Rogue Code (12 page)

“The SEC report said that the regs that were supposed to prevent the Flash Crash didn’t. And that the Exchange was still vulnerable to large and immediate transactions. Those involved in the financial markets decided that the Exchange understood a little of
what
had taken place but not
why
. They figured it could happen again, and it did.”

“When?”

“Facebook and the disastrous BATS IPOs. Now the Facebook IPO was handled by NASDAQ while BATS did its own, but the lessons cut across the industry. Both of them had significant trading anomalies. What’s going on is that there’s a lot of unease and distrust in the worldwide financial community. The big guys have made plans against the day the next Flash Crash happens. The dark side is that if the immediate rebound fails to materialize, it would then be every man for himself. That’s an eventuality these new algos have already been programmed for. The market won’t have more than a few minutes to right itself before it’s everyone acting in his own interest and to hell with the market. No one can predict the extent of the potential financial abyss.”

“You’re saying Thunderdome?” Jeff asked.

“Why not?” Frank said. “The worldwide financial system is so connected, and becoming even more so, why not? It’s all run by computers, and even after such events, there were no significant security changes.” Frank looked around the room. “Everyone’s too busy making money,” he mused.

“Not everyone. Plenty are losing it. So what’s your plan? Bury gold in the backyard?” Jeff asked.

“That’s just it. What do you do? The point is not to stay in the stock market, but if you stay in currency, with the way it’s being devalued, you lose worth. So you buy property, right? Well, good luck with that. We’ve all seen how that goes. Getting the money out of the country and into a basket of currencies might work if there weren’t so many regulations working against it, and at my level, it’s not worth the effort. The point of all this is the average guy is getting screwed.”

“So what else is new?” Jeff asked.

15

MACATUBA

SÃO PAULO, BRAZIL

12:11
P.M.

Following his meeting that morning, Victor Bandeira took the helicopter for the short ride to his residence in exclusive Macatuba. The small helicopter swept over the manicured estates below, banked left, slowed, then eased onto the helipad marked by two concentric circles and an X. The craft touched gently down and the pilot immediately killed the engine, then set the rotor brake. A minute later, Bandeira stepped out and walked briskly toward the main house, carrying a thin briefcase.

His son, Pedro, was waiting at the entrance, as the two of them were to have their midday meal here at Bandeira’s estate. Afterwards, the young man would join his mother at her home across the city before returning to Rio. It was his twenty-fifth birthday.

Set on nearly twenty-five acres with a main house of some nine thousand square feet, the estate was a necessary extravagance, as far as Bandeira was concerned. To be perceived as rich was as important as to be rich. In many circles, this display was unnecessary, as Bandeira’s position was well known, but he did important business, especially with foreigners, who needed to see his wealth on display.

The furniture in every room was specially built for the house. There were eight bedrooms, office space, a huge family room, and a dining room nearly as large. There was a four-season porch and terrace, a spring-fed pool, a game room he never used but his son enjoyed, as well as extensive grounds with fully mature trees and an orchard. There was also a guest and a maid’s house, even an acre of native forest that served as a bird sanctuary. Through it and the grounds wound a creek. Altogether, it was enough to impress even the heads of state.

Pedro Miguel Ademar Bandeira-Carvalho was a handsome young man with sleek black hair and a slim body. He possessed a slightly bookish demeanor enhanced by the rimless glasses he wore. He was dressed casually, and on the streets of São Paulo, he would be taken for exactly what he was—an IT professional, given to long nights writing code.

By design, there were no visible signs of security. The estate had the latest in technology, but Bandeira relied primarily on a devoted team of bodyguards, whom he treated and paid well. They were discreetly located about the grounds, nearly all out of sight.

The operatives were under the direction of Jorge César. Tall, slender, mustached, and nearly always dressed in an austere black suit, he was utterly devoted to the elder Bandeira. The two had attended school together. Afterwards, César joined the police. When Bandeira assumed control of the cartel, César left law enforcement and became his full-time chief of security. A quiet man by nature, he blended easily into the background, always alert, in regular contact with his security team.

Father and son embraced, Pedro kissing his father lightly on both cheeks. Bandeira set his briefcase down, then took his place at the head of the long dining table. Pedro sat to his immediate right. Except for the servant who brought each dish, they dined alone.

“Here,” Bandeira said, removing a nearly square wrapped box from his suit pocket. “For your birthday, my son.”

Pedro accepted the gift with a smile, then unwrapped it as Bandeira watched his face keenly. When the young man opened the box to see the dazzling wristwatch inside, he grinned broadly. It was the latest Louis Moinet. “It’s too expensive. Something more modest would have been enough. Really.”

Bandeira pushed the box and wrapping aside. “I saw you looking at mine one day. I thought you might like one just like it. There’s an engraving.”

Pedro lifted the watch and tilted it so he could read the inscription:
Para o meu filho, Pedro, de seu pai amoroso.
“To my son, Pedro, from his loving father.” He slipped the watch on, his grin never easing. Bandeira sat back, satisfied. He’d read the boy’s interest correctly.

“Now, let us enjoy our meal.”

They ate while discussing Pedro’s work in Rio, Bandeira nodding in approval, asking an occasional question but not as he might at a meeting. This was a festive event, a time he’d looked forward to for several weeks. Anyway, he was well briefed on what his son did, in every aspect of his life.

When they’d exhausted the mundane topics, Bandeira asked, “Is Carnaval ready?”

Pedro nodded lightly, his mouth full of food. When he finished chewing, he said, “Nearly. I think we’ll hit the benchmark.”

“I’m thinking about upping the take with it.”

“We’ve been on this for months now,
pai,
and we’re only a few days out from the IPO. Changes at this date could create unintended problems if we don’t have enough time to run a full range of tests.”

“I understand. But you have a good team. And … I have pressing needs. You understand.”

The pair waited as espresso was served with a dessert.

“We can try,” Pedro said, “but I’m worried there isn’t enough time.” Bandeira nodded without comment. The men took a bite, and then, to change the subject, Pedro said, “You know, you always said that someday you’d tell me more about your life. There is a great deal I know nothing about.”

Bandeira looked at him. “You would find it boring, I’m sure.”

“I never met my grandparents.”

Bandeira thought. “My parents? I suppose you are right. You’re a man now. Actually, except for the family story, you surely know it all as it is.” He leaned back and lifted a cigar from the table where the server had placed it with dessert. As he clipped the tip and lighted it, he said, “Where to begin? It was … so very long ago.”

Victorio Manuel da Silva-Bandeira had been born in the favelas of Rio de Janeiro. As he told the story now, he slowly lapsed into his childhood accent, the patois of the poor and disenfranchised of Rio. He did it without thinking and realized it had occurred only when he saw the sober expression on his son’s face. To speak the truth, Bandeira thought, I must speak in the language of truth.

His father, Miguel, had come from the north, he said, seeking opportunity in Brazil’s premier city. He’d found a job as an automobile mechanic, worked hard, married late, and had just two children, Victor and a younger daughter, Maria.

“My mother, your grandmother,” Bandeira said, “ran a cart that served meals on the street. You know the kind. You see them in every poor area of Brazil. Maria and I helped her from the time we were toddlers, but my father had greater aspirations for me and insisted I attend school when I was of age. He said I was smart.”

Bandeira was just as smart as his parents had thought, and he excelled in school. They encouraged him and at some sacrifice found a way to pay for his clothes and tuition. When Bandeira was a teenager, his intellect and personable manner were recognized, and under a new government initiative, he received a scholarship to an elite boarding school. The program was designed to identify bright youth and give them advantages that would ultimately contribute to Brazil’s emergence as a world economic power.

“Life was not easy on my parents,” Bandeira said. “A new gang took control of the street where my mother set up her cart each day, and they demanded so high a payment, it was nearly impossible for her to earn any money. When my father met with the
chefe
and respectfully explained the situation, he was savagely beaten.” Bandeira stopped at the memory, at the rage he’d known when he first saw his father’s wounds. “Unable to go to work, he lost his job, and for a time my family’s situation was very bad. I wanted to drop out of school to work, but he forbade it.”

“What happened?” Pedro asked.

“My mother agreed to sell more than food from her cart. She had no choice in the matter, frankly. It was either sell the small, folded-paper packets or go hungry. When my father was healthy again, he returned to the
chefe,
knowing another beating might well result. He explained that his wife could not openly deal in drugs. It would drive away her regular customers and inevitably lead either to her arrest by police or death at the hands of a rival gang. He suggested instead that she serve as a lookout and from time to time as a transfer point for wholesale packages. She’d serve a better role for them this way.

“The leader apparently admired his courage, or saw the logic, because he agreed. My father found work with another garage and life went on. For a time. You will find this hard to believe, but I was one of the first at school to show a real interest in computers. I was fascinated by them, even wrote a bit of code. Don’t ask. I don’t have it any longer, and I’d never show it to you if I did. Because of my interest in computers and because of my background, I had many problems at school at first. Most of the students were from well-to-do families, and it was impossible to hide my own poverty. I worked hard on my diction, but it was several years before I rid myself of my accent. I was taunted and teased until I beat one of the older and much bigger tormentors. I threatened to do the same to any student who told on me. Thereafter, I was left alone.” Bandeira paused to reflect. “In the end, it was my ability as an athlete that led to my acceptance.”

“So you were good at
futebol
?”

“Did you doubt it? I had more reason than most to work hard. It was important to me, more important than to players with greater ability.” Bandeira talked about the school, the teachers, the course of study, the girls who attended their own school down the street. “They were like angels for us to worship from afar.

“When I was sixteen years old, everything changed. The situation on the street corner occupied by your grandmother had continued for three years with no real trouble. The family had a bit of savings. My parents did not tell me what my mother was up to, but Maria did. There was nothing I could do about it, and what other choice was there? Other girls I’d known growing up now worked as prostitutes; most of the boys I’d played with as a child were either drug dealers or thieves, or both—if they weren’t dead or in prison. A few had taken honest jobs, but they lived no better than anyone else.

“A new gang wanted the territory. To make their point, they killed a number of the lookouts, including my mother and Maria. She was just fourteen. They’d simply been gunned down at the start of the violence.”

Bandeira stopped. His face became soft as he said, “You’d have liked your aunt. She was delicate. When you smile, it reminds me very much of her. It breaks my heart sometimes.” He sighed. “They gave me a week off from school to attend the funerals and mourn. I told my father that I was not going back, and he slapped me for the first time. ‘You will go back, Victorio,’ he said. ‘You will succeed. Why do you think your mother worked on those streets? For what? Some beans and rice in her belly? It was for you, for you. You were her hope. We need no drug dealers in this family, no thieves. You were, you are, our salvation. Study, work hard, succeed.’ That is what he said to me.

“So I went back to school and worked even harder. Three months later, my father was killed crossing a busy street. I never knew if it was an accident or if he’d said the wrong thing to the wrong man. That is when my life took a change I could not imagine. A few weeks later, I was invited to spend the Easter vacation with the family of my best school friend, Luís. He was a little wild and didn’t study, but he wasn’t a snob like the others. They lived here in São Paulo, and for the first time, I experienced up close the world of the rich.” Bandeira gestured lightly with his cigar. “This world.”

Ademar Carvalho, Luís’s father, he said, was the leader of a local crime cartel. Though uncultured, he’d become very rich and had sought the appearance of legitimacy later in life. He lived in an exclusive gated community near the Pinheiros district of São Paulo. Carvalho was a hearty, robust man who doted on his youngest son. For two years, he’d been hearing about Bandeira—the tough from the favelas, star
futebol
striker—and then he learned of the deaths of his parents.

“‘My home is yours,’ he told me. ‘You must enjoy yourself while you are with us.’ That was more easily said than done. The boarding school had always seemed luxurious to me, with its peaceful central garden and clean solid rooms, the buildings on tree-shaded and safe streets. We students were well taken care of, and I’d always found the food abundant, even sumptuous. But this was a different matter. Afterwards, Luís had to persuade me time and again to join him until finally I became more comfortable with the servants and the Carvalhos’ extended family.