Glencore founder dies in Switzerland

MarcRich_RTR1PQEB_REUTERScm.jpgBillionaire Marc Rich, who invented oil trading and was pardoned by President Bill Clinton over tax evasion, racketeering and busting sanctions with Iran, died June 26 in Switzerland aged 78.

Rich fled the Holocaust with his parents for America to become the most successful and controversial trader of his time and a fugitive from U.S. justice, enjoying decades of comfortable privacy at his sprawling Villa Rosa on Lake Lucerne.

Belgian-born Rich, whose trading group eventually became the global commodities powerhouse Glencore Xstrata, died in hospital from a stroke, spokesman Christian Koenig said.

Many of the biggest players in oil and metals trading trace their roots back to the swashbuckling Rich, whose triumph in the 1970s was to pioneer a spot market for crude oil, wresting business away from the world’s big oil groups.

To his critics, he was a white-collar criminal, a serial sanctions breaker, whom they accused of building a fortune trading with revolutionary Iran, Muammar Gaddafi’s Libya, apartheid-era South Africa, Nicolae Ceausescu’s Romania, Fidel Castro’s Cuba and Augusto Pinochet’s Chile.

In interviews with journalist Daniel Ammann for his biography, “The King of Oil”, the normally obsessively secretive Rich admitted to bribing officials in countries such as Nigeria and to assisting the Israeli intelligence agency, Mossad.

Explaining Rich’s route to riches in an interview with Reuters in 2010, Ammann said: “He was faster and more aggressive than his competitors. He was able to recognize trends and seize opportunities before other traders. And he went where others feared to tread — geographically and morally.”

A U.S. government website once described Rich more simply, as “a white male, 177 centimetres in height… wanted by the Federal Bureau of Investigation, the U.S. Customs Service and the U.S. Marshall Service.” In 1983, he was on the FBI’s 10 most wanted list indicted for tax evasion, fraud and racketeering. At the time, it was the biggest tax evasion case in U.S. history.

Trust, loyalty and secrecy

On learning of the indictment plans, Rich fled to Switzerland to escape the charges, which included exploiting the U.S. embargo against Iran, while it was holding U.S. hostages, to make huge profits on illicit Iranian oil sales.

“Marc Rich is to asset concealment what Babe Ruth was to baseball,” said Arthur J. Roth, New York state commissioner of taxation and finance.

He remained under threat of a life sentence in a U.S. jail until Clinton pardoned him during the last chaotic days of his presidency, a move that provoked moral outrage and bewilderment amongst some politicians.

Clinton later said he regretted granting the pardon, calling it “terrible politics.”

“It wasn’t worth the damage to my reputation,” he told Newsweek magazine in 2002.

Rich, who was born Marcell David Reich in Antwerp on December 18, 1934, started his career at Philipp Brothers, a top global commodities trader after World War Two.

Posted to Madrid in the late 1960s, he found ways to bypass the “Seven Sisters” major oil companies which controlled world oil supplies, and is credited with inventing spot oil trading, which involves sale or purchase for immediate delivery.

While at Phibro, Rich foresaw the huge price increases imposed by the Organization of Petroleum Exporting Countries in 1973, earning big profits for the firm. However, he became infuriated by his pay and trading strictures.

He left in 1974 with a fellow graduate of the Phibro mailroom, Pincus “Pinky” Green, and set up Marc Rich and Co AG in Switzerland, a firm that would eventually become Glencore Xstrata Plc.

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