In the 1960s, Beirut was a center of global capital known for its Swiss-like secrecy. And one bank, founded by Palestinian refugee Yousef Beidas, was the envy of the town: Intra Bank.
In the wake of the 1948 Nakba, Beidas, the son of a Greek Orthodox scholar, fled his Jerusalem home for Lebanon where he sought to revive his banking career. “I picked money-changing,” he told Life many years later, “because you can turn your entire capital six times a day.” He dubbed his small office International Traders. “We had to have a name out of all proportion to our size to impress people.”
By 1951, he had enough capital to launch Intra Bank S.A. Beidas attracted clients away from competitors by touring hotel lobbies and offering high-interest and lower loan rates. By the early ’60s, Intra was the largest bank in Lebanon with branches around the world, including London, Paris, and New York where the Lebanese flag was hoisted at its Fifth Avenue skyscraper.
By then, Intra held 40% of Lebanese deposits, and its companies employed thousands of Lebanese. One prominent Intra holding was Middle East Airlines, then the region’s premier carrier. Fortune reported Intra’s deposits at $500 million ($4 billion adjusted for inflation), and in 1962 Time proclaimed Beidas the “New Mideast Money Man.” Others were not so impressed, however. Intra’s hasty expansion caused “Western financiers [to] … look askance,” Time observed, and Fortune presciently warned that “Intra is a one-man operation that will someday find itself overextended.”
Sudden shifts in global monetary flows put his bank to the test. A jump in European interest rates in early 1966 prompted capital flight out of Beirut’s banks and into West German coffers. An anxious Beidas hired a Bank of America vice-president to review company books, which revealed a low liquidity base worsening by the day as depositors withdrew their cash. Intra would need a government loan to survive. Beidas knew the request could not come from him having made plenty of enemies turning down preferential loans to politicians and boycotting the Lebanese Bankers’ Association, which earned him the hatred of association head Pierre Edde. Moreover, “as a Palestinian refugee, he was forever an outsider,” Life reported. Joseph Oghourlian, deputy governor of the Banque du Liban, once scolded Beidas, “you are not Lebanese and Lebanon does not want you to control its economy.”
To steer the bank through the crisis, parliamentarian Najib Salha, a close friend of Beidas, was named titular chairman and that September appealed to his colleague Prime Minister and Finance Minister Abdullah al-Yafi who, incidentally, had been denied a loan. Perhaps seeking to repay Beidas in kind, al-Yafi denied the loan.
Desperate for help, Beidas departed for Europe to seek investors as the situation worsened at home. From September to mid-October, withdrawal requests at Intra surpassed $30 million. Turmoil was rocking the entire banking sector forcing the Banque du Liban to decree a three-day banking holiday that ended with crowds demanding withdrawals when offices reopened on October 9. In Paris, Beidas read cables relaying the withdrawals.
Things appeared to brighten up later that day when Oghourlian offered 15 million Lebanese pounds if Chairman Salha secured Intra’s highly valued bonds and stocks as collateral. But the offer was a ruse. Upon receiving the collateral, Oghourlian reneged and held a press conference showcasing Intra’s desperation. “The smell of blood,” Time observed, “was in the financial air.” Like sharks, Edde’s union launched a door-to-door campaign against the bank. “They sent out thousands of leaflets full of lies,” Beidas recounted to Life. “They employed 100 people to divide up the telephone book and call every member in Beirut, saying ‘Take your money out of Intra.’” By mid-October, “rumors of the impending collapse of Intra were sweeping Beirut,” Time reported. On October 14, Intra’s tellers handed over $70 million; the bank’s vault dwindled to $330,000.
That night, President Charles Helou summoned an emergency cabinet meeting on Intra. A representative from Intra pleaded that a small loan was all that was needed to ensure that bank’s future given its significant property assets. He was summarily dismissed. If Intra wanted a loan, al-Yafi told Chairman Salha, one of the nation’s wealthiest men, he would have to personally guarantee it. “It was forced on me,” Salha told the New York Times. Like Oghourlian before him, al-Yafi betrayed Salha. Attempting to return to the meeting, after collecting the relevant documents, “the cabinet refused to hear him,” Life reported. “Barred forcibly by an armed guard,” Salha “shouted protests from outside.” One attendee characterized the meeting as “a slaughterhouse of Intrabank.”
Resigned to the harsh denouement, Intra declared bankruptcy in “a thunderclap that all but wrecked the Lebanese economy and rattled the whole world of international finance.” The government rushed $200 million to every domestic bank except Intra; a decision that suggested a personal vendetta against Beidas, whom al-Yafi had labeled a “crook.”
In the end, Lebanon could not avoid responsibility for Intra. The government forwarded loans to ensure thousands of small depositors and hired American consultants to revive the bank and split off its property holdings into an investment firm. Large depositors were given shares in the company. Intra Bank reopened its doors in December 1967, but its bankruptcy was never inevitable. Official inquiries found evidence of dodgy accounting, but they also reported that the capital deficit was a “relatively small sum.” The IMF concluded “even with a modest advance…Intra could have ridden out the crisis with ease.” But al-Yafi and others put personal animosities against Bedias ahead of nation’s interest. In doing so, they destroyed Beirut’s standing as a global banking city.
Beidas heard about his bank’s bankruptcy in New York, and later resurfaced in Sao Paolo, Brazil. “I would happily return to Lebanon tomorrow… But I will not return to be gagged and jailed without trial,” he told Life–Salha was jailed. He went under again after he was marked for deportation following an extradition request by Lebanon.
On November 27, 1967, he was stopped by an officer in Lucerne, Switzerland, carrying $7,000 cash, $30,000 travelers’ cheques, and keys to safe deposit boxes around Europe. Lebanon submitted another extradition request but the end was already near. On November 28, 1968, Beidas died in a Lucerne hospital after losing a battle to cancer. He was 56. The New York Times’ obituary called Beidas a “fugitive banker” brought down by ambition. Edward Said, a relative of Beidas, wrote that the affair “seemed to me to symbolize the broken trajectory imposed on so many of us by the events of 1948.” Beidas’ spirit never wavered. “Many people thought I would shoot myself,” he pensively recounted in Sao Paolo. “With my wisdom and experience, I can create something bigger even than Intra. Easy.”
Sources:
“Arab Banks Map African Advance.” New York Times. 3 March 1960.
“The New Mideast Money Man.” Time. 27 April 1962.
“Who’s Who In Foreign Business.” Fortune. April 1963.
“The Sweet Era.” Time. 28 August 1964.
“The Flying Sheik.” Time. 4 September 1964.
“The Suez of Money.” Time. 23 October 1964.
“The Money Watchers.” Time. 8 January 1965.
“Big Beirut Bank Closes Its Doors.” New York Times. 16 October 1966.
“Fall of a Bank.” New York Times. 19 October 1966.
“The Day the Doors Closed.” Time. 28 October 1966.
“Salha Is No Stranger To Money.” New York Times. 31 October 1966.
“Lebanon Banking Is Freewheeling.” New York Times. 4 November 1966.
“How They Broke the Bank.” Time. 25 November 1966.
“Intra Bank Begins to Pay On its Small Accounts.” New York Times. 15 December 1966.
“Back Toward Business.” Time. 23 December 1966.
“Lebanon Widens Inquiry on Intra.” New York Times. 24 December 1966.
“Intra, Largest Bank in Lebanon, Is Declared Bankrupt by Court.” New York Times. 5 January 1967.
“4 More Arrested Ordered Against Intra Bank Aides.” New York Times. 9 January 1967.
“3 Intra Aids Arrested; Law Aired to Refloat Bank.” New York Times. 10 January 1967.
“Intra Bank Helped By Parliament Vote.” New York Times. 11 January 1967.
“To Be or Not to Be.” Time. 13 January 1967.
“Head of Intra Bank Arrested in Brazil.” New York Times. 18 January 1967.
“Fall of the ‘Genius from Jerusalem.” Life. 21 January 1967.
“3 Ex-Directors of Intra Are Arrested in Lebanon.” New York Times. 31 January 1967.
“Letters to the Editors.” Life. 12 February 1967.
“Rescue in Beirut.” Time. 20 October 1967.
“Intra Bank Ex-Chief Held in Switzerland.” New York Times. 28 November 1967.
“Swiss Asked to Extradite Former Intra Bank Chief.” New York Times. 7 December 1967.
“Intra Bank Opens Doors Again in Lebanon.” New York Times. 29 December 1967.
“Reopening at Intra.” Time. 5 January 1968.
“Mutual Benefit Life Buys Intra Bank Building Here.” New York Times. 8 July 1968.
“Court Ends Affairs Of Intra Bank Here.” New York Times. 17 October 1968.
“Youssef Beidas, Fugitive Banker.” New York Times. 29 November 1968.
“Milestones: Dec. 6, 1968.” Time. 6 December 1968.
“Newly Militant Palestinian Elite Turns to the Commando Cause.” New York Times. 16 November 1970.
Dib, Kamal. Warlords and Merchants, The Lebanese Business and Political Establishment. United Kingdom: Ithaca Press, 2004.
Said, Edward. Out of Place. New York: Vintage Books, 1999.
