Eventually, Onassis got to the point where he said he wouldn’t put any more money into SBM except for upkeep and redecoration of hotel rooms.
“Even then I didn’t like what he was proposing,” Rainier continued. “He said he wanted to find some famous decorators and give them each two rooms to do any way they wanted. I couldn’t believe it. It would have been a mess. There would have been no harmony. Two people in two different rooms would never have thought they were staying in the same hotel. We had lots of meetings, just the two of us, trying to find a solution. But we got to a point where there was no way out.”
GqH
Monte Carlo was in trouble.
And Rainier could see that, just by looking at SBM’s regular clientele.
A European clan, presided over by Onassis with Stavros Niarchos as his sidekick, they were united in wealth and the pursuit of pleasure, assembling each year at the Hotel de Paris, throwing parties for themselves on each other’s boats and gambling together in the salles privees.
Italian film producer Dino De Laurentiis was a charter member, at least as long as he was in love with the beautiful Italian actress, Silvana Mangano.
Fiat tycoon, Gianni Agnelli, was also part of the clique.
As was the Italian industrialist known as “the fridge king.”
He was an old man who began his career repairing bicycles and expanded that into the largest refrigeration company in Italy. He had absolutely no interests in anything, except Italy’s national soccer team and weekends in Monte Carlo. He’d show up in his private plane and toss 5,000 franc chips around the casino as if they were pennies. He managed to average about $1 million in gambling losses a year and went on that way for eight or nine years, until he died.
At this point, thanks entirely to Grace and the publicity she generated, Americans joined the crowd.
Film producer Sam Spiegel mingled with tycoons like Charles Revson of Revlon Cosmetics and real estate magnate Bill Levitt of Levittown fame. Revson docked his boat, Ultima II, next to Levitt’s boat, the Belle Simone, and in those days those two yachts were usually considered the most beautiful in the world.
Still, even with the Americans, the diminishing breed of hard-core gamblers who arrived every summer to stay for a month and divided their time between the Beach Club and the casino, was no longer enough.
By the early 1960s, the Summer Sporting had become a slightly seedy place. It was too small, not air-conditioned, and its tropical ambience was little more than a string of harshly colored lights shining on a couple of palm trees.
A decade later, the Arabs would come with their petrodollars, and super-rich Iranians would be there, as well. They were all high rollers. But even with them, 75 percent of the casino’s total takings came in during July and August, Easter week and the week between Christmas and New Year. And 80 percent of the total takings came from fewer than 2,000 known clients.
The rest of the year, Monte Carlo was three or four little old ladies sitting in the Hotel de Paris having tea.
Many hotels, like the Hermitage and the Old Beach, closed for the winter. There was no young, international, year-round community. There were hardly any foreign companies. There was limited industry.
Off-season Monaco was so quiet that when Pan Am sponsored a feasibility study to build an Intercontinental Hotel there, the result was “don’t bother.”
The state didn’t have sufficient funds to back the project and the only other man around who did—Onassis—didn’t see any reason to help a company which would be in direct competition with SBM.
Pan Am couldn’t come up with a single backer who believed in the future of Monaco.
GqH
In November 1962, Onassis tried to force a solution by giving Rainier a 90-day option to pick up his holding in SBM at nearly $30 per share. But the quoted price was about half that, so the option was left to expire.
Onassis then announced that he was splitting the company into three groups, one for gambling, one for the hotels, restaurants, and the beach facilities, and one for real estate. He said he might even sublease the gambling concession so that he could concentrate on the main holding company and the real estate.
That was the last straw. Around the Palace the drastic step of nationalization was discussed. And for the first time in many years Rainier had the National Council behind him.
“Onassis and I did not quarrel,” Rainier insisted. “We just both dug our heels in to maintain our positions.”
However, the Prince was quoted at the time as saying, “Mr. Onassis is nothing more than a property peddler with no real interests in the welfare of Monaco.”
Finding no equitable way out of the situation, Rainier ordered that the company’s capitalization be increased by 800,000 new shares. Those shares were then sold to the state and Onassis was deprived of his majority.
The story told around the principality, romanticizing the shoot-out between the two into a sort of Monegasque OK Corral, is that Rainier offered Onassis $14 a share, when Onassis had paid between $2.80 and $5.60. Onassis refused. So Rainier took Onassis to the government printing plant and showed him SBM’s new share certificates rolling off the presses.
Onassis supposedly said, “That will ruin me, that will drive my shares down to under $5.”
Rainier supposedly replied, “Either accept $14 gracefully or try to find someone else who’ll give you more than that for your reduced holding.”
Onassis screamed nationalization and went to court to try to stop it.
Unfortunately for him, this was an away game as the only court with jurisdiction was in Monaco.
Except it didn’t quite happen that way.
“That’s not my style,” Rainier said, although he admitted the new share certificates were printed and that Onassis did see them. “There’s no doubt that the law permitting me to print those shares was a huge economic sword to hold over his head. But we didn’t nationalize SBM. We bought those shares and paid Onassis a fair price for his. Now, it’s interesting that once Onassis lost his majority holding, once he no longer had this personal interest in SBM, he became more reasonable and much more involved. He held onto a nominal shareholding, had a representative on the board, and took a real interest in what the company was doing.”
GqH
The SBM that Rainier wrestled away from Onassis was antiquated. Stoves in the Hotel de Paris kitchen dated back to 1899. The kitchen staff included men to carry coal to those stoves, and one fellow in the basement whose job it was to receive huge blocks of ice, cut them up by hand, and send them in plastic bags to various bars around Monte Carlo.
Worse still, SBM’s personnel lived off the fat of the land.
Until 1967, if you worked in a kitchen, SBM’s food was your food. If you worked in a restaurant, SBM’s silverware was your silverware. Whatever you needed at home—rugs, furniture, mirrors, linens, plates, and glasses—you simply helped yourself.
And no one batted an eyelid.
Within only a few months of the state finally assuming majority control, strikes and a student revolt crippled France. In solidarity with their French brothers, the unions in Monaco also went on strike. Even the croupiers walked out of the casino, although theirs might have been the only picket line in history where the protesters arrived in Cadillacs and Mercedes.
Rainier orchestrated sweeping changes to SBM as fast as he could, but it took 15 years before the company would invest $100 million in a five-year refurbishment program to modernize the hotels and build a new Café de Paris, in the style of the original 19th century café.
American games which had crept into the casino over the years—craps, slot machines and Las Vegas-style 38 number roulette, as opposed to European-style 37 number roulette—were moved out of the casino and into the rear of the Café. Rainier wanted the clock turned back in the casino, making it into the same sort of elegant private club it was when Edward VII and the Russian Grand Dukes played there.
He understood how the lights might
be brighter in Atlantic City, and how the games might be faster in Las Vegas, but he also understood the image SBM should be selling—if you haven’t won or lost at Monte Carlo, you’re playing in the minor leagues.
And with that change of image, the punters began to return to Monaco, the way the faithful go to Lourdes.
“You can’t really compare Las Vegas or Atlantic City with Monte Carlo,” he said. “There isn’t a lot of elegance in Las Vegas or Atlantic City. Nor is there a lot of charm there either. I would never want to see in Monaco some of the things I’ve seen in Las Vegas. It was very depressing to see people in wheelchairs stuck for hours in front of the slot machines. The casino at Monte Carlo isn’t merely a place for gambling, it’s an historic monument.”
Even with his backing, nothing happened overnight. Change at SBM has always come at a snail’s pace. Consider the fact that it took a 90-minute lecture from the company’s managing director just to get the various hotel chefs thinking about a new dessert menu.
GqH
Onassis might have lost SBM, but he didn’t exactly walk away penniless. He came out with a profit of more than $7 million—somewhere around $45 million in today’s money—more than five times his original stake.
Still, when he heard of his defeat in court, he barked, “We were gipped.”
Rainier refused to accept that. “The Onassis affair ended as well for him as it did for Monaco. Today the state permanently holds 1.2 million shares, which is a majority stake in SBM, so that one man can never again own SBM. At the same time he made some money on it. But that wasn’t really the important thing. He never would have said so but I think he liberated himself from something he’d gotten into which wasn’t really in his waters. I sincerely believe that because as soon as the deal was completed our personal relationship improved. On the contrary, it was even better than before because there was nothing to get in the way.”
Their friendship continued until Onassis’s death in March 1975.
“I can recall the first time he showed me around The Christina,” Rainier said. “The ship had 12 cabins and I remarked what great cabins they were. He looked at me and confessed, ‘But they’re always empty.’ I asked why. And he said, ‘Because I don’t know 12 people I’d like to have with me.’”
Rainier said that he and Grace liked Onassis a lot, and got along especially well with Maria Callas. “He was a very human man. Of course the tragedy in his life was the death of his son in a plane crash in the sea off Nice in 1973. The son was working with him and would have succeeded him. I don’t think he ever got over that. Nor do I think he was ever very happy in either of his marriages. I’m convinced the only woman who brought him happiness was Callas.”
Sailing on The Christina several times with Onassis and Callas gave Grace and Rainier a chance to see those two up close.
Rainier acknowledged, “There was a very good rapport between them. They understood each other. After all, they were both terribly Greek. They both had international reputations. They were both self-made. Grace and I agreed they were really meant for each other. We thought that Callas was fun. She was forever playing jokes on him. She was very easy to get along with, except that every morning she annoyed the hell out of him by vocalizing. He absolutely hated that. She’d run through her scales and he’d run around the ship turning up all the radios to drown out the sound. But I will always remember Aristotle Onassis as an intensely lonely man.”
Chapter 12
Battling de Gaulle
As if his battles with Onassis and the National Council weren’t enough, in 1962 Rainier also had to take on Charles de Gaulle.
The French President had become obsessed with untaxed French money in Monaco. He’d been complaining for some time that French companies basing themselves in Monaco were doing so specifically to avoid paying taxes, and that was no longer acceptable. French citizens living in Monaco didn’t pay French taxes either. De Gaulle believed they must.
In March of that year, de Gaulle demanded that Rainier accept a revision of the 1951 treaty that protected Monaco from doing exactly what Charles de Gaulle wanted to do.
Rainier refused.
Firing the first salvo in what would ultimately be a stressful, one-year battle, de Gaulle went insisting on France’s right to take over control of Radio Monte Carlo (RMC).
In those days, throughout Europe, governments controlled all sorts of enterprises that today we take for granted as being independent and outside the scope of national ownership. That included the telephone company, the gas and electric companies, the railroads, the airlines, and radio and television stations.
Because the monopoly on broadcasting was absolute, de Gaulle decided that any broadcasts in French, coming from outside France but aimed at sovereign French territory, had to be stopped.
Two years later, in 1964, the famous battle between the non-commercial British BBC and the commercial pirate station Radio Caroline—named for the then seven-year-old Princess Caroline of Monaco—would make headlines around the world. A ship anchored outside of Britain’s three mile territorial limit aimed its antennas into the UK, openly competing with the government-owned BBC. The British government of the day declared that unacceptable.
For de Gaulle it was the same story with the principality’s Radio Monte Carlo (RMC). It was also the perfect excuse to teach Rainier who was really in charge. So the French president’s allies in Monaco strong-armed their way into RMC and got the man running the station fired, on the grounds that he was “too Americanized.”
That meant he was playing too much American music and not enough French music.
Rainier was incensed with this blatant intrusion by a foreign government into the affairs of his independent nation.
By April all negotiations with France had broken down.
Except, of course, Monaco wasn’t entirely independent of France.
The Council backed Rainier but the Minister of State—a loutish French bureaucrat named Emile Pelletier—sided with de Gaulle.
Infuriated, the Prince accused him of being disloyal.
Pelletier threatened to disclose to de Gaulle information that, as Minister of State, he’d been party to in confidence. Pelletier also threatened to inform de Gaulle of just how anti-French Rainier really was.
Rainier fired him on the spot.
De Gaulle now had the pretext he needed to get at the untaxed funds. He announced that Pelletier’s dismissal was an insult to France, demanded that there be a revision of the Franco-Monegasque accords, and warned that, if the situation wasn’t normalized immediately, France would shut Monaco’s border, “and asphyxiate the state.”
De Gaulle’s intention was to rewrite the treaties with Monaco even though they’d been in effect since 1861 and 1918.
Rainier was never sure how de Gaulle thought he could get away with it. “He couldn’t have done it legally. We were even prepared to go to the Hague. The treaty we’ve got with France stems from the Treaty of Versailles. You can’t just erase that.”
Which is precisely what de Gaulle wanted to do.
He was 72 and at the very height of his political powers. His vision of France as an independent super-power that demanded the respect of the rest of the world, was not universally shared. Still, to many Frenchmen he was sometimes, “Monsieur le President,” but always “Le General.”
His arrogance, combined with his haughty vision of France—and of himself—was matched only by his imposing size.
Charles de Gaulle stood six feet five. By contrast, Rainier was a shade over five foot seven.
“He was such a strange man,” Rainier went on. “Whenever we met, when he came to visit in Monaco or when Grace and I went to Paris on what amounted to a state visit, he was very amiable. When he came here he brought gifts for Caroline. She was just a little girl and when she was introduced to him it was as if he was her grandfather. She kept asking him questions, like if he had any ponies. He must have spoken to her for 10 minutes. Still, he was adam
ant about his position vis-à-vis Monaco.”
Despite their many differences, Rainier said, he couldn’t help but be impressed by de Gaulle because he was such a formidable politician. “I always compared him to the Eiffel Tower, not because of his height but because he was something you could admire but couldn’t possibly love. He was very cold.”
To that he added, “You must understand that as soon as they set foot in the Élysées, every President of the French Republic becomes a monarch.”
When de Gaulle discovered, much to his consternation, that Rainier would not give in without a fight, the dispute got bitter.
For de Gaulle, it was unthinkable that anybody would ever dare to stand up to him.
But Rainier understand what was at stake. “He wanted us to align ourselves on the French fiscal system. After someone somewhere in the Finance Ministry got it into de Gaulle’s head that a lot of the North African French money was hidden here and that it had to come to France, he took the approach that there was no need for negotiations. That his word was going to be the law.”
To prove his point, de Gaulle issued an ultimatum. If Rainier didn’t give in, he—Charles de Gaulle—would order customs barriers set up around Monaco to isolate the principality from the rest of the world.
Again, Rainier stood his ground.
In October, de Gaulle fired the first salvo by stopping all mail going into or coming out of Monaco bearing domestic postage stamps. He insisted that those rates no longer applied and that only letters stamped for international mail would be accepted.
At a time when most business was done by mail, this had a staggering effect.
Next, he ordered two companies of gendarmes stationed in Nice to be put on alert. While rumors flew that French paratroopers were getting ready to seize Monte Carlo, the gendarmes constructed barriers at all the roads leading in and out of Monaco. Then, at midnight, Friday, October 12, 1962, French national police along with French customs officers sealed the border.
On de Gaulle’s orders, they stopped every car in both directions and asked endless questions. For example, if you had a radio in your car, they’d ask you where you bought it and demand to see the receipt. If your papers weren’t in order you were turned away.
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