiro looked at the TV screen and took a deep drag of his cigar.
The red encrypted phone on the desk suddenly erupted with an urgent ring.
He calmly placed the cigar on the edge of the crystal ashtray, stood up, walked to the desk, and grabbed the receiver.
"Representative Osawa."
On the other end of the line came the Japanese of William, the Economic Minister at the U.S. Embassy in Japan, spoken with a slight accent.
"Minister William." Osawa Ichiro's voice was very low, his tone carrying an irrepressible sense of satisfaction. "I've already seen the news from New York."
"A perfect encirclement." William gave a light chuckle on the other end. "It's been half a month. The Saionji Family's offshore fund pools hidden in the Cayman Islands have been pinned down by CFIUS in the clearing center's underlying regulatory accounts. They've spent millions of dollars in legal fees in Manhattan and can't move a single cent. Representative Osawa, the United States has given you the firmest administrative support."
William paused for a moment, his tone becoming extremely cold.
"Now, it is time for you to demonstrate your sincerity for reform."
"Washington hopes to see the smooth passage of the repeal of the Large-Scale Retail Store Law in next week's final Parliament deliberation. We need a Japanese market that is completely open, without any cross-shareholding barriers."
Osawa Ichiro's breathing rhythm suddenly quickened by half a beat.
"Rest assured, Minister William."
"The final version of the repeal bill has been submitted. With my current control within the party, next week's final deliberation will absolutely pass smoothly."
"Very good. The United States looks forward to your performance."
Beep—