Edmond was a wreck when he found out about the Swiss investigation, which one of his aides discovered quite by chance. To make matters even worse, American Express then tried to block Republic’s application for a Swiss banking license that would allow the new entity to accept deposits in Switzerland. American Express asked the Swiss federal banking authority to turn down Edmond’s request and demanded a full inquiry.
Soon there would be no way to avoid media scrutiny. Edmond and his aides knew that American Express had a huge publicity machine, and they braced themselves for the terrible months ahead.
The American Express smear campaign against Edmond Safra began quietly enough with small articles appearing in relatively unknown newspapers in Europe and Latin America, beginning in the late summer of 1988. Sporadic articles about Edmond and his banking empire began to appear in the right-wing Parisian newspaper Minute, the Peruvian paper Hoy, the Mexican Uno Más Uno, and Toulouse’s Dépêche de Midi. The tone of all the articles was the same: They tried to portray Edmond as a shadowy financier who had links to organized crime, the Medellín cocaine cartel, and the Iran-Contra scandal. The articles were also anti-Semitic in tone, noting at every opportunity that Edmond was “a Lebanese Jew” who wielded formidable power.
For Edmond and his brothers in Brazil, the articles could prove devastating for business. What if the wealthy Halabim and other clients started to ask about the articles? What if they started to get nervous about the prospects of looming investigations of their banks? Edmond knew he had to act, but in the early days he and his aides didn’t quite know how to go about it.
In August 1988, Minute published an article linking Edmond with Willard Zucker, the Geneva-based American lawyer whose specialty was setting up shell companies in tax havens such as Panama and the Cayman Islands. In April 1987, a U.S. congressional committee investigating the Iran-Contra affair had named Zucker as the financier who had helped set up some of the shell companies involved in the Reagan administration’s secret transfers of funds from the clandestine sale of arms to Iran. The proceeds were geared towards encouraging the release of U.S. hostages in the Middle East and the financing of the Nicaraguan Contra rebels who were trying to overthrow the democratically elected Marxist government of Daniel Ortega. Zucker had set up shell companies for his client Albert Hakim, an Iranian-born middleman who was, in turn, working with a retired U.S. Air Force major general named Richard Secord and Lt. Colonel Oliver North—both of them major figures at the center of the scandal. Hakim, who had important contacts in the Iranian military, sold weapons at inflated prices to Iran and funneled the profits into secret government deals. Zucker was his man in Switzerland—“a discreet, efficient and rapid channel for moving money.” Later, when he was named in the investigation, Zucker agreed to cooperate with American prosecutors in exchange for immunity from prosecution.
In the past, of course, both Edmond and Lily had sought out Zucker’s valuable expertise in setting up offshore companies to protect their own assets. Zucker, who in the 1970s headed up the Compagnie de Services Fiduciaires S.A. on the rue Charles-Bonnet in Geneva, had set up the shell company through which Lily bought her home in Vallauris with Samuel Bendahan in 1972. A year earlier, Zucker worked with Jayme Bastian Pinto, Lily’s Brazilian lawyer, to help sort out the various legal and tax issues that dogged her after Alfredo’s death. In a letter dated December 13, 1971, Zucker wrote to Lily’s British attorney seeking advice on “Mrs. L. Monteverde’s potential liability for income tax in certain jurisdictions.” In the letter, Zucker suggested that Lily avoid declaring income in Britain and “carefully segregate her accounts abroad.” This way, if she were served in conjunction with the Monteverde lawsuit or questioned in a British court she could truthfully say that she was not a resident of the United Kingdom. With a fortune valued at nearly $300 million it was of paramount importance to Lily that she avoid paying high taxes in the UK. At the same time, she didn’t want to jeopardize her long-term ability to gain residency in the UK. The country is a tax haven for UK residents of “foreign domicile” who pay a nominal levy on their non-UK income.
Edmond had also used Zucker’s services in the past to set up Republic Air Transport Services, the offshore company that incorporated a small jet that Edmond had purchased in 1988.
Edmond was furious that the newspaper accounts seemed to suggest that his business connections to Zucker also linked him by default to the Iran-Contra scandal, and to all sorts of other unsavory activities such as money laundering for various mafiosi. Some of the stories even dredged up his stake in the Kings Lafayette Bank, which was linked to organized crime in Brooklyn in the 1960s and 1970s. Edmond did buy up the bank in the early 1970s although his methods generated a great deal of unwanted publicity in New York.
In 1971, the publicity-shy banker and his aides decided to take advantage of an obscure securities loophole that allowed him to accumulate shares in the Kings Lafayette Bank as an individual rather than as a corporation. But when these secret maneuvers led to protracted negotiations with state banking authorities in New York, the negotiations just happened to take place at the same time as the arrest by federal authorities of eight members of New York-based crime families who had sought loans under false pretenses from Kings Lafayette in the past. One of those arrested was mobster Joe Gallo, a major suspect in the shooting of rival mob leader Joseph Colombo, who was attacked at an Italian Day rally in 1971. Colombo, who died after spending seven years in a coma, had forged strong alliances with the Jewish Defense League, and for years the Colombo family supplied arms to the organization that in turn armed Jewish militant groups in Israel and the U.S., according to press reports.
It’s unclear whether Edmond was aware of any of the mob connections when he bought the bank, which expanded the Republic’s reach throughout Brooklyn and Queens.
Still, the mob connections would come back to haunt him seventeen years later, as his purchase of a bank that had been caught loaning money to New York crime bosses formed the basis of innuendo-laden articles in newspapers in Latin America and Europe. In an effort to try to stop the negative publicity, Edmond launched a series of lawsuits in France against Minute, which proved victorious and helped to restore his reputation.
But despite these small legal victories, the larger smear campaign continued unabated. The question of just who was behind the spread of these unsubstantiated rumors dogged Edmond’s advisers for months. Of course, they immediately suspected American Express’s mighty publicity machine, but they needed to prove that the global conglomerate was behind the attacks. Edmond and his aides soon began their own counteroffensive, hiring a crack team of private investigators and publicity experts to fight back.
“Safra…exhorted his aides to rehash everything they knew, everything they could do, to root out the source of the articles and prove once and for all that American Express was behind them,” writes investigative journalist Bryan Burrough, whose 1992 book Vendetta provides an exhaustive retelling of the massive smear campaign engineered by a handful of American Express executives against Edmond. “For Safra it was time to strike back at American Express for what it had done to him.”
With his team of private investigators working around the world, Edmond was able to link the complex and highly developed media disinformation campaign back to American Express. While he prepared his own legal attack on the conglomerate, the Swiss authorities finally granted him a banking license, and on March 1, 1988—three years following his resignation from American Express—he opened the Republic National Bank of New York (Suisse) in Geneva.
Although the battle with American Express wasn’t quite over, Lily had had enough of the stress and trauma. She was tired of the pressure, of the sleepless nights and Edmond’s mood swings. So when the official permission came through for the bank, and the case against the nasty American executives seemed almost over, she decided to do what she did best: She would throw the most lavish and extravagant party that European and New York society had ever seen. Lily convinced
her husband that it was finally time to throw open the doors of their recently acquired estate in the south of France and attract a different kind of media coverage—the boldface mentions in the most fashionable society columns.
Women’s Wear Daily, the haute-society bible for the international jet set, couldn’t resist giving Lily’s soiree advance notice in one of its June 1988 society columns. “The biggest—and most anticipated—ball of the summer season in Europe is actually two balls,” wrote the reporter for the magazine, noting that “Lily and Edmond Safra’s doubleheader” was scheduled for the following August sixth and eighth at their palatial new home in the south of France. The article explained that the couple simply could not accommodate all of their friends and business associates at one party.
It wasn’t that their new villa on verdant, terraced hills overlooking the azure waters of the Mediterranean in Villefranche-sur-Mer was small. The villa was a sprawling, majestic home set among tall cypress trees and orange and lemon groves that had been first owned by King Leopold II of Belgium.
Like the new owners of the villa, King Leopold II was known for his extravagance. But it was his rapacious greed in the African Free State of Congo that became his real legacy. King Leopold II ran the Belgian Congo as a private fiefdom, and he was condemned for the brutal colonization and gross human-rights abuses that were committed by his forces against the native population, who were forced into slavery in the extraction of rubber and precious metals for the Belgian crown. An estimated ten to fifteen million people died as the result of mutilation and illness spread by Belgian colonial masters. Children regularly had their hands amputated if they didn’t meet the labor demands of the Belgians. Atrocities practiced by the Belgian colonists in the Congo were so horrible that they became the inspiration for Joseph Conrad’s novella Heart of Darkness.
Still, with part of the proceeds from his business ventures in the Congo, Leopold II was determined to live well. On a visit to the Riviera, he bought a tract of land overlooking the Mediterranean and ordered construction crews to begin work on Domaine La Leopolda, as it was then called. The villa was a gift to his mistress, Blanche Zelia Josephine Delacroix, a Romanian-born prostitute who bore him two sons out of wedlock. Blanche, who was also known as Caroline Lacroix, married the ailing king on his deathbed, in December 1909, five days before he died. But the Belgian courts refused to recognize the marriage, nor did they recognize the legitimacy of Blanche and her sons, who had been given royal titles before Leopold’s death. Blanche and the children were cast out of the royal court and La Leopolda was taken over by Leopold’s nephew and successor, King Albert I, who donated the land to a hospital for Belgian soldiers wounded during the First World War.
Twenty years after Leopold’s death the land was purchased by Ogden Codman Jr., an American architect and interior designer who had designed some of the greatest homes on the American east coast. He redecorated the novelist Edith Wharton’s home in Newport, Rhode Island, and went on to design homes for Cornelius Vanderbilt II and John D. Rockefeller Jr. before leaving for France in 1920.
Codman envisioned La Leopolda as a grand château, with formal, manicured gardens, inspired by the Château Borelli in Marseilles and the Villa Belgiojoso in Milan. Although he painstakingly designed the villa for himself, by the time the construction was completed the place was so grand that he could no longer afford to keep it.
Later, Gianni Agnelli, the powerful industrialist and head of the Italian car company Fiat, bought La Leopolda as his summer home. Alfred Hitchcock used the property as a set in his 1955 film To Catch a Thief, which starred Cary Grant and Grace Kelly.
Nearly a century after Leopold bought the land for the villa, it was Lily and Edmond who would do the Belgian king proud. The Safras commissioned Renzo Mongiardino, the éminence grise of interior design, who had also designed theater sets for director Franco Zeffirelli and opera singer Maria Callas. Mongiardino had done work for La Leopolda’s previous owner, and he set about blending the Safras’ eighteenth-century European furniture into a grand, formal setting that would have definitely pleased the Belgian king. The second-floor bedrooms were decorated by the Safras’ friend Mica Ertegun. Lily spent $2 million in decorator fees just on her own bedroom, although the bill did not include the eighteenth-century furniture (which she later sold at a Sotheby’s auction in 2005).
“La Leopolda was surely never this grand when Belgium’s King Leopold II summered there,” noted Women’s Wear Daily, making an erroneous reference to the Belgian king, who died before he could begin construction on the property. “Nor was it nearly as royal when Gianni Agnelli kept it as his Riviera retreat. But for Lily and Edmond J. Safra, the current owners of this immense mansion overlooking the Mediterranean, near excess is not enough.” In addition to the interiors, the Safras expanded the swimming pool and nearly doubled its size.
The first ball, on August 6, featured three hundred of Lily’s closest friends—the A-list crowd, according to Women’s Wear Daily—to fete Edmond’s fifty-sixth birthday. Lily, who had honed her hostess skills preparing children’s parties and feeding the hungry businessmen who participated in Alfredo’s all-night poker games, and had outdone herself at his funeral luncheon in Rio—like the “undersecretary of state” as her former sister-in-law had noted at the time—was now showing the world what a meticulous and generous hostess she could be. No expense was spared. Flowers were flown in from Holland, and Sergio Mendes and his entire orchestra were flown in from California. A rumor that Liza Minnelli might show up at the party with Frank Sinatra proved false, but the party was a huge success without them. The menu—soupe de poisson, feuilleté aux asperges, and saumon aux truffes—was prepared by star chef Roger Vergé of the Moulin de Mougins, one of the finest restaurants on the Riviera. The dinner was served outdoors under huge white hurricane-proof tents and “decorated Pompeii style.” For those who did not get enough of the magnificent feast, the Safra chefs laid out a spaghetti dinner at 4:00 a.m. for the remaining guests. As a parting gift, the hostess presented each of the women guests with an enamel box featuring a picture of La Leopolda.
Security was tight. A French SWAT team was hired for the event, and there was “half a man per guest—to protect the glorious three hundred who were arriving.” Princess Caroline and her father, Prince Rainier, insisted that all the guests be in place before they made their grand entrance. In addition to the Grimaldis, other security-conscious royal guests included Princess Firyal of Jordan and the Amyn Aga Khan. As a correspondent for Women’s Wear Daily noted, “the grounds were guarded as heavily as the White House, and security almost outnumbered the guests. Even the day before the fete, passersby who strayed off the Moyenne Corniche [the picturesque highway from nearby Nice] to steal a glimpse of the imposing place would be chased by hulks on motorcycles.”
Valentino, the designer of choice for “at least two dozen” of the women at the first party and a Safra banking client, arrived on his new 152-foot yacht, the TM Blue One, with his business partner Giancarlo Giammetti and dancer Mikhail Baryshnikov. The Niarchos clan also arrived in their giant yacht, the Atlantis II, which was equipped with a helicopter. The Countess Isabelle d’Ornano, one of Europe’s most elegant women, was resplendent in a taffeta gown designed by Jean-Louis Scherrer to match the villa’s ocher and green tones.
John and Susan Gutfreund, who had flown to Rio for Claudio and Evelyne’s wedding, also attended the grand opening of the Safra estate. Like her friend Lily, Susan was also a fan of excess, but on this occasion she wore an understated white Chanel mousseline dress. “With the opening of a place like this, the home and the hostess should be the stars,” she said. “I wanted to dress to disappear like a rat in the woodwork.”
Lily wore a pink mousseline gown designed by Valentino with exquisite butterfly earrings designed by the world’s most exclusive artist-jeweler, JAR, the acronym for Joel Arthur Rosenthal, the New York-born Parisian jeweler whose shop on the place Vendôme has no display window and no regular
hours. JAR only designs one-of-a-kind creations for an elite clientele.
Lily’s friend Lynn Wyatt, the wife of Texas billionaire Oscar Wyatt, wore a striking black, white, and pink satin gown, also by Valentino. The Wyatts, who owned a spectacular home near La Leopolda on the Riviera, would almost always be mentioned in society columns alongside the Safras, whom they considered among their best friends.
The second party, which included many of Edmond’s business associates, did not warrant much mention in the society press, largely because it was a more private affair. At both parties, Edmond and Lily also invited their children and their beloved grandchildren, whom Edmond referred to as mes amours. In addition to Claudio’s two boys, Adriana now had three children of her own.
The grand vernissage of the Safra mansion would cost the Safras more than $2 million, but it was a huge success. It was a small price to pay for their grand entry into high society. For with the La Leopolda parties, Lily became the consummate society hostess on an international scale. As Women’s Wear Daily publisher John Fairchild himself noted, “The Safra event itself…marked the culmination of the Safras’ meteoric rise to social power; they have taken over the Riviera, Southampton, New York, the Metropolitan Opera, Geneva—all in the space of five years. What’s next?”
As the air-kisses flew on that muggy night in August and the Safras greeted everyone from Karl Lagerfeld to Barbara Walters and Betsy Bloomingdale, Lily was living her dream as the grand society hostess of the world’s glitterati and movers and shakers. Here was Felix Rohatyn, an investment banker who had restructured New York City’s debt in the 1970s and resolved a huge fiscal crisis, arriving with his wife Elizabeth and stepdaughter, the New York socialite Nina Griscom. Across the lawn stood the brooding Christina Onassis, heiress to one of the most fabled fortunes in Europe. Like Lily, Christina had married four times, and had recently broken up with her fourth husband, Thierry Roussel, the father of her only daughter, Athina. As it turned out, Lily’s fabulous party was one of the last social events she would attend, for three months later Christina would be found dead of an apparent drug overdose at a country club in Buenos Aires.
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