…continued from John Doe.

It was nearly 9:25 a.m. when the firm’s chief counsel Braxton Lewis entered the board room. Lewis was a big man of imposing stature, which was equally matched by William Jackson, Sr., when he rose to meet his long time friend and counselor. An outsider could picture the two gray-haired captains of industry, two generations younger, as teammates on a high school football offensive line.

But it was in the service of the U.S. Army that Lewis and Jackson met, and while neither saw combat in foreign wars, together they witnessed enough to put some perspective on the current financial crisis, where no human lives were presumably at stake.

“Louie, thanks for making the trip up on such short notice,” the banker said to his attorney.

“Never a problem,” the counselor replied, “how is Elizabeth?”

“Just fine,” the banker returned the pleasantries, “and Anne?”

Greetings were made quickly around the room. Everyone was already acquainted. In addition to the four Jacksons, the bank’s inside accountant and comptroller Arthur “Tubby” Winslow was seated at the far end of the board table and Connie Montgomery, the senior Jackson’s Executive Assistant and Corporate Secretary, situated herself near the middle, to facilitate the taking of minutes.

The two obvious outsiders at the meeting were Stephen Walton and Herbert Moss each representing large investment groups which provided sizable funding for Jackson-Beauregard’s lending operations. Neither stood to greet Braxton Lewis.

“Let’s get to it,” the Chairman began. “Connie, unless anyone objects, I propose we meet today off the record.” The outside directors shifted in their seats. “I don’t see us coming to any resolutions to this problem, or taking any formal actions.” He looked at Walton and then at Moss, and accepted their silence as acquiescence. “This meeting is just to assess the situation.”

“As we all know, the Feds have frozen all of Savannah Banana’s assets,” he recapped. “What do your boys in DC have to say?” William senior directed the question at Lewis.

“My sources at Justice think they have a solid case. Apparently they found heroin in banana containers coming into Norfolk, and instead of seizing them, they let them pass, and traced the drugs through Savannah’s distribution channels pretty near to the produce aisle in local grocery stores.”

“With this lead they obtained phone taps and warrants and were able to trace a pattern of shipments being orchestrated by people high in the Banana HQ.”

“What about Nathan?” the Chairman interrupted. “They can’t possibly think he is involved in this. For god’s sake, Beth and I were at his daughter’s wedding, hardly a year ago.”

“My sources couldn’t speak of his involvement,” the attorney continued, “but the Feds are taking the position that if he didn’t know what was going on, he damn well should have.”

“So what is the exposure?” Stephen Walton didn’t care a bit about the personalities and with this simple direct question, he took control of the meeting.

The Chairman nodded at the rotund accountant with the round head, giving him permission to share the damning facts.

“Right now we have just a little less than $50 million out to Savannah Banana,” it seemed like the accountant paused for effect, when in fact he just needed to catch his breath. “The bulk of it is 20-year money with an average 15-and-a-half-years left to maturity.”

There was a moment of silence as everyone is the room did the math – Jackson-Beauregard maintained a book of about $1 billion in loans. “Their monthly payments are just over $500K,” the accountant added after the pause.

“Do we have any recourse with Justice?” Walton directed the question toward Lewis.

“My friends at Justice said they will honor secured defaults,” the attorney explained. “But only,” he added with emphasis, “after due process.”

Walton looked back at Tubby Winslow.

“About $30 million is collateralized by inventory, containers, warehouse facilities in Sau Luis and Barranquilla, and the farm in Columbia.” Another moment of silence followed as the board silently calculated the value of perishable inventories, corralling shipping boxes from around the globe, and foreclosing on South American real estate.

“That’s great,” Moss interjected. “If we take possession of those warehouses, their contents will probably get us a cell right next to Nathan Pickett.”

There was another moment of awkward silence.

“What happened to all the hard assets like ships and railcars?” Moss queried, to no one in particular.

The truth was bananas no longer moved in specialized banana boats and ventilated boxcars. Like most of the world’s goods, bananas moved in international shipping containers. The refrigerated boxes were loaded onto trucks at the plantation, which were loaded onto common carrier ships at the South American port, and off of the ship and onto railroad flatcar in Miami or Savannah, and finally trucked from intermodal terminal to the food wholesaler, never opened or handled by human hands along the way, except for inspection by custom officials or DEA.

Savannah Steamship Company sold its last railcar in the 1960s, its last ship in the 1970s, and it only kept the warehouses after the 1980s to have something to put on the balance sheet and use as collateral. The company no longer had any field operations and was in reality just a marketing firm, still maximizing 100-year-old connections and trademarks.

Now it was the attorney’s turn to ask questions. “How much of the exposure is ours and how much is fractionalized with investors and the Consortium?” No one made eye contact with Walton or Moss. “And how much reserve is on hand to keep Jackson-Beauregard going, absent the Savannah payments.”

This time the accountant did not wait for a signal from the Chairman. “The exposure is pretty evenly split between us, the outside investors, and the Consortium.” When a deal was too big for Jackson-Beauregard to finance itself, it would often co-op the project with four other like-minded and like-sized private lenders in Norfolk, Richmond, Baltimore, and New York. The group commonly referred to themselves as the Consortium.

“And we can keep going, business-as-usual, for about 2 months without the Banana money,” the accountant finished, and then as an afterthought, he added, “Sir.”

The Attorney had one more question.

“And what about Dixie Bombay?”

###

This story continues with Accept & Proceed.

2016 Kirt Van Buren