Marc Rich has finally spoken. He’s spoken a lot, apparently, to Daniel Ammann, and even took a picture with him. That in itself is newsworthy, because The King of Oil, as the title of the book written by Ammann describes Rich, has talked very little over the years.
So what do we get in Ammann’s book? The easy thing to do would be to rip into the author for not writing a scathing review of Rich’s life. But it is welcome that Ammann has noted how Rich was one of the founding fathers of the oil trade and its rollicking free market.
It was the actions of Rich and several of his colleagues at what was then formally known as Philipp Brothers, now Phibro (a division of Occidental Petroleum), that began to loosen the grip that major oil companies had over the supply of oil from major suppliers into the market. In that sense, the left wing should love him, because there is no doubt he put market power in the hands of resource-rich countries, some of them former colonies, by opening up new sales avenues other than just accepting the price proferred to them by big oil, metals or other commodities firms. Rich, his boss Ludwig Jesselson, refining monarch Tom O’Malley and Andrew Hall, still at Phibro, all played a part in creating the trading of oil as we know it.
And there are plenty of interesting tidbits in the book. He first made his mark as a trader of mercury, helped by US government attempts to stockpile the liquid metals. In oil, the first trade of crude done by Rich was out of Tunisia, in a 25,000 metric ton offering. When Rich and logistics genius Pinky Green departed Phibro, after a 1973 performance that probably earned Phibro between $4 million and $5 million, Rich may have made $100,000 according to Amman. He asked for a half-million; Jesselson countered with $150,000, and the Rich/Green team left to create Marc Rich & Co. By 1976, according to Amman — and these numbers do have the sense of coming from Rich himself — the company made $200 million, or close to $800 million in today’s dollars.
As a boss, Rich comes across well in the book, through the words of former employees. “Marc’s conduct toward his staff creates a family feeling, and people are proud to work for him” is a fairly standard example of what we hear.
He also comes across as a man who would trade with the devil for a dollar. In a typical laconic set of comments, Rich says of Nigeria: “The global capital of corruption. It is a very unpleasant situation…such a rich country, and the people see nothing of it.” And then the book details the contracts he signed with that nation’s leaders.
“Whatever we did, we did legally,” Rich says elsewhere. “We were doing business with Iran, Cuba and south Africa as a Swiss company. These businesses were completely legal according to Swiss law.” Rich also notes he gave up his US citizenship, leading him to dismiss the charge that he dealt with the enemy in trading with post-Khomeini Iran. (The one instance in the book where Ammann seems to get angered is in discussing Rich’s trade with South Africa when most of the world was boycotting the apartheid nation.)
But there are a lot of wealthy people in the world. The reason we care about Rich is because of his flight from tax evasion charges, his years in exile in Switzerland, and the pardon that he and Green received from President Bill Clinton on January 19, 2001, the day before the White House was occupied by George W. Bush.
Ammann spends an extensive amount of time making the case that the Rich tax evasion case, which employed the racketeering-inspired RICO law, was prosecutorial overreach; one chapter is entitled “Rudy Giuliani’s Failures,” as it was as a US Attorney that Giuliani first made his mark, in part by going after Rich.
And it is true that in the late 70s, the US had a crazy quilt system of price regulations that took two barrels of the exact same commodity and declared that the price of the “older” one was capped at a certain level, but the other one, because it was “newer,” could be sold for a higher amount. Ammann doesn’t use the term “cert trading,” but that’s what it was called, as traders would shuffle paper and ownership so that the old barrels became new barrels and suddenly rose in value. Marc Rich was far from the only person engaging in it, and the activities by all traders were, in hindsight, understandable market reactions to regulations that were beyond any normal logic.
Rich’s involvement in that trade were at the root of the tax evasion case, and the RICO case that sent Rich abroad. In one of the more gripping passages in the book, Ammann cites the memoirs of Edward Bennett Williams, the legendary Washington lawyer, who said he lambasted Rich in a phone call after his client disappeared. “You know something, Marc? You spit on the American flag. We could have gotten the minimum. Now you’re going to sink.” Rich tells Ammann that this did not happen.
Rich’s take on his problems is not simplistic, but the victimization comes through. “I was an easy target, one individual, very successful, making a lot of money and Jewish. I stood outside the establishment.”
In the end, Rich was pardoned, but never set foot back in the US and vows he never will. His successor companies, like Glencore, are completely separate from him. Just as Rich opened up a little bit to the author, Glencore is eyeing going public, an act so far from the secretive way that Rich led his life that one can’t help but laugh a bit at the irony.
Ammann, in an email exchange with Platts, made note of that Glencore IPO. “The looming Iran sanctions and the expected IPO of Glencore make the book particularly current,” he said.”Rich became rich not least by circumventing the American embargo against Iran. And he showed, in my opinion, that boycotts hardly ever work.”
And while Rich may be nowhere near Glencore these days, his spirit lives on, according to Ammann. “I would go so far as to say that if you want to understand how Glencore ticks you have to know how Marc Rich ticked,” he wrote. “Rich was the mentor of Glencore’s top management. Willy Strothotte (chairman) and Ivan Glasenberg (CEO) learned almost everything from him.”
John Kingston, Platt’s