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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 Deuxième Bureau （with whom we have been working jointly on this case） and a curious story has e 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 à la Fermeture des Maisons de Tolérance et au Renforcement de la Lutte contre le Proxénitisme。
（When M came to this sentence he grunted and pressed a switch on the inter。
'Head of S。？'
'Sir。'
'What the hell does this word mean？' He spelt it out。
'Pimping； sir。'
'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。'
'Sorry； sir。'
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 cinémas 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 M？urs 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 Deuxième 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 Deuxième 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 mit 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 Société 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 émigré 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。）
Proposed Counter…operation
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 munist 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。）
We therefore remend that the finest gambler available to the Service should be given the necessary funds and endeavour to out…gamble this man。
The risks are obvious and the possible loss to the Secret funds is high； but other operations on which large sums have been hazarded have had fewer chances of success； often for a smaller objective。
If the decision is unfavourable； the only alternative would be to place our information and our remendations in the hands of the Deuxième Bureau or of our American colleagues of the Central Intelligence Agency in Washington。 Both of these organizations would doubtless be delighted to take over the scheme。
Signed： S。
…
Appendix A。
Name： Le Chiffre。
Aliases： Variations on the words 'cypher' or 'number' in different languages； eg 'Herr Ziffer'。
Origin： Unknown。
First encountered as a displaced person； inmate of Dachau DP camp in the US Zone of Germany； June 1945。 Apparently suffering from amnesia and paralysis of vocal chords （？ both feigned）。 Dumbness succumbed to therapy； but subject continued to claim total loss of memory except associations with Alsace…Lorraine and Strasbourg whither he was transferred in September 1945； on Stateless Passport No 304…596。 Adopted the name 'Le Chiffre' （'since I am only a number on a passport'）。 No Christian names。
Age： About 45。
Description： Height 5 ft 8 ins。 Weight 18 stones。 plexion very pale。 Clean…shaven。 Hair red…brown； 'en brosse'。 Eyes very dark brown with whites showing all round iris。 Small； rather feminine mouth。 False teeth of expensive quality。 Ears small； with large lobes； indicating some Jewish blood。 Hands small； well…tended； hirsute。 Feet small。 Racially； subject is probably a mixture of Mediterranean with Prussian or Polish strains。 Dresses well and meticulously； generally in dark double…breasted suits。 Smokes incessantly Caporals； using a denicotinizing holder。 At frequent intervals inhales from benzedrine inhaler。 Voice soft and even。 Bilingual in French and English。 Good German。 Traces of Marseilles accent。 Smiles infrequently。 Does not laugh。
Habits： Mostly expensive； but discreet。 Large sexual appetites。 Flagellant。 Expert driver of fast cars。 Adept with small arms and other forms of personal bat； including knives。 Carries three Eversharp razor blades； in hat…band； heel of left shoe and cigarette…case。 Knowledge of accountancy and mathematics。 Fine gambler。 Always acpanied by two armed guards； well…dressed； one French； one German （details available）。
ment： A formidable and dangerous agent of the USSR； controlled by Leningrad Section III through Paris。
Signed： Archivist。
Appendix B。
Subject： SMERSH
Sources： Own archives and scanty material made available by Deuxième Bureau and CIA Washington。
SMERSH is a conjunction of two Russian words： 'Smyert Shpionam'； meaning roughly： 'Death to Spies'。
Ranks above MWD （formerly NKVD） and is believed to e under the personal direction of Beria。
Headquarters： Leningrad （sub…station at Moscow）。
Its tasks is the elimination of all forms of treachery and back…sliding with the various branches of the Soviet Secret Service and Secret Police at home and abroad。 It is the most powerful and feared organization in the USSR and is popularly believed never to have failed in a mission of vengeance。
It is thought that SMERSH was responsible for the assassination of Trotsky in Mexico （22 August 1940） and may indeed have made its name with this successful murder after attempts by other Russian individuals and organizations had failed。
SMERSH was next heard of when Hitler attacked Russia。 It was then rapidly expanded to cope with treachery and double agents during the retreat of the Soviet forces in 1941。 At that time it worked as an execution squad for the NKVD and its present selective mission was not so clearly defined。
The organization itself was thoroughly purged after the war and is now believed to consist of only a few hundred operatives of very high quality divided into five sections：
Department I： In charge of counter…intelligence among Soviet organizations at home and abroad。
Department II： Operations； including executions。
Department III： Administration and Finance。
Department IV： Investigations and legal work。 Personnel。
Department V： Prosecutions： the section which passes final judgement on all victims。
Only one SMERSH operative has e into our hands since the war： Goytchev； alias Garrad…Jones。 He shot Petchora； medical officer at the Yugoslav Embassy； in Hyde Park； 7 August 1948。 During interrogation he mitted suicide by swallowing a coat…button of pressed potassium cyanide。 He revealed nothing beyond his membership of SMERSH； of which he was arrogantly boastful。
We believe that the following British double agents were victims of SMERSH： Donovan； Harthrop…Vane； Elizabeth Dumont； Ventnor； Mace； Savarin。 （For details see Morgue： Section Q。）
Conclusion： Every effort should be made to improve our knowledge of this very powerful organizat