Italian prosecutors were trying to establish yesterday whether US bonds with a face value of $134 billion seized from two alleged smugglers were real or counterfeit.

The bonds were found when the two men — said to be Japanese but as yet not identified — were arrested while attempting to cross into Switzerland from Italy by train at the frontier town of Chiasso this month. Prosecutors in Como said that the two men had hidden the bonds in the false bottom of a suitcase.

Police said that Chiasso was a notorious crossing point for currency and bond smugglers but the sums involved this time were “colossal”. The amount of $134 billion would place the two travellers as the fourth most important investors in US debt, well ahead of Britain ($128.2 billion) and just behind Russia ($138.4 billion).

The bonds were described as being 249 US Federal Reserve bonds each worth $500 million, plus ten Kennedy bonds with face values of $1 billion, in addition to various other types. Police said that the two men had stayed at a hotel in Milan last Tuesday. Instead of taking the express train to Lugano, they had boarded a slow commuter train from a suburban station to attract less attention.

Although Switzerland and Italy adhere to the Schengen accords on frontier-free travel, customs officers from both sides who still watch travellers became suspicious, Italian reports said.

Police said that there was cause for concern even if the bonds turned out to be forgeries, since it would amount to a counterfeiting scam “on an unprecedented scale”.

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