Glencore’s looming flotation, in which the company could be valued at $60 billion, will bring the Swiss commodities trader into the public eye for the first time, forcing it to confront its controversial past.David Robertson
The Glencore name has existed only since 1994, when the present management team bought out the firm’s founder Marc Rich.
Mr Rich had grown up in the United States after fleeing Nazi Europe aged seven. He started his career as a crude oil trader after dropping out of university and he married Denise Eisenberg, a songwriter and footwear heiress.
Marc Rich & Co was established in 1974 and became arguably the world’s most successful — and notorious — commodities trader. In The King of Oil, a biography by Daniel Ammann, Mr Rich admits to breaking sanctions by supplying oil to apartheid-era South Africa and by trading with Iran during the hostage crisis of 1979-81.
In 1983 Rudy Giuliani, then the US Attorney for the Southern District of New York, accused Mr Rich of tax evasion to the tune of more than $48 million and of racketeering, conspiracy and trading with the enemy — Iran. Mr Giuliani promised that Mr Rich would spend the rest of his life in prison — but the oil trader had already fled for Switzerland. He was forced to sell Marc Rich & Co in 1994 after a bet on the zinc market went sour. Part of the business became what is now Glencore, while other companies were spun off to form Trafigura, the Dutch metals and energy trader.
On President Clinton’s last day in office in 2001, Mr Rich was granted a pardon and the criminal tax evasion charges were dropped. Mr Clinton’s pardon was enormously controversial, partly because Mr Rich’s former wife Denise was a significant donor to the Democrat Party. A subsequent investigation established no wrongdoing.
According to Mr Ammann’s book, Shimon Peres and Ehud Barak, the former Israeli prime ministers, also petitioned Mr Clinton for the pardon and their involvement is thought to have been crucial.
Glencore is clearly uncomfortable with its historical association with Mr Rich and executives bristle at any mention of his name. There is no mention of Marc Rich & Co in the history section of the company’s website.