Metropolitan Club — The Roosevelt Suite
The heavy mahogany doors closed behind them with a soundless finality. The latch clicked, shutting out the muted conversations and the muffled tread of feet on thick wool carpet in the corridor outside.
Inside, the suite was dim. Dark walnut paneling swallowed most of the scant light. The air hung still, steeped in the mellow smoke of aged cigars and the faint, sweet ghost of vintage cognac that had long since evaporated.
A white-haired man in a tailored British tweed suit sat upright on a Chesterfield leather sofa at the room's center.
Richard, a secret envoy for the White House who also held an honorary directorship at Goldman Sachs, set down his copy of the Wall Street Journal when he heard the door open. He rose, bracing his hands on his knees.
"Miss Saionji. Mr. Frank." His tone was polite, carrying a note of practiced familiarity. He took a half step forward and extended his right hand. "I am Richard. It's a pleasure to meet you both in Manhattan."
Satsuki stepped forward. She wore a slim, dark suit with a pure white silk blouse. She took his hand and shook it lightly.
"Mr. Richard, I've heard much about you," she said, her voice clear and cool. "It's my honor to receive a private invitation from an honorary director of Goldman Sachs."
Frank, carrying a black briefcase, stood half a pace behind Satsuki. He shook Richard's hand as well, then settled into a single armchair to the side.
Richard gestured for Satsuki to take the seat of honor across from him. He turned to the marble coffee table, picked up a decanted bottle of red wine from beside the ice bucket, and poured steadily into two Baccarat crystal goblets. The deep red liquid moved like silk.
"This comes from the Hill Country winery in Texas," Richard said as he slid one glass toward her. A meaningful smile touched the corners of his mouth. "The sunlight there is generous. The grapes run sweeter than those from Bordeaux. I hope you enjoy its boldness."
Satsuki lifted the crystal glass. The wine left thick, slow legs on the walls. As she expected. Given the revolving door between the Bush administration and Goldman Sachs, Richard had almost certainly been sent by the White House to test her.
She brought the goblet to her lips and took a small sip. "The fruit is indeed rich," she said, setting the glass down and savoring the finish. "Though the sweetness is a bit heavy. Personally, when handling certain matters, I prefer a crisper, more decisive taste."
Richard smiled. He sat on the opposite sofa and crossed his hands over his abdomen. "Crisp and decisive. Friends in Washington have described the Saionji Family's recent methods in much the same way." He studied her, a hint of appraisal in his eyes.
"To be honest, Miss Saionji, the speed with which the Tokyo Cabinet released that thirteen billion dollars in military funding was astonishing."
He leaned forward slightly and set his wine glass on the table. "Do you know? While congressmen on Capitol Hill were still arguing over the Middle East budget, Tokyo's funds had already cleared into the Pentagon's contingency account." He shook his head with a knowing smile. "The President has privately praised Prime Minister Kaifu's boldness."
"Everyone understands this," Richard continued, tapping the back of his hand lightly with his fingers. "In this world, the only people who can make Japan's notoriously slow bureaucracy finish appropriations in days are those who control their votes and campaign donations."
Satsuki leaned back into the leather sofa. She met his gaze and kept her smile elegant. "Mr. Richard, capital has always pursued efficiency and safety," she said, her voice calm in the quiet room.
"The Persian Gulf is on the brink. If the crude oil routes are cut, the Far East's entire industrial system faces paralysis. When the nation's lifeblood is threatened, urging the Cabinet to meet its share of the free world's defense costs quickly is simply a corporation's social responsibility."
She reached for the sparkling water on the table. "Moreover, only efficient capital flow can reduce the casualties of young American soldiers in the desert. With proper logistical support, the front lines hold their position more firmly."
The muscle at the corner of Richard's eye twitched. She was young, yet her command of diplomatic language was flawless. He picked up his wine glass, took a sip, and recalibrated.
"Miss Saionji's concern for our allies is moving," he said, setting the glass down. The smile on his face thinned. "But while Washington focuses on the Middle East, it also watches domestic asset flows closely."
He tapped the edge of the coffee table with his index finger. "Recently, your S.A. Investment completed the title transfer of 40 Wall Street with the Resolution Trust Corporation." His tone dropped.
"That building has witnessed half a century of Wall Street history. Although CFIUS has cleared the transaction for now, many on Capitol Hill are uneasy about Far East capital acquiring core Manhattan assets during an economically sensitive time."
"They see it as a slow erosion of American economic sovereignty."
Frank, who had been silent, sat up slightly. He looked ready to cite the RTC's liquidation data as a legal defense.
Satsuki raised her left hand and pressed the air lightly, stopping him. "Erosion of economic sovereignty?" She touched the corner of her lips with her fingertips, her eyes curving into a faint smile. She looked at Richard, still composed and tranquil.
"Mr. Richard, hundreds of savings and loan banks across America have collapsed. The treasury's budget for bad debt is already exhausted, is it not? I've heard the liquidators at the RTC are so burdened by vacant buildings they can't sell, they've nearly written resignation letters out of guilt."
She continued, her tone even. "Inside the fireproof mezzanine on the ground floor of 40 Wall Street, illegal asbestos from the seventies remains intact. Tell me, which prudent commercial bank would approve a single dollar in renovation loans for a flawed building that invites environmental lawsuits?"
She folded her hands, resting her elbows lightly on the sofa's arms. "If that building stays on your books, it bleeds money every day in maintenance and security costs. S.A. Investment paid hundreds of millions in cash to buy this unwanted liability in one transaction. We are clearing financial waste for a government mired in the savings and loan crisis. We are filling your bad-debt hole."
Her pace quickened slightly. "For that kind of help, Capitol Hill doesn't intend to award a medal of honor, yet they feel uneasy? If those congressmen are truly so concerned, I can have my legal team halt the transfer of the next twenty buildings. Let the congressmen pay the property bills themselves when they land on their desks tomorrow."
Richard's breath caught. Her assertiveness exceeded anything he had expected. In past dealings with Japanese zaibatsu, their presidents usually grew anxious under pressure from Washington and the threat of CFIUS reviews. They compromised quickly on price or terms.
But the young woman before him showed no fear of CFIUS. She had turned the situation around and used his own cash-flow weakness to threaten Washington. He had been outmaneuvered.
He coughed dryly and looked for a way to retreat. "Miss Saionji, you overstate the matter. I believe there's a minor misunderstanding," he said, his tone shifting back to gentle.
"The RTC is very grateful for the liquidity S.A. Investment provided. You are solving a problem for the federal government. As for the noise from Congress, the White House will handle it."
He picked up his wine glass again and rubbed the rim slowly with his finger. Since he could not breach her defenses on financial mergers, he cut straight to the real purpose of today's meeting.
"Asset acquisition is a legal commercial act. Washington respects the rules of the free market," he said. "But some actions go beyond business, and conventional economic logic struggles to explain them."
He set the glass down and leaned forward, closing the distance between them. "That team operating on the outskirts of the Dhahran Base in Saudi Arabia," he said, holding her gaze.
"They're labeled as commercial employees, but Pentagon investigators found their equipment and personnel caliber far exceed a normal engineering team. And they all carry passports issued by Tokyo."
Satsuki sat upright on the sofa and met his eyes. A dangerous note entered his voice.
"If bureaucrats at the State Department made the wrong connections, anonymous letters could appear on the editor-in-chief's desk at the New York Times at any time. They would detail how a Far East zaibatsu used defense private equity channels to send a combat-ready team into the Middle East theater."
How predictable. Satsuki picked up the sparkling water and took a small sip.
"Mr. Richard, you seem to have forgotten whose account that two-billion-dollar blind pool fund currently sits in," she said, setting the glass down without a ripple in her expression.
"The Carlyle Group's partner list is full of retired Pentagon generals and former aides. Legally, that rescue team is a defense outsourcing project under their names. If the New York Times received that anonymous letter, I imagine the Washington Post would run a front-page story the next morning.
It would show exactly how this military-backed private equity group used funds from a Far East zaibatsu to secure Department of Defense theater passes for foreigners."
She folded her hands, her elbows resting lightly on the sofa arms.
"Go ahead and guess. If the White House exposed that secret, would the generals and members of the Senate Armed Services Committee, who rely on those dividends to fund their campaigns, rage hard enough to tear the White House apart?"
The muscle at Richard's temple twitched. Same tactic again. Did she have no other cards? She was counting on the fact that the military had already taken the money. If they backed out now, they would destroy the livelihoods of a powerful group.
He coughed to hide his frustration. "Miss Saionji misunderstands. I was only stating a potential risk," he said.
"But now it seems we were overthinking it." His tone warmed again, sincere. "In fact, there's no chance for that risk to develop."
"Several old generals in Washington have praised the logistical efficiency of 'S.A. Global Rescue' at the Dhahran Base," he continued, swirling his wine gently.
"The excellent returns from The Carlyle Group's recent blind pool fund gave Senate Armed Services Committee members a very comfortable summer. The military is grateful for Miss Saionji's generous support of allied defense."
Satsuki remained calm. Frank stayed quiet beside her. Both understood this was preamble.
Sure enough, Richard shifted gears and leaned forward. "The military has the guarantees it wanted, and the White House is pleased to see it," he said. His smile faded, replaced by a look of civic concern.
"But American voters don't care about a desert ten thousand miles away. Hit by the savings and loan crisis, the domestic unemployment rate remains high, especially in the energy-rich southern states. The President has been deeply worried in his office about the oil workers in Texas who have lost their jobs."
Satsuki watched his compassionate expression. She understood now. Feeding the Pentagon wasn't enough. The White House wanted its share. When it came to leveraging influence, these people were masters.
She took a sip of water and followed his lead. "The President's concern is touching," she said. "Having a leader who thinks of the people is a blessing for Americans." She set the glass down and met his eyes.
"We feel the same. We can't bear to see the American people suffer. As a socially responsible, international corporation, we're willing to help our President."
"S.A. Investment happens to be adjusting its North American asset structure. We've noticed that, due to the credit crunch, many independent oil fields and refineries in Texas with strong extraction potential are facing bankruptcy.
If the RTC can offer some flexibility during its audits, S.A. would be glad to use a substantial amount of cash to acquire these distressed assets and restart those idle drilling rigs."
Richard's eye twitched almost imperceptibly. Restarting Texas rigs would create tens of thousands of jobs across the southern energy belt. This was the President's home state, his largest voting bloc, and the political leverage he needed most for re-election. She knew the rules. She was giving him a way to justify the deal back home.
He lifted his wine glass, his smile now thoroughly sincere. "The United States welcomes any well-intentioned investment that helps local economies prosper," he said.
"So, Miss Saionji, what corresponding conveniences do you need from the White House?"
Satsuki leaned back against the leather. "I want to buy a charter," she said, looking at him steadily. "Restrain Washington's administrative agencies. That includes CFIUS and the SEC."
"In the coming months, Japan will experience an unprecedented asset liquidation. The Saionji Family will harvest from the ruins at home." Her elbow rested lightly on the armrest. "I want Washington's guarantee. The highest level of the U.S. government must strictly forbid any intervention in the Saionji Family's acquisition of core assets in Japan's semiconductor supply chain, medical pharmaceutical industry, and banking sector under the pretext of national security or antitrust."
"I want that hunting ground kept clean."
Richard studied her face, his mind racing. She clearly intended to seize Japan's economic lifeblood. But compared to re-election leverage, that was secondary. As long as dollars flowed into Texas, Washington would not care how she moved in the Far East.
"Limited only to semiconductors, medical, and banking?" he asked, confirming the deal's boundaries.
Satsuki picked up her sparkling water. "Of course." She watched the tiny bubbles rise, a soft smile at the corners of her mouth.
Richard considered it, then relaxed. "Miss Saionji's proposal is fair," he said. He raised his Baccarat crystal glass, his tone solemn.
"I will faithfully convey this sincere investment plan to Washington's economic advisory team. With those Texas drilling rigs, the White House will have ample reason to quiet the bureaucrats at State who like to make mountains out of molehills."
He looked at her, offering the White House's political endorsement. "The President will personally guarantee that any baseless speculation about that private rescue team will never appear in mainstream Washington media. Their logistical work in Saudi Arabia will receive the strictest protection from the United States."
Satsuki raised her water glass. "A pleasure doing business, Mr. Richard."
"Clink." Glass and crystal touched gently in the air, the clear note echoing through the suite.
"A pleasure doing business. May Japan-U.S. friendship endure."