Gilded Lily (14 page)

His formula for success was little changed from his days in Geneva. He still extolled the conservative banking formula he had learned from his father: “security, seriousness, hard work, careful lending, and controlling expenses.”

“You can take a chance in life, but not with a bank,” Edmond was fond of telling his aides. “A bank is not a playground. Banking is conservatism. And it has been the same for a few thousand years.”

In New York, as in Geneva, he offered discretion to a client base of wealthy Sephardic refugees and royal families from Saudi Arabia and the Persian Gulf, many of whom had banked with Safra Frères for generations.

But doing business in America was markedly different from doing business anywhere else in the world. For one thing, the media-shy Edmond felt he needed to be much more public if he was going to be as successful as he wanted to be. This is why he needed to open with a splash. He told his friends that a relatively unknown swarthy Lebanese banker with thick eyebrows was not going to pass muster among New York's elite, with their Harvard pedigrees and their connections to the Kennedy clan.

So, at the bank's grand opening on a frigid morning in January 1966, Safra made sure he had all the elements that would make New Yorkers sit up and take notice. Robert Kennedy, New York's junior senator, cut the yellow ribbon officially opening the city's newest bank and mingled with the new officers and organizers—themselves a who's who of New York business and legal circles. There was the prominent lawyer Theodore W. Kheel, the mediator of many New York labor disputes who had strong ties to the city's Democratic political machine. Kheel, who was extremely well connected in New
York power circles, was Republic's new chairman, although his authority was nominal. Peter White, a former senior vice president of the Manufacturers Hanover Trust Company and Republic's new president and chief executive officer, was also on hand at the ribbon cutting. In the
New York Times
article that chronicled the opening, Edmond was mentioned almost as an afterthought and was described as “a Lebanese banker whose family controls 36 per cent of the new bank.”

Of course, Edmond, who hated publicity, didn't mind receiving only a fleeting mention in the third paragraph of the
New York Times
story, which went on to marvel that the bank's initial capital—$11 million—was the largest of any other private commercial bank in U.S. history.

Still, the newspaper was skeptical about the bank's chances at success: “Republic, of course, will be a pygmy among New York City's banking giants,” noted the
New York Times
reporter, adding that the largest, Chase Manhattan Bank, had assets at the end of 1965 of $15.3 billion.

With his obsessive attention to every detail of his new business, Safra set out to prove them all wrong. By 1969, he had come up with an ingenious way to lure more depositors. He offered account holders who brought in new depositors free color television sets and Singer sewing machines for every three-year deposit of $10,000 or more. U.S. commercial banking rules limit the use of gifts as a way to attract new depositors, but the rules do not apply to account holders bringing in a new customer. “If someone brings a friend to the bank to open a deposit, the sponsor gets a color TV,” noted the
Wall Street Journal
. Soon depositors crowded Republic's lobby to open accounts.

“Stockholders of Republic National Bank of New York, trooping in for the annual meeting, had to weave their way through throngs of customers shoveling money into the bank,” reported the
Wall Street Journal.
“Crowds of customers milled around temporary work tables set up to handle the overflow from tellers' positions,
and bank clerks were opening new accounts as fast as they could type up the forms.”

It didn't seem to matter that they were locking themselves into long-term deposits that offered extremely low interest rates or that they could have probably gotten a better rate elsewhere. But even as the free sixteen-inch Zenith sets were drawing hundreds of new account holders, some of the bank's own stockholders were urging Edmond to undertake a more aggressive public relations campaign. “As it is,” quipped one stockholder, “all anyone knows about us is that we sell more TV sets than anyone else in New York.” The giveaways soon earned the bank the derisive moniker “TV bank” in New York business circles.

But attracting new depositors would only prove part of the Republic's success. Like the other Safra banks, Republic was also involved in the trade of precious metals. It was the first bank in the U.S. to be granted a license to sell gold for industry, and eventually it became the largest seller of gold bullion after the U.S. government stopped selling gold in 1968. Safra, whose name means “yellow” in Arabic, set about buying gold coins and industrial gold around the world. After the U.S. Department of Treasury lifted the forty-one-year-old ban on private ownership of gold, the bank became the leading importer of gold coins. By 1980, the bank controlled one-third of the U.S. market for gold used by dentists and jewelers. Its gold holdings eventually became so vast that Edmond ordered the construction of special vaults in the sub-basement of the bank's headquarters to store blocks of gold and silver. The vaults were among the most modern precious metals warehouses in North America, with a loading dock capable of handling four armored trucks and two tractor trailers at the same time.

Even though U.S. tax laws forced Edmond, a nonresident for tax purposes, to take on the title of honorary chairman, everyone at Republic knew he was firmly in charge. Nothing escaped his watchful eye; all loans had to be approved by him. When he faced a particu
larly difficult decision, Safra would lock himself in a boardroom with only his most trusted Sephardic aides, who included Jacques Tawil, who had accompanied him to Milan in 1948; Cyril Dwek, a fellow Halabim whose family had known the Safras for generations; and, later, Walter Weiner, a New York lawyer who would earn his stripes dealing with Lily's sticky legal issues over the Monteverde estate on two continents. Edmond was so impressed with Weiner's dedication and intelligence that he later made him Republic president, and then chairman.

Edmond was a man obsessed with his banks, which he often referred to as “my children, my life.” In the early days of Republic, he lived in his small suite of rooms on the ninth floor, rarely leaving the building until it was time for him to jet off to Geneva to take care of affairs at the TDB. He conducted intercontinental business in the mornings while shaving. Later, after he bought a magnificent villa on the Riviera, he regularly received his clients at home. Peter Cohen, a former board member and chair of Republic, recalled that the reception areas of the grand château often resembled a lavish doctor's waiting room, with elegantly dressed clients awaiting their turn to speak to Edmond.

“His is one of the few banks in the world where the proprietor is at home—the service is that close and personal,” said Cohen.

On the rare occasions that he did take time off, he loved to put on a pair of jeans and ride a bicycle through Central Park.

But Edmond's obsession with banking eventually paid off in a big way. In the first month of its history, Republic opened 20,000 accounts—a record for a commercial bank in New York City. From that single townhouse on Fifth Avenue, Edmond transformed Republic into the twentieth largest bank in the U.S. Republic had sixty-nine branches in New York, Florida, and California, and 300,000 depositors in the heyday of its success in the mid–1990s.

“I'm now competing with the big boys in their own country,” Edmond told the
New York Times
, six years after the founding of
Republic National Bank of New York. “I must say the Americans have been more than fair to me. Doing business in America is beautiful.”

A little more than a decade later, Edmond's fascination with America soured as he became enmeshed in a war that nearly cost him his “children” and, even more important to him, his reputation.

 

EDMOND WAS USED
to getting what he wanted in business. But his romantic life was another matter. His single-minded dedication to his banks, especially when he was building his empire in the 1950s and 1960s, left the young banker, who was growing prematurely bald, little time to socialize, although he did have something of the jet-set playboy in him. He kept a fully staffed and equipped 100-foot yacht named
Aley
after the hillside village in Beirut where he was born and where he operated his first successful venture with the family chauffeur. The yacht was anchored off the coast of Cannes. Friends from Brazil recalled lavish parties and endless backgammon games—which Edmond loved to play—aboard the yacht.

But even as his mother and sisters offered to set him up with marriageable young women from the Levant—Syrian Jewish virgins whose families they knew personally—Safra rarely expressed any interest in marriage. Everything changed, of course, when he saw the blonde in the green satin dress at his brother Joseph's wedding in São Paulo in the late 1960s.

“Who is that beautiful woman?” he whispered to his friend Nasser.

“Don't you see, Edmond?” Nasser replied. “She's with Fred, her husband.”

Although Edmond had done business with Alfredo for years, he may have been only vaguely aware of his wives and affairs. After 1957 his Swiss bank kept him away from Rio de Janeiro, where Alfredo's own company was based.

But by August 1969, when Alfredo died under bizarre circumstances at his home in Rio de Janeiro, Edmond's and Lily's fortunes seemed inextricably linked.

Immediately following Alfredo's death, the surviving Monteverde family members were extremely puzzled by his will, although their first instincts seem to have been to trust his widow. At one point, Regina Monteverde, who was promised her Copacabana apartment, which Alfredo owned, and a monthly living allowance from a separate legacy to the will, even signed an agreement with Lily agreeing to the split in assets. But in the months after his death, as they examined Alfredo's business affairs more closely, they questioned why certain assets had not been disclosed. The Monteverdes decided they needed to take action.

They feared that Lily was working closely with Edmond and decided to take their battle for Alfredo's estate to a level that would force them both to come to account. Immediately following Alfredo's death, they feared that Edmond was orchestrating Lily's financial and legal affairs.

A legal challenge in Brazil was simply not an option because of the ease with which judicial officials could be bribed. Besides, Lily and Edmond had too many friends among Rio de Janeiro's power elite—people who could be easily bought and persuaded to falsify an important document or lie under oath. The Monteverdes decided it would be in Britain, in Her Majesty's courts, that the battle over the estate would be fought. At the time, Lily was living in London, where Edmond's Trade Development Bank also had a branch office.

As one of their British attorneys noted in court, the Monteverdes “instituted proceedings so that a British court may establish whether or not there were assets in the possession or under the management or control of Alfredo, and, if so, whether any such assets have been concealed to the English or Brazilian authorities by the defendant.”

The Monteverdes, who had all lived in England before the Second World War, had unshakable faith in British justice. But, as they were
to find out years later, even British justice proved no match for Edmond Safra.

Still, in the beginning the Monteverdes (Rosy and her mother Regina) were full of hope that justice would prevail. They filed suit against Lily and Edmond's Swiss bank in a British court, convinced that Lily and Edmond had colluded to secure Alfredo's estate.

“The relationship between the bank and the first-named defendant Lily Monteverde is not, as the Bank has sought to suggest, merely the normal relationship between a bank and its client (or a bank and the widow of a former client),” noted the court filing against Lily and the Trade Development Bank. At the time, lawyers for the Trade Development Bank tried to dismiss the Monteverde family suit against the bank, arguing that it had nothing to do with Alfredo's estate.

“On the contrary, it is clear from the information about the Bank and its officers which I have been able to obtain that the bank is directly interested and involved in the matters which are the subject of these proceedings,” said Rosy.

Lily, who now controlled Alfredo's vast empire, allowed Safra to oversee all financial and legal decisions. One of her main attorneys at the time, Jayme Bastian Pinto, was a director of the Safra Group in Brazil. Shortly after Alfredo's death, Lily had also appointed Bastian Pinto to head up one of Alfredo's old firms in Brazil, the Universal Company, which she now controlled.

“In October 1970, a meeting at which I was present was held to discuss a possible settlement of the matters at issue in these proceedings,” noted Rosy in one of her court filings. “At the request of Lily Monteverde's advisers this meeting was held in Geneva. I obtained the clear impression that Mr. Bastian Pinto was acting on the direct instructions of Mr. Safra and that Geneva was chosen for negotiations in order that Mr. Safra should be able to instruct Mr. Bastian Pinto.”

A year later another meeting was held in Geneva to try to come to an out-of-court settlement. “Immediately after [the meeting]…Mr. Safra flew to London to join Lily Monteverde.”

It didn't take long for the Monteverde family to find out that Lily and Edmond were extremely close. As Rosy noted in court filings, “From my own knowledge and from what I have been told by my friends in Brazil, I can say that since my brother's death by gunshot wounds, Mr. Safra has become extensively involved (either personally or through his agents such as Mr. Bastian Pinto) in the running of the Brazilian companies comprised in the partnership which is subject of these proceedings and that he now has a personal interest in these companies.”