The King of Oil: The Secret Lives of Marc Rich

by Daniel Ammann

  From the “biggest devil” to “God”—there can be no greater span when it comes to evaluating a person. Pitch black or snow white. Why is Rich so polarizing? How does he manage to stir such emotions? There is a psychological explanation for this phenomenon: It is easy to pigeonhole Rich. We can ignore the ambiguities and complexities of Rich’s person, as well as the ambiguities and complexities of the oil trade in general. If we demonize Rich—or if we make him appear larger than life—we make it easier for ourselves to forget the moral and political contradictions of our own actions.

  Most commodities come from countries that are not beacons of democracy and human rights. “The resource curse” and “the paradox of plenty” are the terms economists and political scientists use to describe the fact that countries that are rich in oil, gas, or metals are usually plagued by poverty, corruption, and misgovernment.15 If commodities traders want to be successful, they are forced—much like journalists or intelligence agents, who will take their information from any source—to sit down with people that they would rather not have as friends, and they apparently have to resort to practices that are either frowned upon or downright illegal in other parts of the world.

  “When in Rome, do as the Romans do,” an oil trader once said in response to one of my questions. He had spent a lot of time in Nigeria, one of the most corrupt countries in the world, which just happens to possess immense oil reserves. I wanted to know what he meant. “If you want to get pregnant, you can’t stay a virgin,” he said. Of course, he admitted, he had paid bribes in order to receive contracts. “[Marc Rich’s] trading empire was based largely on systematic bribes and kickbacks to corrupt local officials,” alleged the House Committee on Government Reform, which carried out an investigation into the circumstances surrounding Rich’s pardon.16 The oil trader in Nigeria does not accept this charge. “We would be neither as successful nor would we still be in business if we had only paid bribes. More importantly, we offered our customers a better service than our competitors.” Rich himself does not deny having authorized bribes (see chapter 14).

  The Final Frontier

  “I’m driven by what drives most people: ambition,” Rich said to me. “Mankind has developed through ambitions. Some wanted to climb higher, some wanted to run faster, some wanted to fly, others to dive. I wanted to succeed in business.” His final frontier was the earth’s crust and the treasures it contains. In order to achieve his ambitions, he traded with anyone who would trade with him, be they dictators or democrats, communists or capitalists. Born Jewish, he supported Israel and nonetheless made deals with the Iranian Islamists who wanted to destroy the Jewish state. Even South Africa’s apartheid regime could count on him. This all made him one of the richest men in the world—and a bogeyman to all political camps. The Left sees him not as Marx but as an exploiter of the third world. The Right considers him a traitor for doing business with Iran and Cuba. Both sides see him as the greatest tax fraudster of all time. He maintains his innocence and insists that he never broke any laws. His lawyers provide long explanations detailing how all of his business dealings were perfectly legal under Swiss law, but public opinion remains unmoved by this argument—not to mention the American politicians who are convinced that the opposite is the case. “It is clear that Rich built his fortune doing business without legal, ethical, or even moral restraints,” the House Committee on Government Reform concluded.17

  Rich, who of all people always maintained that his company acted “apolitically,” sank ever deeper in the political meat grinder. His trading with Iran after Khomeini’s seizure of power remains his mortal sin, but American politicians also get angry about his alleged dealings with Muammar el-Qaddafi’s Libya “even after U.S. oil companies completely withdrew from the country.”18 They denounce him for selling grain to the Soviet Union after the United States had enacted an embargo against the country following its invasion of Afghanistan in 1980. They rage over the fact that he traded copper, sugar, and oil with Cuba despite the Kennedy embargo. “Mr. Rich was publicly reported to have traded with just about every enemy of the United States they have had over the last twenty years, and many of those countries were embargoed,” says Dan Burton, the influential chairman of the House Committee on Government Reform when its report on Rich was written.19

  Anti-Semitic Stereotypes

  The capitalist without a country who makes deals with the enemy. The speculator who creates nothing of his own but only acts as an intermediary while profiting from others. The “bloodsucker of the Third World,” as Rich was once referred to in the Swiss parliament. The perfidious profiteer, who would rather leave his own country and give up his citizenship than pay taxes. Many critics may not be aware of the anti-Semitic stereotypes that resonate throughout these accusations. More than a few of my interviewees see this as at least one of the reasons why Rich was so persecuted while other oil companies that acted in a similar fashion were treated much more leniently.

  “I don’t really like to use the word ‘anti-Semitic,’ because you can say for any type of criticism that this or that is anti-Semitic. Usually it is just not true, but in Marc’s case this was a really big problem,” Avner Azulay said to me. The former officer of Israel’s Mossad intelligence service is one of Rich’s closest friends and was influential in gaining his pardon. “He was a parvenu. Not from the U.S. establishment—and Jewish. I have no doubt about it: A part of the American establishment, the WASP elite, is anti-Semitic,” says another one of Rich’s longtime companions, who closely witnessed his case from the very beginning.

  An anti-Semitic angle to the whole affair? “Could be,” Rich himself says. “I was an easy target: one individual, making a lot of money, Jewish.” Sandy Weinberg, the assistant U.S. attorney who initiated and heavily influenced the criminal proceedings against Rich, took a sip of Perrier from a bottle and raised his voice for the first time. He strongly rejected the charge of anti-Semitism. “My father was a Jew from Brooklyn. He was discriminated against as a Jew,” he angrily told me while we were sitting in his office on the thirteenth floor of the Bank of America Building, which provides a fantastic view of Tampa that reaches toward St. Petersburg.

  “Survival is Rich’s chief commodity,” a journalist for Fortune once aptly wrote.20 This could be Rich’s motto. The experience of having to flee his home in Belgium had a great effect on Rich. He does not like talking about it, but he confirms my suspicion. “The forced emigration instilled in me a strong desire for independence.” “Independence” is a word that Rich often uses, and he uses it again when I ask him what his unimaginable wealth means to him. “Wealth always means independence.”

  He has the typical mentality of the immigrant who has to do everything himself and who wants to show everyone that he can make it. He was hungry for success and ambitious enough to work his way up from a small apartment at 4404 Holly Street in Kansas City, Missouri, to a ten-room apartment on Park Avenue in Manhattan. “He is motivated by an athlete’s drive to think faster, work harder, and achieve more than others,” says the private banker Karl Reichmuth, who has known Rich well for many years.

  Top performance was Rich’s instrument in gaining recognition, esteem, and—if not love—respect, as a young refugee who spoke not a word of English, as a Jew in the Diaspora all on his own, and as an only child who wanted to please the father he so admired. His close friend Michael Steinhardt, the legendary hedge fund pioneer, expressed it best, when he received me in his Madison Avenue office in Manhattan. Steinhardt is a man like a panda bear with a silver mustache and a very low and calm voice. His office on the seventeenth floor offers a view of the ice rink in Central Park and contains marvelous artworks. There are ancient Judaica like silver menorahs and Torah boxes. There are photomontages by the famous German artist John Heartfield, né Helmut Herzfeld, who was satirizing Adolf Hitler and the Nazis with his gripping work. Steinhardt shows the seminal picture of the white dove of peace spitted on a bayonet in front of the League of Nations building in Gene
va. “Succeeding in business became a function of Marc’s life,” he then says about his friend. Over the years, success became an end in itself; it became the true meaning of life.

  His Greatest Strength

  “His greatest strength?” Ursula Santo Domingo repeated my question. We were sitting in her apartment in an upscale neighborhood on the outskirts of Madrid. The elegant marquesa with German roots was Rich’s first secretary. She has known him for more than forty years. Later their families became friends, and they sometimes went on vacation together. “He is what we call superdotado in Spanish, a gifted individual. His greatest strength is surely the fact that he does not give up until he has achieved his goal. He could work on something day and night until it finally worked out. He never thought of anything else except work. You cannot achieve what he has achieved if you only work eight hours a day and keep your weekends free.”

  All successful commodities traders, Marc Rich included, are aware that they are living their lives on a knife edge. There is a very fine line between riches and ruin, between right and wrong, between success and loneliness. A South American oil trader told me of being hired by Rich in the 1970s. “Marc picked up a knife with his left hand and ran his right index finger over the edge of the blade. He said, ‘As a trader you often walk on the blade. Be careful and don’t step off.’ ” If one believes Rudy Giuliani and his assistant, Sandy Weinberg, then Rich really did step off in the early 1980s. “We didn’t have a good case, we had an overwhelming case,” Weinberg told me. However, Giuliani and Weinberg never had to prove in court how good their case actually was. As Rich elected not to return to the United States, the trial never took place and he was never convicted—or acquitted.

  One aspect of Marc Rich’s career that was virtually forgotten during the entire affair was his unique entrepreneurial success. For starters, he is more than just a profiteer and boycott breaker. It was not Rich’s alleged tax evasion that made him the twentieth century’s most dominant trader. When I asked how he had managed to achieve so much, he answered with the standard trader’s joke, “Buy low, sell high.” Then he added in a more serious tone, “The ingredients are hard work, hard work, and hard work—and good collaborators. Obviously a little bit of luck helps also.” These are surely important elements of success, but they cannot provide a good explanation for the sheer scale of his remarkable achievements.

  It is because I want to speak to Rich about all of these things that I am waiting in the Suvretta ski lift parking lot in St. Moritz on a cold early morning. We had agreed to meet at eight thirty, and not a minute later a grass green car pulls up and Marc Rich climbs out. It is not one of those Mercedes, BMWs, or Jeep SUVs that are so fashionable among the jet-set crowd but an unimposing Subaru Legacy with Lucerne plates that has obviously seen a few years. One of the burly men I had met in Rich’s office is sitting behind the wheel. The bodyguard turns out to be a kind of butler. He helps Rich unload his skis.

  If a journalist were to happen to observe this rather unspectacular scene, he or she could never imagine who was standing here. Rich is wearing a black helmet with ski goggles, a bright red jacket, and blue ski pants. A look at his feet reveals the true ski aficionado—if your ski boots prove comfortable, you keep them forever. He is, as every year, accompanied by his daughters Ilona and Danielle with their families. It is obvious that he enjoys their company. “Please stay here, don’t go yet. I miss you every day,” he says on the chairlift to Danielle, who is leaving for the States the next day. “I have to go back to New York. Mother would be very sad if I didn’t come back to her,” Danielle answers. “Call her and tell her to come here,” Rich insists. Danielle shakes her head. “You know she has a history in St. Moritz. I don’t think she would feel at ease here.” This short conversation sums up the entire story. Rich met Gisela Rossi, an attractive German woman, in 1992. In the end she turned out to be a reason for divorce (see chapter 16).

  The first half of the 1990s was a time when everything suddenly seemed to be going wrong. Marc Rich was free, but the American government’s pursuit was beginning to take its toll. For Rich, who loved traveling and traveled often, Switzerland was like a golden cage. In almost every other country in the world he was in danger of being picked up by American agents and brought back to the United States. He was isolated. A number of potential business partners wanted to have nothing to do with him—at least officially—as most did not want to play games with the American government. Commodities prices were dropping deeper and deeper across the board. After the end of apartheid, the sanctions against South Africa were gradually lifted, and the country no longer had to pay a premium to obtain Rich’s oil.

  His good friends say he was often insufferable back then. He drank a lot, surrounded himself with bad advisers, and made a few bad decisions that cost him a lot of money and, in the end, his company. On top of it all, his divorce from his first wife, Denise, became a bitter and expensive battle that was fought out in the limelight of the media. The scars ran deep. For years after the divorce, the two never spoke. Those who know the details say that it was not easy for Denise to campaign for her ex-husband’s pardon. St. Moritz, once the place of happy family vacations, was now the place where their marriage had begun to crumble. No wonder that she had little desire to return there.

  Skiing in St. Moritz

  The ski resort of Corviglia on the mountain above St. Moritz is not only one of the largest but also one of the most attractive resorts in the Alps. Rich owns a three-story chalet on Suvretta Hill, which has the most exclusive and most expensive real estate in the area—a villa recently changed hands here for an estimated 70 million. Rich’s chalet is equipped with an indoor pool where he goes to swim every morning. In the winter he spends almost every weekend here. He is an excellent skier who masters every run with elegance, even at seventy-four. He is sportive as ever, still likes to play tennis, and works out twice a week with a personal trainer.

  While the super-rich may enjoy being flown by helicopter up to the mountain’s summit, Rich stands in line with ordinary people at the chairlift. On the slopes, a vigilant observer would notice his two companions, one skiing in front of Rich, the other behind. The two bodyguards are carrying radios and heavy backpacks—you never know. Although he is still suffering from a cold, Rich is indefatigable as he makes his way down the slope. The moment he is in the chairlift he starts to work—on the phone to business partners all over the world, easily switching back and forth between English, Spanish, French, and German. When I ask him which language he is most comfortable with, he answers with a shake of his head and a sweep of his hand. He spoke German with his father and French with his mother. He often speaks Spanish with his daughters, who grew up in Spain, and in business he most often speaks English.

  These days Rich is heavily involved in the real estate business, and the subprime mortgage crisis is keeping him busy. He owns some land in Spain, the European country hit worst by the crisis, which is not of the best quality. He bought it a few years ago for 30 million in the hope that its value would rise during the prevailing real estate boom. Now the value of the land is melting like snow in the spring sun. The banks are looking to get out. On the phone in the ski lift, Rich gives short and snappy instructions and asks a few questions. “How many percent do we have? Who’s got the lead? We’re not going to throw good money after bad. Good-bye.” After hanging up, he talks openly about the deal with his daughter Danielle and her husband, Richard. It does not seem to bother him at all that I am sitting next to him in the chair-lift and can hear everything.

  After a morning of skiing, he invites me to his chalet for lunch. Stepping out of the lift that takes you from the garage to the third floor of his house, you are immediately struck by the fairy-tale view of the snowy mountains and lakes of the Upper Engadine Valley. The furnishings in the house display impeccable good taste. It is a happy mix of modern furniture and modern art that provides a fitting contrast to the chalet’s traditional wooden interior. Two bright larg
e sofas dominate the spacious room. On the table between the sofas there are bronze animal sculptures from Bolivia and a mountain of monographs covering the entire history of art from Diego Velázquez to Joseph Beuys and Philip Taaffe. On the walls are works by Miquel Barceló and Keith Haring. The whole chalet smells like a florist’s shop. Everywhere there are gorgeous flower bouquets in green vases left over from Rich’s birthday—roses, tulips, lilies; all of them white, his favorite color.

  We are joined by his girlfriend Dolores “Lola” Ruiz, whom he calls “mi más bella flor” (my most beautiful flower). What at first sounds perhaps a bit affected turns out to be something quite different when I discover who Lola really is. The Spanish-Russian intellectual with a degree in philosophy is writing a book about her famous grandmother Dolores Ibárruri Gómez, the legendary secretary-general of the Communist Party of Spain. During the siege of Madrid in the Spanish Civil War (1936–39), she coined the slogan “¡No Pasarán!” which soon became a global antifascist rallying call. Her nom de guerre was “La Pasionaria,” the passion flower. Ernest Hemingway immortalized her in For Whom the Bell Tolls, his novel about the Spanish Civil War, which was made into a film with Gary Cooper and Ingrid Bergman. One of La Pasionaria’s most often quoted lines goes “It is better to die on one’s feet than to live on one’s knees.” Reformulated, the line fits her granddaughter Lola’s partner quite well: It is better to go down in freedom than to spend a single day in an American prison.