Gilded Lily (13 page)

Jacob's decision to take Edmond under his wing at the bank was a huge blow to his elder brother, Elie. In Sephardic tradition, the eldest
son typically inherits the family business. But while the decision to promote Edmond was painful for Elie, the Safras broke with tradition because Edmond seemed such a born financier.

His friends noticed the same kind of emerging business acumen. In the summer of 1942, while he was vacationing at the resort town of Aley in the mountains outside Beirut, he convinced his father's chauffeur to take his friends up the steep mountains for a fee that he and the chauffeur split between them. When the boys' families began to complain to Jacob that Edmond was exploiting the children, the Safra patriarch laughed and said he was very glad that his son knew how to make money, and gave him his blessing to continue ferrying passengers up the mountains for cash.

But while Edmond may have been destined to become one of the world's great businessmen, he was by all accounts a terrible student. Friends recall that he was one of the worst pupils at the Alliance Israélite in Beirut. One of his teachers, Madame Tarrab, used to chide him for being the class clown, and once told him, “Edmond, you are going to grow up to be a shoeshine boy because you know nothing, and you will never know anything!” Years later, Madame Tarrab swallowed her own words when she traveled to New York to ask Edmond for a loan to save the Jewish school where she worked in Montreal. Without an appointment, she entered the Republic National Bank of New York, took the elevator to the top floor and told the receptionist that she wanted to see Edmond, who was in a meeting.

“Tell him that Madame Tarrab is here to see him,” said the elderly teacher, who took a seat in the waiting room.

Minutes later, she was ushered into Edmond's opulent office. “Madame Tarrab, I have thought a lot about you over the years, please tell me what I can do to help you,” said Edmond, hugging his old teacher.

He didn't flinch when he wrote her a check for $100,000 that helped save the school. He also gave her a small package that he told her to open when she was back in Montreal. But curiosity got the better of
her and she opened the package on the flight from New York. She was shocked when a perfectly cut diamond ring tumbled out onto her tray table.

Edmond's lack of academic success seems not to have troubled his parents as higher education among the Halabim was not especially welcome. As one expert on Sephardic culture has noted, “Sephardic assimilation was slowed…by the tendency of many, especially those of Syrian background, to stay within the business community and not to send their children to universities, eliminating a major force that encourages the abandonment of traditional ways.” Edmond left high school to go into the family business when he was fourteen.

The Safras lived a life of luxury in Beirut, a cosmopolitan, French-speaking seaside center often referred to as the Paris of the Middle East. Under the French Mandate, and even during the Second World War, a tight-knit community of some five thousand Jews lived relatively comfortable lives, buffered from the rabid anti-Semitism that was raging through Europe. As a teenager, Edmond had his own valet. His father was considered an important patron in the city, called upon to resolve disputes between Jews and to contribute to synagogues and Jewish schools. He even paid for the construction of a mosque for Beirut's Muslim population, across the street from his bank.

But the prosperous peace was shattered after the end of the Second World War as Jewish refugees began making their way to Palestine and clamoring for the establishment of a Jewish state. Across the Middle East, angry mobs of Arab nationalists turned on the Jews. In 1947, marauding Arab nationalists burned Jewish businesses, including the old Safra Frères offices and the synagogues in Aleppo. A year later, Jews in Syria became victims of fierce anti-Jewish laws that prevented them from selling their property and froze their assets. The violence and anti-Semitism soon took hold in Beirut as angry Arabs began to picket Jacob Safra and his bank. Still, the Lebanese government was tolerant of Jews; it did not punish them for the “sins”
of the Zionists and, after the founding of the state of Israel in 1948, continued to grant citizenship to new immigrants.

But following the anti-Semitic picketing in front of his bank in Beirut, Jacob felt it was time to leave. He split up the family, sending his two youngest sons, Joseph and Moise, to boarding school in England. Edmond was entrusted with the important task of finding a secure haven somewhere else in the world where the clan could become citizens and do business in peace. At sixteen, Edmond boarded a plane for the first time in his young life. He headed for Italy accompanied by his valet and Jacques Tawil, one of his father's most trusted bankers. After settling in the Italian financial capital Milan, Safra and Tawil set up a small trading company that dealt in commodities and gold across the Middle East and Europe. The business was a success, but the young Edmond clearly felt like a second-class citizen in a country where he was forced to check in with immigration authorities every three months to renew his visa. Feeling particularly nervous before his first such meeting, Edmond consulted a friend who told him the best way to handle any situation was to give out as little information as possible—a philosophy that would serve him well the rest of his life, as he shunned publicity to protect himself and his clients.

“If they ask you how you came into the country—was it through the window?—your answer is ‘No,'” the friend said. “Just no. Not, ‘I came in through the door.'”

Edmond searched for a stable country where he could easily come in through the door and establish a family business that would grow and prosper for centuries. “I'm in no hurry to make money,” he told
BusinessWeek
in 1994. “I want to build a bank that will last 1,000 years.”

After visiting a client's paper mill in Brazil, Edmond wrote his father a long letter urging him to settle in the resource-rich, then stable, and prosperous country in the Southern Hemisphere. The Safras moved to Rio de Janeiro, arriving just after the annual Carnaval celebrations, on March 3, 1954. While the seaside cosmopolitan city
must have reminded them of their home in Beirut, Jacob, the sixty-three-year-old patriarch, was not impressed. He quickly determined that Rio de Janeiro was not a serious capital of international finance. He uprooted the family and moved to São Paulo, where they joined a large wave of Sephardic Jews escaping violence and anti-Semitism in the Middle East.

The Sephardic clans kept to themselves in São Paulo and had little to do with the more established Ashkenazi Jews, from Russia and Poland, who had arrived earlier and established the synagogues and religious schools in the region. As they had done for centuries, the Sephardim created their own religious communities, which continue to function independently of the Ashkenazi Jews. For centuries, the two groups have regarded each other with some mistrust. Ashkenazi Jews from Europe, some of whom consider themselves to be the more enlightened and educated of the two groups, often view their Sephardic counterparts as poorly educated, extremely clannish, conservative, and prone to superstition. The Sephardic label was first applied to Jews who were expelled from Spain and Portugal after 1492, but later came to include Jews who lived in the Middle East and North Africa. Within the Sephardic community, the Halabim, like the Safras, set themselves even further apart. In São Paulo, the Syrian Jewish immigrants founded their own closely knit synagogues and schools, and generally married within their own tight circle. By the mid-1980s, there were 50,000 Sephardic Jews in Brazil, the second largest community outside France.

In 1957, three years after arriving in Rio de Janeiro, Edmond, just shy of his twenty-fifth birthday, became a Brazilian citizen. But his ambitions lay elsewhere, for even as he was petitioning for citizenship, he was flying off to Geneva to establish a new bank. Borrowing money from family and a group of Brazilian investors, Edmond had laid the groundwork in 1956 for what would become the Trade Development Bank—a financial institution that did what generations of Safra banks had done in the past: protect Sephardic and Arab in
vestments. When it officially began to accept deposits, the bank attracted hundreds of wealthy Halabim and other Sephardic Jews who had fled the Middle East and Africa to re-establish themselves in Milan, Rio, São Paulo, Paris, Buenos Aires, and New York. The bank also welcomed Arab depositors. Those who needed a safe place for their funds knew that they could trust the Safra name, especially now that it was behind a bank in the primary haven for flight capital from around the world.

For the Halabim, Safra's new business venture in Switzerland, with its strict laws ensuring secrecy, was simply irresistible. In an early advertisement in a Brazilian newspaper for the Banque Pour le Developpement Commercial, as the bank was known in French, Safra offered “accounts in any currency; investments; and buying and selling of shares in all international markets.” For clients in Brazil and Argentina, countries that forbade offshore investments, the TDB offered numbered accounts to protect their assets. There were also so-called hold-mail accounts that forbade any correspondence between the bank and the account holder. Discussions were carried out with the depositor in person or by telephone. “The rules on hold-mail accounts were considered sacrosanct, since a single errant letter could well get a depositor thrown into prison.” According to the ad, the representative in Brazil for the TDB was Joseph Safra in São Paulo.

But Edmond needn't have bothered with any advertising. As with his father and uncle before him, clients were brought in to the Safra universe by the current account holders. The bank's reputation for utter discretion and secrecy spread largely by word of mouth. Correspondence was sent to account holders in unmarked envelopes and new depositors had to be vetted beforehand. The standing joke among bankers in Switzerland was that the switchboard operator at the TDB would answer the phone with a cautious “hello” rather than reveal the name of the bank. No one simply walked into the bank, located on the rue Chantepoulet before moving to more permanent headquarters at the elegant place du Lac. Clients had to make an ap
pointment and show proper identification when they arrived. Most clients in far-flung places around the world preferred to speak by phone, but account officers, known at the bank as
garants
, were only allowed to speak to the depositor at the other end if they knew their voice. Often, phone calls were conducted in code, with depositors only speaking in numbers. Later, Edmond opened branches of the TDB in Nassau, London, and Chiasso, on the Italian-Swiss border.

Discreet and extremely low-key, the Trade Development Bank, which Edmond started with a loan of $1 million, would explode into an enterprise worth $5 billion by 1983, the year of its sale to American Express. By 1962, as the TDB began to take in increasing numbers of Halabim depositors fleeing Arab discontent in the Middle East, Edmond had decided to concentrate full time on his Swiss venture. He sold his Brazilian holdings to Moise and Joseph. A year later, Jacob died, and Edmond's younger brothers took over control of the family business in Brazil.

Grief-stricken at his father's death, Edmond took stock of his position in the world. He was thirty and already one of Europe's most successful bankers. But he was clearly dissatisfied. True success, he felt, still eluded him. He left Geneva and decided to use the money from the sale of his Brazilian holdings to finance his boldest venture—a bank in New York City, the world's financial capital.

It's not clear why Edmond chose the Knox Hat Company townhouse in midtown Manhattan to house the Republic National Bank of New York. The ten-story beaux-arts building on Fifth Avenue, across from the New York Public Library, was far from the banking hub of Wall Street and surrounded by retail stores. But there was something about the building that appealed to him. “He went there to buy a hat, liked the building and bought it,” recalled one of his aides.

But perhaps Edmond was familiar with the history of the Knox Hat Company, which, like the Safra empire, had started out as a nineteenth-century family business.

Charles Knox initially established the hat company on Fulton
Street in lower Manhattan in 1838, but the company fell on hard times following damage from a nearby fire and protracted litigation over a dispute over trademarks. Following the Civil War, the business was taken over by his son Edward, a war hero who was wounded at the battle of Gettysburg. After a long rest cure in Geneva, Edward returned to New York “with the intention of making his name known wherever a hat was sold.” With this in mind, he purchased the land on the southwest corner of Fifth Avenue and Fortieth Street, across from the site of the recently vacated reservoir where the New York Public Library was under construction. He hired John Duncan, one of the city's finest architects, and commissioned him to design the building, which was built between 1901 and 1902 and soon became the show-place for New York's finest hats.

It's hard to believe that a man as superstitious as Safra
didn't
know the history of the building and the Knox family's similarities to his own before he began the process of transforming the townhouse into his showpiece bank in Manhattan. Here was the site where Edward Knox, recently arrived from Geneva, was determined to become successful. And here was Edmond, the displaced Lebanese-Brazilian Genevois, some six decades later, determined to conquer the financial world.

“He knew more about the history of the Knox building than I did,” said Eli Attia, the architect who would later be commissioned to design an addition to the building. “There were no banks in that area, but Edmond was more intelligent than most developers and he had a vision.”

Whatever his reasons for buying the Knox Hat Company building, the townhouse at 452 Fifth Avenue was a perfect fit for him. Nevertheless, he spent $2.5 million converting the retail space for a bank, removing the mezzanine, installing plate glass windows and wood paneling, and decorating the lobby with Louis XIV antiques, of which he had become an avid collector. The Republic's refurbished lobby was without a doubt the most opulent of any bank in New York at the time. On the ninth floor, Attia created a small apartment with space
for separate quarters for Edmond's valet. Later, when he became even more successful and his thriving business outgrew the confines of the ten-story structure, Edmond commissioned Attia to add a gleaming glass tower to the original building, and a palatial 13,000-square-foot apartment for himself on the twenty-ninth floor.