Stub 4.4: Stipends

Raymond called ahead and got Aaron an appointment for 8:00 the next morning.

Aaron quickly explained the situation and what it would take to remedy the situation. Lacking any other attorneys who were familiar with the issue, the Executive branch authorized Aaron to write and deliver such Cease-and-Desist letters as were required to stop sending funds to Sedelia’s enemy.

They also approved of Aaron’s plan to make Sedelia port fees competitive with Portland.

And, knowing that work rules can make even the most attractive “base fees” non-competitive, they also sent Aaron on his way with the most recent set of regulations for code enforcement.

Aaron was on a plane to Dallas that afternoon.

It took him until 11:00 the next morning to drill his way up to the mid-level of the legal department of the BN railroad. The lawyer on the other side of the desk was a dyspepsic, jaunticed man in his mid-sixties. The name on the desk indicated that his name was Lief Zucker.

“What can I do for you?” Mr Zucker asked, tersely.

“I am hereby serving you Cease-and-Desist papers to stop your payments to the government of Cali for those portions of your rail lines in the listed counties.” Aaron said.

“Let me get this straight. You want me to stop payment to Cali? You know you are going to need a court order to make that happen, don’t you?” Zucker informed him.

“It is common practice for companies to start paying into escrow while these challenges are thrashed out in court. That will be sufficient for now.” Aaron agreed.

“We anticipate winning the court challenges, of course. When that happens we expect that you will be paying those moneys to the following accounts.” and Aaron supplied Mr Zucker with a bank account with a large bank that was closely affiliated with BN.

“Furthermore, it is our expectation that the payments will be in accordance with the following rate schedule.” and Aaron handed him a single sheet of paper.

Zucker picked it up as if it were radioactive. He fully expected Sedelia to double the already ruinous Cali rates.

“For your convenience I also listed the rates that Portland, Oregon charges in parenthesis. As you can see, we are about 5% cheaper for every class of cargo except for Korean originated cargo. There we are 10% cheaper.” Aaron said.

“Why is the Korean originated cargo cheaper, if I may ask?” Zucker asked, genuinely interested.

“Shorter transit times from Korea to Portland than Korea to LA or SD. We see the unified Koreas as an economic powerhouse in the future and we want to be their port-of-choice going forward. Simple business.” Aaron said smoothly.

Zucker said, “Let me get an operations guy on conference call.” as he tapped a few commands into his computer.

“Hey Zuck, whats shakin’ down there? Usually it is me calling you.” the round faced man on the other end of the conference call said.

“I have a duly authorized representative of Sedelia telling me that they control the ports of San Diego, Long Beach and Los Angeles. He showed me a schedule of rates that are competitive with Portland. What would it take to ship more cargo through those ports?” Zucker asked.

Joe shook his head in the negative. “The infrastructure is trash. Cali just let it go. It is a struggle just to move what is already coming in.”

Aaron piped up, “I am the Sedelia representative. What would it take to up-grade the facilities to make the ports competitive?”

Joe started ticking off on his fingers “Roadbed up-grades, rail replacement, new switching yards, cargo holding yards, robotized unloading for containerized cargo...all that for starters.”

“How long will it take to make those upgrades?” Aaron asked.

“Frankly, I don’t know if we are willing to make that investment. We tried in the past but were never able to activate those investments and start recouping our costs. It is very hard to get any work in your country approved.” Joe said.

“I can address that concern.” Aaron said. “Sedelia recently passed a law regarding code enforcement. The Executive Branch just published the nuts-and-bolts of how that law is to be implemented. Basically, any two Master Trades can certify that the work meets code and the new asset can be tenanted and/or activated.”

“Any two Masters?” Joe queried.

“As long as they have been passed their Master’s exams and the exams had up-to-date seismic sections, yes.” Aaron said. “Even if the Master license was granted in the United States, although, obviously we prefer that you use local people.”

“So we could activate the facilities we had to mothball and start getting ROI on those assets by simply hiring a couple of your Master Millwrights and other trades to rubber stamp the project?” Joe said.

“That is not what I said. If they find issues then you will have to address them. But other than that you are correct.” Aaron agreed.

Joe signed off the call.

Zucker said to Aaron, “I suppose you will want the stipends changed to your people, too?”

“Stipends?” Aaron asked. There had been nothing on the internet regarding “stipends”.

“Bribes, protection money, ‘insurance money’; call it what you want. Stipends.” Zucker said with a sour smile.  "Bribes are illegal under US law but 'stipends' are not."

“Sedelia has no requirements for ‘stipends’. Do you have the addresses of the people who are receiving ‘stipends’?” Aaron asked.

“You bet. You cannot believe the number of people named Roberto Gonzales who live in Cali.” Zucker said.

“Can you plot them on with GIS so I can see where they live?” Aaron asked.

It came as no surprise that almost all of the recipients were clustered in Sacramento, the Bay Area and LA. Within LA, most of the recipients were clustered four-to-five miles northwest of Downtown.

“All of former Cali south of Fresno is now Sedelia. Consider the Cease-and-Desist letter to apply to the ‘stipends’ being sent to residents who live there.” Aaron said. “Furthermore, if the other people outside of Sedelia receiving ‘stipends’ are not tied to specific assets, I suggest you pro-rate what you are sending them based on the miles of rail now inside Sedelia.”

Zucker smiled a wintery smile. He knew for a fact that the company was sending out monthly ‘stipend’ checks in excess of two times his annual salary. Your timing was excellent, Mr Ducat. The checks were scheduled to go out at the end of this week.”

Zucker drew a line around the southern recipients and with the click of a mouse moved the payments from “direct” to “escrow”. Then with another couple of clicks of the mouse he reduced the amount to the other recipients by 50%. “I will fine-tune that after talking with our internal people.” Zucker said.

Aaron ended the meeting with a reminder, "Your company will save a great deal of money with every ton you ship through Sedelia as soon as you can get a judge to rule on the Cease-and-Desist.  The sooner the judge rules, the more money you save."

And with that, the meeting was adjourned. Zucker gave Aaron his private number and told him to call any time, day or night. The meeting had been the most profitable one Zucker had in the past decade.

Aaron had a plane to catch to Omaha and he sure-as-hell was going to be asking about 'stipends'.

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