Trade Development Bank
Trade Development Bank (TDB) was a private Geneva-based bank built by Edmond Safra (who also founded Brazil's sixth largest bank, Banco Safra) in the 1950s. Beginning with only US$1 million, the bank grew into the flagship of Safra’s international banking empire with nearly US$5 billion in deposits by the early 1980s. TDB's mode of banking was different from much of that done in the western world, as it was done with intimacy and learning a depositor's character rather than balance sheets and hard numbers. Safra sold the bank for US$550 million in 1983 to American Express. TDB owner, Edmond Safra, was inducted to the board of American Express.
The acquisition of TDB by American Express was part of Jim Robinson's plan, who at the time was the chairman of American Express, to break into the private depositor banking industry. TDB was intended to be 3rd arm of American Express's financial empire which would reach wealthy private depositors internationally. TDB quickly realized after the acquisition that American Express was not able to uphold promises with which they used to court TDB at the time of acquisition and TDB was excluded from important company decisions such as the overpriced US$1 billion acquisition of a Minneapolis-based financial services firm named Investors Diversified Services, Inc. (IDS). TDB was only notified of the deal once their executives received a dispatch fresh from the Dow Jones news wire. Among other incidents, there was also the American Express public announcement of a US$242 million earnings loss on the year due to excessive insurance claims paid out through their California-based insurance company, Fireman's Fund. TDB was not given any warning of the excessive filed claims which caused the first year with a net loss in earnings by American Express.
It was after this incident that TDB owner, Edmond Safra, tried to separate from the mother company. After failed attempts to get American Express to accept his offers to buy TDB back, Safra went on to open a competing bank. It was in response to the opening of a competing bank, American Express launched an international smear campaign against Safra, by inaccurately reporting to news and media outlets that Safra was being investigated by the FBI for being involved in the Iran–Contra affair along with drug trafficking and the mafia.
All of the accusations are confirmed to be false, and as a result led to the resignation of Harry Freeman, the American Express chairman Jim Robinson's right-hand man and public relations chief, after admitting to the entire scandal.In July 1989, American Express publicly apologized to Edmond Safra and donated US$8 million to the charity of his choice.
- Burrough, Bryan (1992). vendetta. New York, NY: Harper Collins Publishers. p. 101. ISBN 0-06-016759-9.
- Burrough, Bryan (1992). vendetta. New York, NY: Harper Collins Publishers. p. 103. ISBN 0-06-016759-9.
- Shapiro, T. Rees (2011-06-18). "Harry L. Freeman, American Express executive embroiled in unsavory investigation, dies at 79". Washington Post.
- Eichenwald, Kurt (1989-12-29). "American Express to Sell Geneva Bank for $1 Billion". The New York Times. ISSN 0362-4331. Retrieved 2015-02-24.