It’s that time of the year when we have four hours of daylight and assignment deadlines for days, so I’m sure another Brexit article is the last thing you want to see. Fear not, for I have an underdog story to motivate you into action, or at least remind you that things could be a lot, lot worse.
We have all heard ‘if you owe the bank 100 dollars, the bank owns you, if you owe the bank 100 million dollars, you own the bank’. In the case of a little-known, century-old story, you can own a country too.
As if out of an Edgar Wallace novel comes Artur Virgilio Alves Reis. A penniless amateur whose ingenuity and audacity alone, Frank Abagnale can only dream of. As a child of a bankrupt undertaker, marrying into an aristocratic family proved a formative experience. Alves Reis was met with discrimination over his social status and sought to justify his worthiness.
From day one Reis showed an unconventional approach to making his way in the world. Emigrating to Angola in 1916, a Portuguese colony at the time, and forging himself a diploma from the University of Oxford, which qualified him in twenty-one subjects, he quickly climbed to the position of Acting Chief Engineer of the Angola Railways. From forging his university degree, Reis went on to forge cheques which would bounce across the globe until he finally conned his way into enough capital to acquire the Royal Trans-African Railway Company of Angola (Ambaca). Having briefly won the respect of his wife’s family, Reis’ wasted no time in moving to a lavish residence in Lisbon. Inevitably, Reis did not get to enjoy the residence, as he was shortly arrested and went to jail. Fortunately, this anticlimactic turn of events is not the end of his story. Instead, his jail-time served as the inception of what was to become the greatest financial fraud in history.
At this point in time, Portugal and all its colonies used the Escudo as their legal tender. The difference with the colonies was that the original Portuguese Escudo would have a further imprint made on it to signal the colony where the note was in circulation. So an Angolese Escudo, for example, was just a Portuguese note with a further imprint laid over the top. Opportunistic Reis had identified this flawed system during his time in Angola and set about capitalising on it as soon as he had served his brief two-month sentence.
Within twelve months of leaving that jail cell, Reis had founded the Bank of Angola and Metropole with an initial investment of 100 million escudos. This was equivalent to 1% of Portugal’s GDP. The Reis’ genius was that no money was counterfeited, each and every one of the notes in the bank’s reserve was a legitimate 500-escudo banknote. Reis had persuaded the British mint that produced the Portuguese banknotes to print him cash. In an elaborate lie whereby Reis presented himself to be part of a covert delegation transporting Portuguese escudo’s to be turned into Angolese escudo’s, he found himself with an unfathomable amount of legitimate cash hot off the press. Notwithstanding his stellar forging of documents and unwitting accomplices, the son of an insolvent caretaker had printed himself a slice of the Portuguese Republic. This 100 million was leant out and invested in the economy. Reis’ bought farms, a taxi fleet, and acquired the full vertical of a jewellery network. Through buying up Portuguese assets and lending out to the unknowing public, Reis and the Bank of Angola and Metropole had become deeply intertwined with the Portuguese private and public sectors alike. The perfect crime; the money was laundered back into the economy and is genuinely recorded to have spurred significant economic growth. In 1925, to further legitimise his heist, Reis attempted to gain a controlling stake in the National Bank of Portugal. It is at this point that the operation came undone. Within a month a journalistic and criminal investigation had lead back to Waterlow in London, the printing company responsible for the 100 million. It was discovered that because the notes were allegedly destined for Angola, the serial numbers were identical to those of an earlier Portuguese batch. Should the cash have reached Angola and been imprinted, this would have been perfectly fine. In this case, over 1% of Portugal’s gross domestic product was a duplicate and the National Bank was forced to initiate a pain-staking process of locating these duplicates. Long story short, as soon as news broke, it triggered a run on the banks. Within weeks the economy near enough collapsed a financial crisis ensued. Within a year, Portuguese democracy was a remnant of the past as Portugal fell into Salazar’s authoritarian Estado Novo.