'What is it?'

'Shhh ... I thought I heard a boat.'

I concentrated, and suddenly heard it again. It seemed to be coming from behind me-from the south, where we'd landed. Although we were surrounded by sheer drops, the view of the immediate area around the south end was hidden by the hump of Winklestein's Steeple. Then, as I stared downward, a boat emerged around the point and into view. 'There!' I cried. 'I think it's Bob's boat. He's looking for us.'

It seemed so small, a tiny white speck. We were like people on the observation deck of the tallest skysc.r.a.per, looking down at the ant-like activity far below. We began shouting and waving our arms, hoping he might be scanning the peaks with his binoculars. Our throats were so dry that we quickly became hoa.r.s.e, and then the boat slid out of sight beneath the lee of the eastern cliffs. We hoped it would do another circuit around the Pyramid, but perhaps it already had, for the next sighting we got was of it heading out across the sparkling sea, back to Lord Howe.

'Oh f.u.c.k.' I sagged.

'Come on.' Anna was pulling her backpack on again. 'One last effort.'

We had discovered no further signs of Luce that morning, and I had pretty much given up hope of finding any answers to our quest. The summit pinnacle was a formidable cylinder of rock, like an ancient watchtower with a domed cap. To get to its base we inched across the Cheval Ridge, feet dangling over five hundred metres of s.p.a.ce on each side. Halfway across I paused to ease the strain in my arms, and looked down, first one side, then the other. Far below, beyond spinning seabirds, I saw the foam of breakers. I felt the suck of vertigo dragging on my feet and stomach. My head felt hot and swollen inside the helmet and I became dizzy.

'Josh!'

I dragged my eyes away from the void and saw Luce on the ridge ahead of me. I cried out her name.

'Josh? It's me! Come on!' I blinked. It was Anna, of course.

'Yeah ... coming.' My throat was so parched I could barely speak, but I focused on the rock in front of me and began to move forward again.

I really can't remember that last climb, only the feeling of relief when we finally crawled onto the summit, a dozen square metres in extent, covered with tufted gra.s.s. How had it got up there? The sheer b.l.o.o.d.y-minded persistence of living matter seemed astonishing. I lay down with a groan, and as if at a signal the sunlight faded and died, and a cold gust whipped across the quivering gra.s.s.

There was a small cairn of loose stones that the first climbers had piled together on the crown. Anna crawled towards it and began dragging it apart. She pulled out an old rum bottle, and handed me the messages that former climbers had left inside. The last one ended with a confident ... and now attempting to descend the North Ridge and now attempting to descend the North Ridge. I hoped they'd made it. But there was nothing from Luce.

'Nothing at all?' I said. I don't know what I'd expected, but the futility of what we'd done filled me with despair.

Anna gave a little yelp. I thought she'd been bitten by something, Ball's Last Insult. But it wasn't that. She'd turned over another stone and pulled out a small candy-striped bag. I knew it well-I'd followed it with my eyes many times, bouncing around on Luce's shapely rump. It was her chalk bag.

I got up and walked unsteadily to Anna and looked over her shoulder as she prised the thing open and drew out a slip of paper. She read it and then handed it to me. There were tears br.i.m.m.i.n.g in her eyes.

I recognised the handwriting, but not the quotation.

For with earth do we see earth,with water water,with air bright air,with fire consuming fire,with Love do we see Love,Death with dread Death.

I wasn't sure what the poem meant, but it seemed pretty obvious what Luce had intended. I just stood there for a long time without speaking, without really thinking, just surrendering to the earth, the water, and the bright air, to love and death.

A spatter of rain slapped my cheek. I turned and saw a grey ma.s.s of cloud advancing on us across the ocean from the south. Anna was sitting at my feet, hands tucked up into her armpits, absorbed in some private meditation of her own.

'I think we're in for a storm,' I said.

She looked up at me, eyes puffy with tears, then out to sea. To the north Lord Howe was rapidly disappearing into grey cloud, the sun was gone and the wind was picking up, cold and harsh. She roused herself and I helped her to her feet, scooping Luce's chalk bag into my pack.

'Sure there's nothing else?'

She shook her head, and I piled the rocks back into the semblance of a cairn.

We abseiled down the pinnacle a great deal faster than we'd gone up, then worked our way back along the Cheval Ridge, the wind now ripping alarmingly at us on our exposed perch. By the time we reached the Black Tower the southerly change had reached full force, scouring us with driving rain. Refreshing at first, it rapidly chilled us through and we decided we'd better find somewhere to shelter. We chose what seemed the least exposed flank and I began to lower myself down, cautiously now. I knew that more climbers are killed abseiling downwards than climbing up, and the rock was streaming with water. About twenty metres down I came to an overhang, beneath which was a relatively dry ledge. I called up to tell Anna, and a few minutes later we were both down there, huddled against the wind and gusting rain. I tried with limited success to rig up a water collection scoop with my nylon coat, and after a while managed to get us a drink and begin to fill our water bottles. Soaked and freezing, I sank back against the unyielding rock, feeling that this was certainly the most miserable situation I'd ever found myself in. I sneezed and shivered and began to laugh.

'What's funny?' Anna said, through teeth clenched against the cold.

'I was just thinking that my specialty was risk management.'

She gave a snort. 'That was with the bank, was it?'

'Yes.'

'I don't like banks.'

'n.o.body does.'

'But you left Luce to go and work for one.'

There was no real answer to that. Put so bluntly, it seemed preposterous.

'Yes. I did a stupid thing.' I'd never spoken about this to anyone, but what did it matter now, marooned on a crag in the middle of the ocean? 'I slept with someone else, one weekend when Luce was away. It didn't mean anything and I didn't think it mattered, but it did. I couldn't stand the thought of her finding out. So I left.'

It was more complicated of course-my restlessness, my doubts about us. But I felt a tremendous relief to tell someone this simple, shameful fact at last. The wind howled around us, and Anna said nothing for a while.

'She was a first-year student of Marcus's.'

I thought I'd misheard. 'What?'

She repeated it, and I said, 'You knew? I didn't think anyone knew. How ...?'

'Marcus told us.'

'Us?'

'Well, Damien certainly, probably Curtis and Owen.'

'My G.o.d ... And Luce?'

'I don't know. I didn't say anything. She never mentioned it.'

I was astounded. 'How did Marcus know? He wasn't even there.'

'He arranged it, Josh. He never forgave you for having Luce fall in love with you. He got the girl to do it.'

I think if I hadn't been tied in I'd have slipped off the rock at that point. I thought of everything that had flowed from that betrayal, leading ultimately to Luce's death. If I hadn't left so abruptly, if I'd waited till the end of the academic year, say, and come to Lord Howe with Luce, and climbed with her on that fateful day ...

As if she was listening to my thoughts, she said, 'I had the impression that Marcus wanted to get rid of you. That he didn't want you coming here with Luce.'

'I feel terrible, Anna. So ashamed.'

'That's why we're here, isn't it?' She put a cold hand around mine and squeezed it tight.

'Me, maybe. But you've got nothing to be ashamed of.'

'Haven't I?' She hesitated.

'Of course not. You were always her truest friend.'

'Maybe not. She was very upset after you left for London, and finally came to tell me that she'd decided to withdraw from the course and take a year's leave of absence, to go over to be with you. I persuaded her not to.'

'Oh ...' I wiped water out of my eyes. 'Well, that was sensible advice. She was so close to finishing her degree.'

'No, it wasn't that. I was jealous of you two. I was just the same as Marcus. I wanted to climb with her over here. I was being very selfish, and because of that she died.'

'But you didn't come.'

'No. I met someone-a man.' Another surprise. It wasn't that Anna wasn't attractive, but she had always seemed rather diffident around men, and her occasional dates and encounters never seemed to come to anything. 'He wanted me to stay with him. It would have been difficult anyway coming over here so close to my end-of-year exams. I thought he was wonderful. When Luce and the others came over here I moved in with him and I felt I'd never been so happy. Then we got the terrible news. He helped me a lot, getting through the first shock-but I was inconsolable. I couldn't think about anything else, and with the inquest and everything ... I was obsessive, I suppose, pretty impossible to be around. Anyway, one day he told me that when we met he'd just split up with this other girl, and now he was going back to her. I didn't eat for a week, and then one day I was standing at a bus stop, and I saw this truck coming and I just walked out in front of it. It wasn't a big decision or anything-I just did it. The poor driver ... He almost managed to stop, but I was sent flying. I spent five weeks in hospital getting patched up, then two months as an in-patient in a private psychiatric clinic in Waverley.'

'Oh, Anna ...' I put my arm around her shoulder and pulled her close.

A blast of cold wet air, more vicious than the rest, slapped us so hard it sucked our breath away. 'Oh!' Anna gasped, gripping me tight. 'This is terrible.'

'Yeah, marginally worse than working at the Walter Murchison Memorial Nursing Home, I should imagine.'

She dug me in the ribs with her free hand, then said, 'So, go on then, tell me about your bank.'

'It's very boring. You wouldn't be interested.'

'Try me. I think we've got all day.'

So I began to tell her about credit derivatives and risk management. It seemed quite surreal in such a setting, and as I spoke I found it hard to believe that I had once found that stuff incredibly interesting. It was all so remote now, so utterly devoid of real meaning. Yet in the city, where the real world rarely set foot any more, it had seemed close to the vital essence, the purpose of life. It was s.e.xy. I was doing what every young man wants, to be involved in something clever and important that hardly anyone knows about.

It became s.e.xy, as I said before, after the Barings Bank and other disasters.

In the post-Barings wisdom, the essential principles of risk management require a separation of powers within an organisation between the front-of-house traders and dealers, who are greedy for contracts and commissions, and senior management, with its more sober perspective on risk. Between these two groups should sit the RMU, the Risk Management Unit, a.s.sessing the dangers of promised deals and ensuring that the policies of the board are implemented on the shop floor. No longer would it be possible for a rogue trader to approve his own deals, as Nick Leeson had at Barings, getting deeper and deeper into trouble without senior management having a clue what was going on.

That was the theory, but of course policies and strategies, no matter how rational, depend upon inadequate human beings like ourselves to carry them out. We have our weaknesses. We have an undue respect for people with grand reputations, especially if they appoint us to much-sought-after positions; we develop an attachment, then a dependence, on the absurdly generous rewards they offer us; and we feel proud loyalties which cloud our view of those outside our circle, who increasingly appear stupid and obtuse.

We didn't gamble recklessly on the Nikkei like Leeson at Barings, nor drown in commodity options like Hamanaka at Sumitomo. Our failure was more innocent, I liked to think, like sewing machine legs, or tidal waves, just one of those things that happen. Imagine a chemical engineering company in the north of England-let's call it Sunderland Petchem-with a track record of supplying equipment to the North Sea oil fields. They have done business with BBK Bank before, and are regarded as a soundly managed small company. But now contracts in the North Sea are on the decline, and they have been forced to look further afield, to the booming oil business in Venezuela. There they have possibly secured a major contract, subject to final details. This project is much larger than any they have previously undertaken, and would require a major injection of capital for expansion. BBK's loans staff are highly enthusiastic, having reached agreement on lending rates which would be extremely rewarding for the bank, not to mention the bonuses of the negotiating staff. However, the RMU is worried; Sunderland is inexperienced in this part of the world, and with this size of project our a.n.a.lysis rates the risks as rather high. Our boss, Lionel Stamp, calls a team meeting to discuss what we should do.

Lionel was an impressive fellow. In his mid-thirties, energetic, imaginative, with a startling memory, his reputation was outstanding. When I first met him I was most struck by his floppy hair and languid English accent, which I thought rather ludicrous, but I soon got over that when I realised how sharp he was. Now he hadn't got to lead the central RMU of an organisation like BBK by being negative and obstructive. On the contrary, his mentor, Sir George Henderson, had picked him because he could not only sniff out possible problems, but also provide ingenious remedies. In the case of Sunderland, the problem basically was to reduce the levels of risk to BBK if something went wrong with the Venezuela contract. The straightforward way to do this would be to sell on part of our Sunderland loan to other lenders in the secondary loan market, or to investors in the a.s.set-backed securities market. Either way, BBK would reduce its exposure on the deal to a more acceptable level. The trouble with this approach was that we would be legally obliged to tell Sunderland what we were doing, and obtain their agreement. In effect we would be telling them that we didn't have complete confidence in them, upsetting not only our client, but also perhaps the whole Venezuela deal if word got out.

The answer was synthetic CDOs. Through the use of credit derivatives, these could imitate the operations of conventional collateralised debt obligations without requiring us to make public what we were doing. Synthetic CDOs were a favourite weapon in Lionel's armoury, and he had refined them to an exquisite degree. He became quite evangelical as we discussed the intimate details of how it should be done, the array of subordinated and senior mezzanine tranches, the choice of first-loss investor, the ramp-ups and replenishments in the collateral pool. All very exciting, the more so for being clandestine and potentially dangerous.

There was a snag. It was referred to as a moral hazard problem moral hazard problem, a term we liked, I think, because it made us sound like philosophers or priests, rather than loan sharks. The moral hazard problem lay in the fact that, since our dealings were not public and transparent, the CDO investors onto whom we were pa.s.sing some of the Sunderland loans would only know as much about the risk involved as we were prepared to tell them. The riskier they thought the loan, the more they would charge us for it and the more our profit on the whole deal would be eroded, so there was a temptation for us to ma.s.sage the information a little. Of course, if things went wrong and our secondary lenders suspected us of hiding the true risk, then BBK's name would stink. To Lionel, this, like all moral problems, was just another risk management issue. It was clearly important that the board of BBK in general, and Sir George Henderson-the director charged with oversight of the RMU-in particular, be shielded from some of the trickier details so that, if worst came to worst, they could honestly deny all knowledge of any moral hedging. This, of course, is a risk management technique perfected by our political leaders in recent years.

For a while things went very well in Venezuela, so much so that BBK offered Sunderland further and larger loans, quietly offsetting them with more synthetic CDOs. Then one spring day, four years after I had answered that fateful email from Gary McCall urging me to come to London, things went abruptly wrong in Venezuela. It was a political rather than an engineering problem, but its financial consequences were just as devastating. Sunderland Petchem, ma.s.sively overstretched, collapsed, and BBK was faced with huge unpaid debts, which it promptly pa.s.sed on to a cascading series of CDO investors. As the Sunderland story became public, its history painstakingly revealed by investigative reporters, the investors became more and more belligerent and the BBK Board increasingly defensive. There were whispers of legal action, fraud and criminal charges.

Once again, Lionel recognised this as a risk management problem, the logic of which he explained to Gary and myself over a rather tense lunch at an excellent little restaurant overlooking the river. The bank was wounded, Lionel explained, and surgery would have to be performed before gangrene set in. There were really only two options. Option one entailed the removal of the whole RMU, including its board supervisor. Criminal charges would be brought against Lionel, Gary and myself, and very possibly Sir George. There would be a nasty public trial in which, to demonstrate the bank's innocence and resolve, our names would be dragged through the mud before we were given exemplary prison terms. Option two was the discreet route. It would be quietly explained to the secondary lenders that the bank would cover their losses after the discovery that two of its staff (reckless antipodean colonials, naturally) had bypa.s.sed internal controls and procedures.

The board was in a bloodthirsty mood, Lionel explained, and currently favoured option one. But he had carried out a very detailed worst-case scenario a.n.a.lysis calculating all the possible eventualities of both courses of action, and he was confident that cooler heads could persuade board members to go for option two. That, of course, would depend on Gary and myself making a full confession of sole responsibility for the debacle, making token reparations to the bank (basically everything we owned), signing a binding confidentiality agreement, and returning to the far side of the world, never to be seen again.

But what would happen to you, Lionel, we asked, and Sir George? Solemnly, and without a hint of shame, he explained the irresistible logic by which it would be necessary for the bank to demonstrate the limited nature of the breach by rewarding those who had isolated it.

We really had no choice. Within a couple of weeks Gary and I were boarding a plane at Heathrow, all risks neatly managed, moral hazards expunged.

'So you didn't even make any money out of it?' Anna said.

'That's right. Then on the plane, just before we reached Bangkok, Gary mentioned that Lionel had been s.c.r.e.w.i.n.g my girlfriend all along. He thought I must have known.'

Anna said nothing for a while, then murmured, 'Yes, I don't really think you were cut out for risk management.'

In the fading light I watched small gulls hurled backwards through the air in front of us by the force of the wind.

21.

About the only thing that could be said for our ledge was that it was free of centipedes, probably because it was too inhospitable even for them. Soaked through and frozen, I pa.s.sed the night in a semi-comatose state in which h.e.l.lish winds swept in and out of nightmares steeped in guilt.

Just before dawn I jerked awake with the certain knowledge that Anna had died during the night. I felt for her hand and it was stone cold. I thought, oh, so this is the end. I didn't want to try to go on without her, and I was filled with the same sense of calm I'd experienced when I realised I was going to fall on Frenchmans Cap and nothing could be done. I didn't feel afraid. I reached for the clip attaching our rope to the anchors. My fingers were clumsy with cold as I worked to release it so we would plunge down into the ocean, as Luce had surely done.

Then the corpse stirred and mumbled something about scrambled eggs. I had actually just managed to unfasten the clip, and any movement would have sent us slithering over the edge. I refastened it quickly, and we clung together as the first glimmer of light grew in the sky.

With dawn we untangled ourselves and speculated about raiding seabird nests, but the thought of a raw gull's egg was only marginally more appealing than that of a raw gull. While I was groping around in my pack to see if there was one last cracker hiding in the lining, I came upon Luce's chalk bag. I had a look inside, but all I found was the remains of a large black insect curled in the chalk dust. It didn't look edible.

The important thing, Anna said, was to get back down to the southern tip of the Pyramid, where we might hope to attract the attention of a pa.s.sing boat. And surely, we agreed, they would have to send out boats today. We said this forcibly, to cover up the fact that there was no reason why anyone should think to look for us out here. So when the rain died away we unhooked ourselves and stretched our aching limbs, and started abseiling and traversing down the cliffs in short, cautious stages.

In the late morning, as we reached Winklestein's Steeple, the weather closed in again and we were forced to take shelter in the centipede cave. This time we weren't in a mood for compromise, and swept and beat the little b.a.s.t.a.r.ds back to the deepest recess. The weather was so foul and the visibility so limited that we could see no signs of a rescue boat out on the stormy water. Later, when the rain eased a little, we continued further down the ridge until we found a sheltered ledge free of wildlife. Then the rain began to pour down again and we tied ourselves in for our third night on the Pyramid.

The following morning dawned with a brilliant calm, the first rays of the sun sparkling on clear water, white birds swooping across the swell, as if the storm and our struggle down the rain-lashed mountain had been no more than a bad dream. We continued on down, step by step, pitch by pitch, until we stood on the rock platform at the southern tip on which we had first landed. And there, as if according to some prearranged schedule, we heard the purr of an engine, and Bob's boat circled into view, just fifty metres offsh.o.r.e. We waved and shouted, and the boat came to a stop. It stayed out there, bobbing in the swell, and we made out the figure in the wheelhouse, looking at us through binoculars.

There was something rather eerie about the way he just waited out there, and finally I said to Anna that I would swim over. I was worried about the weight and drag of the rope across that distance, but unless he came closer there wasn't much I could do. At least the sea was relatively calm, and if the worst happened I'd just have to untie the rope and let it go. So I stripped off and dived in. As I thrashed through the water I became aware of the engine noise increasing, and saw that he was heading towards me. Then he was alongside and hauling me aboard.

I lay in the bottom, spluttering, while he freed the rope from my waist and waved to Anna, who had tied our bags to her end of the rope, and now jumped in. I pulled myself up onto the seat and watched, shivering, as Bob hauled her across. And as I watched him, strong and capable, a nasty thought came into my mind. He had rescued us, yes, but what now? Whatever had happened to Luce on b.a.l.l.s Pyramid, he'd been a part of it, and it seemed to me entirely possible that he might prefer that we, too, should disappear into the ocean. I looked around, wondering if there was anything that I might use as a weapon, but I could see nothing apart from some fishing rods, an esky, a bucket and some lengths of rope. As a fisherman I a.s.sumed he would be carrying a knife. I tried desperately to think.

Now he was helping Anna over the side, and then pulling the plastic bags with our clothes and gear on board. I decided suddenly that this was the time to act, and I took a couple of paces over to the controls and pulled the key out of the switch. Immediately the motor coughed and cut out.

Bob turned to face me. 'What're you doing, mate?'

'Are you carrying a knife, Bob?'

'Yeah, sure.'

'Take it out of your pocket and place it on the seat over there.'

'What?'

On the other side of the boat, Anna, gasping and wiping wet hair off her face, stared at me in surprise.