Gilded Lily

by Isabel Vincent

  In the early days, at least, Alfredo seems to have put a great deal of confidence in the Safra bank. Joseph Safra was a close friend and frequent visitor to the Ponto Frio offices in Rio de Janeiro, recalled many of Alfredo’s business associates. And Edmond’s new enterprise in Switzerland, the cradle of private banking, was the perfect place for Alfredo to safeguard a big chunk of the family fortune.

  But Alfredo probably never imagined that Edmond would take care of him in other ways. For years the Monteverde family has wondered just what role Edmond played in the series of events that led to some of Alfredo’s ill-conceived business decisions just before his death.

  It’s not clear how Lily met Edmond. Some claim that the two met at his brother Joseph Safra’s wedding in São Paulo in the late 1960s. Others insist that they met immediately after Alfredo’s death, when the distraught widow needed financial advice on how to run Ponto Frio. Still, others insist that Edmond and his brothers were frequent visitors at the Monteverde home on Rua Icatu. Alfredo’s business associates recall that the Monteverdes had invited the Safra brothers for dinner on several occasions. On one of those occasions, Edmond was visiting from Switzerland and might have tagged along with his brothers.

  “We all encouraged Edmond to visit Lily and give her his sympathies after Alfredo died,” recalled a Safra family member in São Paulo who did not want to be identified. “That’s when they met for the first time.”

  But wherever that first meeting took place, Edmond Safra fell hard for Lily Monteverde.

  Their friend Albert Nasser swears that his friend the Lebanese banker locked eyes on Lily at Joseph’s São Paulo wedding, where Alfredo had been asked to be the best man. Lily, in a green satin dress, her hair in a chignon studded with diamonds, looked absolutely beautiful, he recalled. When Joseph introduced Lily to Edmond, “they looked at each other as if the world did not exist around them,” recalled Albert, who was also a guest at the wedding. “Edmond fell in love with her instantly,” he said.

  Nasser says that he is certain the love affair only started months after Alfredo’s death in 1969. The way Nasser remembers it, a mutual friend in Rio, businessman Samy Cohn, who had also introduced Alfredo to Lily years earlier, had suggested that Lily call Edmond in New York to help her with some of the financial issues after Alfredo’s death. Nasser says that within a few weeks after the funeral, she flew to New York for a meeting with Edmond, telling him that she had no one to help her with the business she had just inherited. It was only then that the two became lovers, Nasser insisted.

  “Edmond said he would fix everything,” said Nasser.

  But Nasser’s version of events does not coincide with accounts of those who were much closer to Lily and Alfredo at the time. According to family friends, Alfredo’s business associates, and servants at the house on Rua Icatu in Rio, Lily traveled almost immediately to London, not to New York, after Alfredo’s death. “We all thought that when Fred died, Lily would marry Safra,” said a Rio socialite who knew the couple.

  The careful planning that saw Lily take almost instant control of Alfredo’s entire fortune may have been executed by Edmond himself. After all, he was one of Alfredo’s bankers. Many marveled at how rapidly a grieving widow with little experience in the ways of international finance was able to so quickly secure her late husband’s assets.

  “My son died on August 25, 1969,” said Regina Monteverde in court papers filed against Lily and Edmond in England in 1971. “On the 26th of August, my power of attorney on a joint bank account was canceled. I returned to Rio on September 1, and only then did I realize how miserable my life had become.”

  According to some business associates of Alfredo and his family, it was Edmond who took immediate control of Lily’s business affairs—surely an arrangement that could only have been possible if a relationship of deep trust had already existed. It was Edmond and a team of his most trusted lawyers and international financial advisers who instructed Lily to move to London where she could take advantage of favorable tax loopholes for foreigners. They also guided her through the important process of adopting Alfredo’s son, Carlos. Under Brazilian law, children are automatically heir to half of the deceased’s estate. As a result of Carlos’s adoption, Lily could control the entire Monteverde fortune.

  Lily rented temporary quarters at 6 Hyde Park Gardens, a “good address” in high-society parlance, across the street from Hyde Park and in the neighborhood of Kensington Palace. The flat itself was expensively furnished but by no means opulent, not in the grand style for which Lily would later become famous. There was an apartment below for the three boys, which also seemed to be expensively furnished, “but in the manner that a railway baron would buy leather-bound books by the yard,” recalled one visitor. Lily immediately enrolled Carlos and Claudio at Millfield, Alfredo’s old boarding school in Somerset. Eduardo chose to live in Buenos Aires with his father. Adriana lived with her mother in the upstairs flat and attended a day school in London.

  Of course, these were only temporary rented quarters, hastily arranged in the frantic days after Alfredo’s death in Brazil. Lily tried to make the best of slight inconveniences. Her bedroom, for example, was too small, and did not have enough space to accommodate her extensive wardrobe. The solution was to keep her clothes in an adjoining bedroom. An opening between the two rooms had been constructed to make it appear en suite. But it was awkward. The opening was only five feet high, forcing her to duck whenever she moved from one room to the other.

  Still, she pampered herself now that she was a wealthy widow. She leased a Rolls-Royce and a Mercedes convertible, and hired a driver to take her on frequent shopping forays in Knightsbridge. She also bought herself exquisite new clothes, and began to jet to Paris to order her wardrobe for each season from the finest couture houses.

  Lily lived quietly in London, although she frequently threw dinner parties for visiting friends from South America, and dined often at such elite restaurants as Annabel’s, especially when Edmond was in town. Lily also traveled frequently to Geneva to see Edmond and take care of her financial affairs, recalled Ponto Frio executives who were summoned to Edmond’s offices in the Swiss city for regular business meetings. Lily was careful not to declare herself a resident of London so that she wouldn’t be taxed on the inheritance until all of it was squirreled away in Switzerland. Instead, in the fall of 1969 she maintained her Brazilian citizenship and established residency in Switzerland, using Edmond’s address on the rue Moillebeau in Geneva as her own.

  The intricacies of such artful tax maneuvers would have been lost on a Brazilian socialite with limited experience of the world of high finance, but Lily clearly had the best legal and tax advice money could buy.

  “She wasn’t exactly an intellectual, but it’s fantastic how quickly she learned,” said Rosy. “You really have to admire the unemotional part of Lily. She’s coolheaded. The day after the death of her husband, she immediately canceled all his bank accounts.”

  While she was in London, Edmond gave Lily a generous weekly allowance in cash and forbade her from buying property or applying for a credit card until her residency was formalized. In many ways, Lily’s legal and financial issues became his own, for Alfredo’s fortune must have represented one of the most important assets in his own growing banking empire.

  In a series of expensive legal actions that played out for years in British courts, Alfredo’s surviving family tried to establish a strong professional and personal link that they believed existed between Lily and Edmond.

  For Lily, Edmond Safra was not only a future marriage prospect, he was the ultimate repairman, fixing all the tangled legal and financial details that emerged soon after Alfredo’s death and threatened her newly acquired fortune.

  Edmond said he would fix everything.

  And, in many ways, he did.

  EDMOND SAFRA WAS born into a tight-knit clan of renowned Sephardic bankers and currency traders in Beirut on August 6, 1932. But his origins can be traced to Aleppo,
the Middle East’s most important ancient trading center, where the Safras, a prominent clan of Syrian Jews, first carved out their banking empire nearly a century before.

  Located midway between the Mediterranean and the Euphrates—the crossroads of Europe and the Middle East—Aleppo was a thriving business capital where for hundreds of years merchants conducted a bustling trade in the world’s finest spices, textiles, and precious metals deep inside the city’s fabled souks. Commerce was traditionally dominated by the Halabim, as the Syrian Jews from Aleppo were known, who were skillful traders and financiers.

  Safra Frères et Cie. was a respected firm well-known throughout the Ottoman Empire and as far away as the Persian Gulf. In the days before the opening of the Suez Canal in 1869, the bank financed the camel caravans to Iraq and Egypt. The bank, overseen by Edmond’s great-uncle Ezra, also had branches in Istanbul and Alexandria, each of them run by a trusted member of the Safra clan.

  Born in Aleppo in 1891, Jacob Safra, Edmond’s father, cut his teeth at the family banking house after his own father, a local sir-eh-feen, or “money changer,” died when Jacob was a boy. Jacob was taken in by his uncle Ezra, and by the time he was a teenager, was working at Safra Frères in Aleppo. But as the city fell on hard economic times with the decline of the Ottoman Empire and Jews began to be conscripted for military service, Jacob was dispatched by his cousins to Beirut to open a new branch office of the family bank in 1914. As conditions grew worse in Aleppo, hundreds of Halabim also made the trek to Beirut. Although Jacob tried to resettle in Aleppo at the end of the First World War, he found the city much changed. The Jewish population had dwindled and after the victorious Allies divided up the Ottoman Empire, Aleppo lost its importance as a major trading route. The Safras scaled back their banking operations in Aleppo, and the cousins focused most of their efforts on the branches they had set up in Istanbul, Alexandria, and Beirut.

  The Syrian Jews who made their way to Beirut after the First World War became Jacob Safra’s most important clients, although he also took in deposits from Arabs and Druse clients when he opened his new bank in 1920. But while the Jacob Safra Bank took in deposits, it did not make very many loans, which was in keeping with the conservative philosophy of banking that has infused generations of Safra bankers. Trading was the main activity of the bank, and Jacob traded commodities, foreign currencies, and especially gold. The gold business soon proved so lucrative that Jacob became one of the wealthiest Jews in Beirut. In 1918, Jacob married his cousin Teira Safra. The couple would go on to have eight children, beginning with the birth of their first child, Elie, in 1922.

  Edmond, Jacob and Teira’s second son, was born ten years after Elie, and from an early age seemed the natural heir to the family business. A banking prodigy by the time he was eight, he began accompanying his father to the souks of Beirut to check on the Safra bank’s depositors. Jacob taught Edmond to look people in the eye, as a person’s character was often more important than a financial statement. Would he repay a loan? How well was he doing in business? How much did he give to charity?

  Jacob’s manifesto for success became legend among the Safra family, and to this day is quoted on the Web site of Grupo Safra, the Brazilian branch of the Safra empire. “You need to build a bank like a ship, solid to weather storms,” goes the Safra motto. “You also need to maintain a high level of liquidity because sometimes Jews have to flee in a hurry, and never be the biggest because lightning always hits the highest trees.”

  In rare interviews given when he was an established banker in Switzerland and the U.S., Safra called banking “a simple and stupid business.” He told one reporter that his father had always said, “May God send you intuition in life.” Jacob also warned him “that you should never take a loan that you cannot afford to have in default.”

  “You need honesty and hard work and you don’t need intelligence,” Edmond said in an interview with the Jornal do Brasil in Rio in 1978. “The more intelligent the man, the more dangerous he turns out to be.”

  In another interview, he noted, “My father taught me that if you loan a man too much money, you turn a good man into a bad man.”

  These seemingly simple rules of running a bank were drilled into Edmond by his father, who also warned his son that he must always maintain a low profile—never call attention to his family’s wealth or business success. Among the Halabim, modesty was considered a necessity. They believed that it was of paramount importance not to tempt the ayin harah, or the “evil eye,” which would bring bad luck and hardship. For years, Edmond did what generations of men in his family had done—he carried around shiny blue stones in his pocket to ward off the evil eye. He also avoided becoming too exposed, too prosperous in the banking world. As he noted in a 1994 interview, he had the opportunity in 1990 to buy up Chase Manhattan stock and earn a controlling interest in the largest bank in America, but, the ultimate outsider, he held back. Jews should not own the biggest bank in a non-Jewish country, he told the reporter. “That is what my father taught me. I told that to my brothers in Brazil, too. Never become the largest bank.”

  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.