Documentation: Head of Archives' biography of Le Chiffre is attached at Appendix A. Also, Appendix B, a note on SMERSH.
We have been feeling for some time that Le Chiffre is getting into deep water. In nearly all respects he is an admirable agent of the USSR, but his gross physical habits and predilections are an Achilles heel of which we have been able to take advantage from time to time and one of his mistresses is a Eurasian (No 1860) controlled by Station F, who has recently been able to obtain insight into his private affairs.
Briefly, it seems that Le Chiffre is on the brink of a financial crisis. Certain straws in the wind were noticed by 1860 - some discreet sales of jewellery, the disposal of a villa at Antibes, and a general tendency to check the loose spending which has always been a feature of his way of life. Further inquiries were made with the help of our friends of the DeuxiŠme Bureau (with whom we have been working jointly on this case) and a curious story has come to light.
In January 1946, Le Chiffre bought control of a chain of brothels, known as the Cordon Jaune, operating in Normandy and Brittany. He was foolish enough to employ for this purpose some fifty million francs of the moneys entrusted to him by Leningrad Section III for the financing of SODA, the trade union mentioned above.
Normally the Cordon Jaune would have proved a most excellent investment and it is possible that Le Chiffre was motivated more by a desire to increase his union funds than by the hope of lining his own pocket by speculating with his employers' money. However that may be, it is clear that he could have found many investments more savoury than prostitution, if he had not been tempted by the byproduct of unlimited women for his personal use.
Fate rebuked him with terrifying swiftness.
Barely three months later, on 13 April, there was passed in France Law No. 46685 entitled Loi Tendant … la Fermeture des Maisons de Tol‚rance et au Renforcement de la Lutte contre le Prox‚nitisme.
(When M came to this sentence he grunted and pressed a switch on the intercom.
'Head of S.?'
'What the hell does this word mean?' He spelt it out.
'This is not the Berlitz School of Languages, Head of S. If you want to show off your knowledge of foreign jawbreakers, be good enough to provide a crib. Better still, write in English.'
M released the switch and turned back to the memorandum.)
This law [he read] known popularly as 'La Loi Marthe Richard', closing all houses of ill-fame and forbidding the sale of pornographic books and films knocked the bottom out of his investment almost overnight and suddenly Le Chiffre was faced with a serious deficit in his union funds. In desperation he turned his open houses into maisons de passe, where clandestine rendezvous could be arranged on the border-line of the law, and he continued to operate one or two cin‚mas bleus underground, but these shifts in no way served to cover his overheads, and all attempts to sell his investment, even at a heavy loss, failed dismally. Meanwhile the Police des Mours were on his trail and in a short while twenty or more of his establishments were closed down.
The police were, of course, only interested in this man as a big-time brothel-keeper and it was not until we expressed an interest in his finances that the DeuxiŠme Bureau unearthed the parallel dossier which was running with their colleagues of the police department.
The significance of the situation became apparent to us and to our French friends and, in the past few months, a veritable rat-hunt has been operated by the police after the establishments of the Cordon Jaune, with the result that today nothing remains of Le Chiffre's original investment and any routine inquiry would reveal a deficit of around fifty million francs in the trade union funds of which he is the treasurer and paymaster.
It does not seem that the suspicions of Leningrad have been aroused yet but, unfortunately for Le Chiffre, it is possible that at any rate SMERSH is on the scent. Last week a high-grade source of Station P reported that a senior official of this efficient organ of Soviet vengeance had left Warsaw for Strasbourg via the Eastern sector of Berlin. There is no confirmation of this report from the DeuxiŠme Bureau, nor from the authorities in Strasbourg (who are reliable and thorough) and there is also no news from Le Chiffre's headquarters there, which we have well covered by a double agent (in addition to 1860).
If Le Chiffre knew that SMERSH was on his tail or that they had the smallest suspicion of him, he would have no alternative but to commit suicide or attempt to escape, but his present plans suggest that while he is certainly desperate, he does not yet realize that his life may be at stake. It is these rather spectacular plans of his that have suggested to us a counter-operation which, though risky and unconventional we submit at the end of this memorandum with confidence.
In brief, Le Chiffre plans, we believe, to follow the example of most other desperate till-robbers and make good the deficit in his accounts by gambling. The 'Bourse' is too slow. So are the various illicit traffics in drugs, or rare medicines' such as aureo- and streptomycin and cortisone. No race-tracks could carry the sort of stakes he will have to play and, if he wins, he would more likely be killed than paid off.
In any case, we know that he has withdrawn the final twenty-five million francs from the treasury of his union and that he has taken a small villa in the neighbourhood of Royale-les-Eaux, just north of Dieppe, for a week from a fortnight tomorrow.
Now, it is expected that the Casino at Royale will see the highest gambling in Europe this summer. In an effort to wrest the big money from Deauville and Le Touquet, the Soci‚t‚ des Bains de Mers de Royale have leased the baccarat and the two top chemin-de-fer tables to the Mahomet Ali Syndicate, a group of ‚migr‚ Egyptian bankers and business-men with, it is said, a call on certain royal funds, who have for years been trying to cut in on the profits of Zographos and his Greek associates resulting from their monopoly of the highest French baccarat banks.
With the help of discreet publicity, a considerable number of the biggest operators in America and Europe have been encouraged to book at Royale this summer and it seems possible that this old-fashioned watering-place will regain some of its Victorian renown.
Be that as it may, it is here that Le Chiffre will, we are confident, endeavour on or after 15 June to make a profit at baccarat of fifty million francs on a working capital of twenty-five million. (And, incidentally, save his life.)
It would be greatly in the interests of this country and of the other nations of the North Atlantic Treaty Organization that this powerful Soviet agent should be ridiculed and destroyed, that his Communist trade union should be bankrupted and brought into disrepute, and that this potential fifth column, with a strength of 50,000, capable in time of war of controlling a wide sector of France's northern frontier, should lose faith and cohesion. All this would result if Le Chiffre could be defeated at the tables. (NB. Assassination is pointless. Leningrad would quickly cover up his defalcations and make him into a martyr.)