Chapter 394: The Era’s Dividend

Chapter 394 -39: The Era’s Dividend

Werner left the chemical plant and got into his car.

His driver, Thomas, asked, “Where to, Boss?”

“Leipzig,” Werner said. “There are seven more factories waiting.”

As the car drove out of Dresden, Werner watched the scenery recede rapidly outside the window, his mind already calculating.

For this operation, he had arranged to lend out a total of 20 million East German Marks.

But now, by loaning the money to factories on the verge of bankruptcy, this cash had been converted into “corporate debt.”

After July 1st, the 20 million East German Marks of debt would automatically become a 10 million West German Mark claim.

On paper, Werner had “lost” half his money.

But in reality:

First, if he had exchanged it on the Black Market, 20 million East German Marks would have only gotten him 2 million West German Marks. Now, converting it into 10 million was a five-fold profit.

Second, this 10 million West German Marks came from legal “debt repayment,” passed through the banking system, and had a complete paper trail. No audit could find any issues.

Third, those factories unable to repay their debts would eventually be his for the taking. He could convert his debt claims into equity, acquiring the factories’ land, equipment, and technology at a low price.

More importantly, this laid the groundwork for privatization.

Werner knew that in the coming months, the trust agency would begin mass privatization. Over 8,000 East German state-owned enterprises would be auctioned off.

When that happened, major capital from West Germany would come flooding in.

But those West Germans didn’t understand East Germany. They didn’t know which factories had potential and which were just empty shells.

Werner, however, had already gotten an inside look at dozens of factories. He had debt claims, connections, and information.

When privatization truly began, he would have an advantage over any West German.

*************

Similar scenes repeated themselves more than a dozen times over the next week.

A textile mill in Leipzig, 3 million East German Marks.

A musical instrument factory in Weimar, 2 million East German Marks.

Every factory was desperate for funds, and every director signed on the dotted line.

By June 30th, Werner had “lent” a total of about 20 million East German Marks to over a dozen factories on the brink of bankruptcy through this method.

This was all black money he controlled.

But after this series of operations, it had all been converted into “corporate debt.”

After July 1st, the 20 million East German Marks of debt would automatically become a 10 million West German Mark claim.

On paper, Werner had legally “evaporated” half the cost.

More importantly, this 10 million West German Marks was completely clean.

It came from the “July 1st legal debt conversion,” was recorded by the banks, endorsed by the government, and would pass any audit without issue.

*************

Sunday, July 1st, 1990.

Werner woke up at five in the morning.

He didn’t go to the bank, nor did he go to the office.

He just sat quietly by the window of his apartment, watching the sky gradually lighten over East Berlin.

Today, the monetary, economic, and social union officially took effect.

The East German Mark and the West German Mark were being exchanged at the predetermined rates.

Of the 30 million in black money East German Marks he held, 20 million had been laundered through “debt conversion,” becoming 10 million West German Marks in legal claims.

Of the remaining 10 million, 3 million were currently being exchanged at banks, queued up through the accounts of 872 agents.

As for the last 7 million, Werner decided not to launder it.

It was too risky.

The phone rang.

“Boss,” Keller’s voice was excited. “It was a success! All the agents exchanged their money smoothly. Three million East German Marks have been turned into three million West German Marks. No problems at all!”

Werner nodded. “Good. Transfer the money to the account in Switzerland.”

“Yes, sir.”

Another call came in.

“Mr. Betelich,” it was Schmidt from the Dresden Chemical Plant. “Our accounts have been updated at the bank. The 5 million East German Mark debt is now showing as 2.5 million West German Marks.”

“Good,” Werner said. “Director Schmidt, remember our agreement.”

“I remember,” Schmidt said, his tone laced with complicated emotions. “Mr. Betelich, I don’t know whether I should thank you or hate you.”

Werner laughed. “Neither. We both just got what we wanted.”

After hanging up, Werner stood up and walked to the window.

On the street below, people were already starting to hurry toward the banks. Though it was a Sunday, the banks were open specially for this historic day.

Werner watched the excited crowds, a faint smile on his face.

For those ordinary East Germans, today was a dream come true.

For Werner, it was the day his black money turned white.

************

A few days later, Werner received a phone call in his office.

“Mr. Betelich, my name is Stein. I’m a reporter with the weekly magazine *Der Spiegel*. I’d like to interview you.”

Werner frowned. “Interview me? Why?”

“We’ve heard that on the eve of the monetary union, you provided emergency loans to many East German companies on the verge of bankruptcy. Some say you’re a conscientious entrepreneur, while others call you a shrewd speculator. I’d like to hear what you have to say for yourself.”

Werner was silent for a few seconds. “It was a legal business transaction.”

“We don’t doubt that,” Stein said. “But we want to know your thoughts on the monetary union’s impact on East Germany.”

Werner thought for a moment. “Alright. But I have one condition.”

“What condition?”

“I get to review the content of the interview before it’s published.”

“That… doesn’t exactly align with journalistic standards.”

“Then there’s no need for an interview,” Werner said, preparing to hang up.

“Wait!” Stein said hurriedly. “Fine, I agree.”

*************

A few days later, the interview took place in Werner’s office.

Stein was a young reporter in his early thirties, wearing glasses, and he looked sharp. He brought a tape recorder and placed it on the table.

“Shall we begin?” Stein asked.

Werner nodded.

“Mr. Betelich, we’ve learned that on the eve of the monetary union, you provided loans totaling tens of millions of East German Marks to at least a dozen East German companies. What was your reasoning for this?”

Werner sat opposite him, his expression calm. “It’s simple. These companies needed capital, and I had the ability to provide it. It was a mutually beneficial business cooperation.”

“But some say you were using the debt conversion policy for arbitrage,” Stein said.

“That was the policy,” Werner said. “This rule applied to all creditors and debtors, not just me. I was simply acting in accordance with the law.”

“Don’t you think that’s unfair to the debtors, then?”

“Unfair?” Werner laughed. “Mr. Stein, if I hadn’t lent them the money, they would be bankrupt by now. Their workers would be unemployed, and their equipment would be sold for scrap. My money bought them at least a few more months, maybe long enough to make it to privatization, maybe long enough to find another way out.”

Stein paused for a moment. “So, do you think the monetary union is a good thing or a bad thing for East Germany?”

“It’s both,” Werner said. “The good part is that the East German Mark finally has a stable value, so people can save and spend with confidence. The bad part is that many companies will go under, and unemployment will rise. But that is the price of transition.”

“Don’t you think that price is too high?”

“It is high,” Werner admitted, “but it’s unavoidable. Mr. Stein, the East German system was already bankrupt. The monetary union just brought that bankruptcy to light ahead of schedule.”

“So what do you think East Germany should do?”

Werner looked at him and was silent for a moment.

“The future of East Germany,” Werner said slowly, “depends on whether we can preserve the things of real value during this transformation. The technology, the talent, the traditions. Instead of simply selling everything off to the West Germans.”

“And how do you plan to do that?”

“I will acquire those companies that have potential,” Werner said. “I’ll help them modernize, help them compete with West Germany. This isn’t charity; it’s an investment. I believe East Germany still has a chance.”

Stein asked a few more questions, but Werner skillfully evaded them all.

After the interview, Stein turned off the recorder and gathered his things to leave.

“Mr. Betelich,” he said suddenly, “to be honest, I don’t really believe what you said. I think you’re just a speculator.”