Controversy at American Express : Book Links Chairman to Smear Campaign Against Rival Banker


American Express Co. Chairman and Chief Executive James D. Robinson III personally approved payments to two company operatives who were deeply involved in the company’s smearcampaign against rival banker Edmond Safra, according to a former company executive and a new book by financial writer Bryan Burrough.

Harry L. Freeman, a former executive vice president of American Express, said in an interview Monday that Robinson had approved the payments to the two operatives. However, Freeman, who has filed a $50-million libel suit against Burrough andhis employer, the Wall Street Journal, continued to disclaim any knowledge of the smear campaign while it was underway. Robinson on Monday flatly denied any involvement with the campaign.

According to the book, “Vendetta: American Express and the Smearing of Edmond Safra,” Robinson approved a payment of $300,000 to Tony Greco, a Mafia-connected undercover agent and accused drug trafficker. Robinson also boosted the bonus of American Express Bank Senior Vice President Susan Cantor to $200,000 from the normal bonus of $150,000, the book says.

Greco and Cantor were deeply involved in American Express’ “investigation” of Safra, according to the book. Greco is now out on bail in Spain on drug trafficking charges and couldn’t be reached for comment. Cantor didn’t return a message left on her American Express voice mail.


Robinson, on behalf of American Express, issued a public apology to Safra when the smear campaign came to light in 1990. Freeman resigned from American Express shortly thereafter.

The “investigation” of Safra, as previously reported, quickly degenerated into an international campaign to discredit Safra by planting false stories that linked the banker to drug trafficking, money laundering and the Iran-Contra scandal.

Robinson, through spokesman Lawrence A. Armour, declined comment on the payments to Greco and Cantor. But at the company’s annual meeting Monday morning here, the embattled chief executive flatly denied any role in, or knowledge of, American Express’ international campaign to discredit Safra while it was underway.

“Let me state for the record, clearly and unequivocally, that I was not aware of, did not authorize, did not condone any effort to spread false or defamatory information about Edmond Safra or his banks,” Robinson said.


Robinson also said he “did not know . . . that the company had retained a private investigator of Mr. Greco’s alleged background.”

The book quotes Freeman as telling Robinson, about the payment to Greco: “You’ve got a guy working on sensitive stuff; you don’t just want to cut him off.” Robinson shrugged his shoulders and told Freeman to “take care of it,” according to the book.

“Jim approved the $300,000 payment to Greco, yes,” Freeman said in an interview with The Times on Monday.

While Robinson was defending himself against fresh allegations that he was more closely tied to the Safra affair than previously acknowledged, American Express’ Armour attacked Burrough and his employer, the Wall Street Journal. The Journal on Monday carried excepts from Burrough’s book.

The Journal’s “new brand of tabloid journalism,” Armour charged in a four-page letter to the newspaper that was distributed to American Express shareholders, “seems clearly designed to promote books written by members of its staff.” Armour also claimed that the Journal had engaged in “ambush tactics” by asking for Robinson’s reactions to charges in the book “on the Friday before our Monday shareholders’ meeting.”

Paul Steiger, managing editor of the Journal, rejected Armour’s claims, defending Burrough’s work as “fascinating and newsworthy.” There was no “ambush,” Steiger added. “We’ve been asking that they comment in more detail on this incident since 1989,” Steiger said.

Burrough, co-author of the best-selling “Barbarians at the Gate,” received a $1-million advance from HarperCollins Publishers for his new book. Armor insisted Burrough had “struck out” in his attempt to pin the Safra affair on Robinson. “There’s no smoking gun; there’s not even a warm sling shot,” he said.

Responded Burrough: “I would invite anyone to read our article this morning and read the book and draw their own conclusion.”


The Safra affair has its roots in 1983, when American Express bought the Lebanese-born banker’s Trade Development Bank for $520 million. After clashing with American Express management, Safra, who had become chairman of the combined Trade Development/American Express Bank, resigned in 1984. He agreed not to compete with American Express until 1988.

Amex launched its investigation when it suspected Safra of violating the agreement. “At some point, unknown to me, the investigation went beyond its intended bounds, and unfavorable articles about Mr. Safra appeared in the press,” Robinson said.

Robinson also denied allegations in Burrough’s book that an investigation of the Safra incident by the board’s audit committee was a whitewash.

But Freeman, in the interview with The Times, contradicted Robinson. “What happened was a game that is common in corporate America: Always protect the chairman and do not involve them.”

Added Freeman, “When a thing like this hits the fan, everybody heads for the hills.”

Said Armour, the Amex spokesman: “Like everybody else, from time to time, our company needs the services of a private investigator. . . . In hindsight, it turned out it was inappropriate. He wasn’t a guy we should have hired.”