Date: 8/26/2020
Author: Kent Moors, Ph.D.
After decades in the intelligence, investment, and academic worlds, I’ve identified one fundamental truth. You succeed when you can distinguish between what is utterly new from what is just the same old pattern. And the only way you can identify that difference is through experience. This knowledge is what separates those who make money from those lost in the crowd, dancing to yesterday’s tune.
Welcome to Classified Intelligence Brief. CIB has one core objective. It will reveal the upcoming changes in the investment landscape, allowing you to move (and profit) before the general market does.
Recently, a report crossing my desk recalled something that happened over 42 years ago. Then, as now, it augured something had changed. I will not always be telling tales in CIB. But I will in this inaugural edition, the initial installment in a two-part story.
It was Sunday May 21, 1978. In those days I was splitting my time between dual academic positions in London – one as a visiting lecturer at the London School of Economics and Political Science (LSE), the other as a research fellow in risk assessment at the Centre for Strategic Studies – and my other life as an intelligence operative. The third component of my rapidly complicating existence was also kicking in. That one was moving my work into the eddying world of investment flows, primarily in the energy and defense/security sectors.
Before the end of that year, the three pillars of my professional life would be cast in stone.
For most of May, the city had been even wetter and colder than normal. That Sunday, however, was warm and sunny. Good thing too. Because that day I would intentionally meet an officer from the opposition … and outside in Kensington Gardens, no less.
The occasion was an unexpected offer of a “clarification,” and it required from our side somebody with facility in intel, risk analysis, and energy investment matters. By process of elimination that could mean only one person.
Me.
The location was my choice. I favored using the park benches in Kensington Gardens scattered on Mound Walk between The Albert Memorial and Round Pond. An easy walk from my apartment off Gloucester Road and the US Embassy then on Grosvenor Square in Mayfair, even closer to the Soviet (now Russian) Embassy in Kensington Park Gardens, the benches allowed me to “hold court” while watching foot traffic in all directions. On this occasion, it was also easy for both sides to monitor.
But the reason for the meeting was something new.
Not long before, I had been a party to ironing out how a shooting war had begun between the CIA and KGB in Vienna (a story for another time). Standard operating procedures (SOPs) in the Austrian capital had allowed for a more relaxed connection between the two agencies. For some reason that arrangement had broken down and each side started targeting the other. Beginning in 1975, several were killed on both sides and more were wounded (I was in this latter category, the first of my two Hostile Action medals – the intel equivalent of a Purple Heart).
An intel version of going to the mattresses straight out of The Godfather.
The “Vienna spy war” was winding down by May of 1978 and new contact protocols were in place. They would be severely strained less than four months later with the September 7 assassination of Bulgarian dissident Georgi Markov on London’s Waterloo Bridge (another of my personal stories, again for another time). But on this Sunday in May, the new SOPs were being applied, and on a different matter altogether.
We met early on a beautiful afternoon. Like most people I came across in the business by that time my counterpart was older than I. By agreement, he was carrying Friday’s edition of The Times under his left arm. I was sitting reading Thursday’s issue of The Morning Star, the UK’s daily communist newspaper. Yeah, I know, it seemed a rather lame reversal of roles straight out of a bad espionage novel.
The meeting came quickly to the point. He gave me an envelope for COS London, the CIA Chief of Station (addressed with his real name!); we briefly discussed the new SOPs.
But the conversation centered on a discussion of the Amoco Cadiz disaster. As it turned out, the envelope contained particulars from Moscow’s read on the March 16 tragedy. At the time, this had been the worst oil spill in history. The tanker ran aground on Porstall Rocks, close to the coast of Brittany in northwestern France.
It ultimately split into three parts and sank. The Cadiz was carrying 219,797 tons (1,604,500 barrels) of crude from Ras Tanura in Saudi Arabia and the Kharg Island terminal off Iran (both were in those days Washington’s allies) along with 4,000 tons of bunker oil. All of it was released into the sea.
The spill resulted in contamination of some 200 miles of coastline with some 80 Breton communities suffering, as well as the largest loss of marine life ever recorded from a spill to that date. In some cases, the effects would still be there more than two years later.
Much of the KGB analysis was unexceptional. They concluded (as had we) that the tragedy resulted from foul weather and bad seas. Yet the material in the envelope also discussed something else entirely. The Soviets provided a list of which investors and other parties would profit from the tanker running aground.
In their judgment (and ours) nobody had intentionally caused the wreck. This was not an act of terrorism, industrial or otherwise. But somebody was going to benefit anyway, perhaps from transactions entered into as the crude was already in transit.
This was before the introduction of futures contracts to estimate (and profit from) ongoing oil prices and well before an international market had formed to trade derivatives on oil consignments. Within a decade, trading in “paper” barrels (the futures contracts and other derivatives) would become far larger in dollar terms than the underlying “wet” barrels (actual physical oil consignments).
But in May of 1978, international oil trade was still under the control of a few huge IOCs (international oil companies) and the governments overseeing either their corporate operations or production facilities. The Cadiz may have been owned by then US major Amoco (subsequently absorbed by BP in 1998), but the cargo was owned by Dutch-UK Shell.
In the envelope was material I had not encountered before. It described various transactions involving entities in the shadow fiduciary world surrounding players in what would later become the Dubai Stock Exchange on one side and banks in continental Europe on the other.
There was no conclusion reached by the material. But it was clear that the Soviets had flagged some suspicious investment flows, using what at the time was their advantage in dealing with Middle Eastern financial houses.
Our meeting was part “goodwill” and part a request that we investigate what could be found on our end. As was often the case in what would be my more than two decades of field experience, the KGB was looking several moves ahead (in true Russian chess playing tradition). The Soviet budget was integrally related to the foreign sale of its domestically produced oil. Recently, the Kremlin had begun experimenting with contract swaps to allow entry into new outside markets.
But they did not control the channels emerging to finance the transactions, a major problem in developing new trading strategies. The request for my meeting had less to do with the Amoco Cadiz and more to do with what was emerging in a new world of oil finance.
Under the pretense of exchanging views on a tanker spill, the KGB was really requesting assistance in meeting a challenge they did not completely understand. Well, I was hardly going to burst the bubble. We did not fully follow what was going on here either. As has been the case so many times, guys in the trading markets where ahead of the folks who were supposed to be tracking them.
As we began to go our separate ways, I noted that we may be dealing with a new element of risk. He smiled and responded: “Life without risk, is like meat without mustard.”
Oh great, I thought, a gastronomic philosopher!
But the sides would occasionally exchange views on the matter subsequently, although not again in London. The show would move to where it had more immediate repercussions – the Persian Gulf.
I also started putting mustard on my hot dogs.
On August 12, 2020, I would be reminded of this meeting in a London park more than four decades ago. A report was circulating in my network of global contacts. This one involved intel on parties cutting forward deals in anticipation that US sanctions against Iran would again make the headlines, the tension level would again rise in the Persian Gulf, and profits would again be made in handicapping oil prices. Only this time, there are wrinkles that just might allow average investors to profit.
We pick up the tale here next time in CIB…
Dr. Kent Moors
This is an installment of Classified Intelligence Brief, your guide to what’s really happening behind the headlines… and how to profit from it.
Dr. Kent Moors served the United States for 30 years as one of the most highly decorated intelligence operatives alive today (including THREE Presidential commendations). After moving through the inner circles of royalty, oligarchs, billionaires, and the uber-rich, he discovered some of the most important secrets regarding finance, geo-politics, and business. As a result, he built one of the most impressive rolodexes in the world. His insights and network of contacts took him from a Vietnam veteran to becoming one of the globe’s most sought after consultants, with clients including six of the largest energy companies and the United States government.
Now, Dr. Moors is sharing his proprietary research every week… knowledge filtered through his decades as an internationally recognized professor and scholar, intelligence operative, business consultant, investor, and geo-political “troubleshooter.”
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