Safra Death Sparks Questions
NEW YORK (AP) _ The tragic and mysterious death of international banker Edmond J. Safra inspired reflections on a banking dynasty that dates back to the Ottoman empire, but had lately been tainted by scandal.
Safra, the founder of Republic National Bank of New York and one of the richest men in the world, suffocated in his apartment in Monaco during a fire set by hooded men armed with knives. He was 67.
As police searched for the attackers and motives, bankers and investors around the world recalled Safra as an intelligent and thoughtful man who expanded his family’s banking empire in Europe, Latin America and the United States.
``He was a brilliant banker, and very generous friend,″ said Theodore W. Kheel, who was the first chairman of Republic National Bank, founded by Safra in 1966.
``Today people in the banking industry have little computers to calculate interest or amortization; Edmund never needed a computer. He was faster than the computer,″ Kheel said.
Safra’s death comes just three days after shareholders of Republic voted to approve the bank’s sale to London-based HSBC Holdings for $10 billion.
The sale, announced last May, was delayed for months after one of Republic’s customers was charged with defrauding Japanese investors out of $1 billion. The deal is now awaiting the go-ahead from regulators.
Sir John Bond, group chairman HSBC, said his bank ``will uphold the banking tradition and integrity which were the hallmarks of Edmond’s life.″
The Safra family started as bankers and gold traders, financing camel caravans moving goods between Aleppo, Constantinople and Alexandria. The name Safra means ``yellow″ in Arabic.
Safra, a devout Jew, was born in Beirut in 1932, and by the age of 16 he was working at the side of his father Jacob. In the late 1940s, when anti-Semitic riots swept the city, the younger Safra moved the family business to Brazil, which was a major refuge for Aleppo Jews fleeing Syria.
The Safras founded Banco Safra, Brazil’s fifth largest private bank, catering to the wealthy.
He later sold his interests in Brazil to his brothers and moved to Switzerland, where he started the Trade Development Bank, another private bank.
In New York, he launched Republic National Bank in the former Knox Hats Co. building on Fifth Avenue. Today, Republic New York Corp. has $67.8 billion in assets and is the 16th-largest bank holding company in the United States with branches in New York, New Jersey, Connecticut, California, Delaware and Washington.
Safra was a stocky man with sad, dark eyes. He spoke and moved slowly and deliberately, often quoting credos passed down by his father like, ``If you loan a man too much money, you turn a good man into a bad man.″
He amassed a fortune of more than $2.5 billion and ranked 199th on Forbes’ list of billionaires. He shunned publicity, but sometimes couldn’t avoid it.
In 1983, he sold the Trade Development Bank to American Express, but their relationship quickly soured. When Safra started a competing company in 1988, American Express launched a smear campaign, linking Safra to drug trafficking and the Iran-Contra scandal, according to Bryan Burrough’s book ``Vendetta.″
American Express apologized in 1989 and agreed to pay $8 million to charities of Safra’s choice.
This year Republic was touched by scandal when customer Martin Armstrong, a prominent financial advisor, was charged with defrauding Japanese investors out of $1 billion. Republic fired two employees after Armstrong was indicted. One of the Japanese investors is suing Republic.
HSBC raised concerns about Republic’s liability in the case, stalling the Republic purchase. Safra, Republic’s largest shareholder, stepped in last month to save the deal by cutting his take by $450 million.
``I am taking this action because I believe that a swift completion of the transaction will be to the benefit of Republic’s clients, shareholders and employees to whom my life’s work has been devoted,″ he said.
At the same time, reports surfaced of a massive Russian money laundering operation involving U.S. banks. Republic Bank had closed a suspicious account of a company called Benex Worldwide in August 1998 and alerted regulators. Benex also had accounts at Bank of New York, which is now cooperating with investigators who suspect the money laundering ring has ties to organized crime.
Safra, who is the honorary chairman of Republic, was no longer involved with the day to day operations of the bank, and was suffering from Parkinson’s disease.
Though he never received a formal education, Safra gave generously to education. He helped underwrite a high school in Paris, founded educational programs at Harvard and Yeshiva universities and the Wharton business school of the University of Pennsylvania.
He is survived by three sisters, two brothers, his wife Lily and her two children. With Safra’s death, his banking interests will be transferred to his brothers Moise and Joseph.
Editor’s Note: Investigative Researcher Randy Herschaft in New York and Business Writer Marcy Gordon in Washington, D.C., contributed to this story.