The legacy of financier Marc Rich

Published: Friday | June 28, 2013 Comments 0
This is a November 30, 1998 file photo of financier Marc Rich shown in Zug, central Switzerland. An associate of Marc Rich said on Wednesday that the trader pardoned by former President Clinton has died in Switzerland.ap
This is a November 30, 1998 file photo of financier Marc Rich shown in Zug, central Switzerland. An associate of Marc Rich said on Wednesday that the trader pardoned by former President Clinton has died in Switzerland.ap

HE WAS a wheeler-dealer pardoned by another consummate dealmaker, a working-class Jewish boy who left Belgium to escape the Nazis and rose to become the billionaire 'King of Commodities'.

Marc Rich's connections to the rich and powerful not only made him fabulously wealthy, but when he was indicted for fraud, racketeering and tax evasion on a grand scale, they helped secure him a pardon from Bill Clinton, hours before the United States president left office.

That triggered a political firestorm from critics who alleged Rich bought his pardon through donations that his ex-wife had made to the Democratic Party.

Rich died Wednesday of a stroke at a hospital in Lucerne, near his home for decades. He was 78, and his Israel-based spokesman, Avner Azulay, said he would be buried Thursday in a kibbutz in Israel.

Throughout his storied career at the pinnacle of high finance, Rich was known as a man who could deliver the big deals thanks to personal relationships he had forged with powerful figures around the world.

In a rare 1992 interview with NBC, Rich said that in his business, "we're not political ... . That's just the philosophy of our company."

Yet, Rich cultivated contacts with powerful politicians - in the Middle East as well as the United States - and used those ties to make billions, often when it seemed all doors were closed.

During the Arab oil embargo of the 1970s, Rich used his Middle East contacts to purchase crude oil from Iran and Iraq and made a fortune selling it to American companies.

In 1981, Rich and a partner bought 20th Century Fox and three years later he sold his interest to Rupert Murdoch for US$250 million.

But in 1983, while he was in Switzerland, Rich was indicted by a US federal grand jury on more than 50 counts of fraud, racketeering, trading with Iran during the US Embassy hostage crisis and evading more than US$48 million in income taxes.

At the time, it was the largest tax-evasion case in US history and could have earned him more than 300 years in prison.

Although the Swiss refused to arrest or extradite Rich, he stayed on the FBI's Most Wanted List, narrowly escaping capture in Finland, Germany, Britain and Jamaica, until Clinton granted him a pardon on January 20, 2001 - the day he handed over the keys to the White House to George W. Bush.

Last-minute presidential pardons are not uncommon in the United States, but this one raised a furore. Critics believed the case showed that justice means one thing for ordinary people and another for powerful insiders.

Rich was born in Antwerp, Belgium, on December 18, 1934. His Jewish family fled from the Nazis to the United States, where he went to school and college in New York.

After dropping out of college, Rich went to work for the commodity traders Phillips Brothers, now called Phibro, in New York.

He quickly got the knack of trading and in 1967 was sent by the company to work in Madrid, where he met Pincus 'Pinky' Green, his future partner.

In 1973, Rich and Green left the company after arguing over the size of their bonuses. They set up Marc Rich and Company, based in the Swiss town of Zug, whose low taxes have made it one of the world's oil trading centres.

Business boomed. Rich specialised in acting as a middleman for purchases in global trouble spots, such as Iran, apartheid-era South Africa or Cuba and Libya during US trade embargoes.

Rich and Green were the first traders to use short-term purchases, now known as the spot market, to make big money, quickly. Buying large volumes when the price was low, they were able to control the market when prices rose.

With Rich in Switzerland, his companies pleaded guilty to the US charges, paying fines of about US$130 million.

"It's an unfortunate situation," Rich told NBC. "But the question is, was there crime? And I'm saying I don't think so."

He added that as Marc Rich and Co was a Swiss company, it was legal for the firm to do business with Ayatollah Ruhollah Khomeini's Iran.

Rich worked on making himself popular by becoming a major philanthropist, giving money to the arts and charities in the hope of building good contacts and guarding against extradition. He renounced his US citizenship and became a citizen both of Israel and Spain.

But he earned the hatred of US labour unions during the 1990-92 Ravenswood Aluminum Corp strike in West Virginia.

His company was a part-owner of Ravenswood Aluminum, whose workers accused Rich of locking 1,500 steelworkers out of the plant when their contract expired and hiring replacement workers without negotiating.

The union won the 20-month labour battle, but not before union members picketed outside Rich's Swiss offices.

In 1993, Rich sold his own company - which was then renamed Glencore, now the world's largest commodity trader - and set up a new firm, Marc Rich and Co Holding, also based in Zug.

Although a Russian firm, Crown Resources, tried to buy its commodities unit in 2001, the buyout fell through and Rich remained active in the trading business.

After spending several years in Zug, Rich moved to La Villa Rose on the shores of Lake Lucerne in nearby Meggen.

He also owned property in the Swiss ski resort of St Moritz and in Marbella, on the south coast of Spain.

Rich married for a second time, to German-born Gisela Rossi, in 1998. They divorced in 2005. Rich had two daughters, Ilona Schachter-Rich and Danielle Kilstock Rich.

- AP

Although the Swiss refused to arrest or extradite Rich, he stayed on the FBI's Most Wanted List, narrowly escaping capture in Finland, Germany, Britain and Jamaica.


 

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