The King of Oil: The Secret Lives of Marc Rich

by Daniel Ammann

  After years of negotiations, the State Department’s efforts finally appeared to pay off—or so it seemed in the eyes of the public—and in January 1989 Egypt agreed to pay the victims’ relatives generous compensation. A trust fund was set up for Tali Griffel to pay for her medical treatment and education in the United States. It was a solution that was agreeable to everyone, and relations between Israel and Egypt were soon back on track. The negotiations surrounding the future of Taba resumed, and a solution amenable to both parties was reached. In March 1989 Egyptian president Hosni Mubarak personally raised the Egyptian flag over the border town.

  Reconciliation Between Israel and Egypt

  The public was unaware of the true story behind the compensation paid by the Egyptians. In reality it was Marc Rich who made it possible for Egypt and Israel to reconcile their differences. As luck would have it, the State Department recommended Rich’s lawyer Leonard Garment to represent the interests of Tali Griffel in the compensation negotiations.2 The State Department trusted Garment and was aware of the contacts he maintained in the Middle East. After serving as special counsel to President Nixon, Garment was appointed U.S. delegate to the United Nations Human Rights Commission, where he was often involved in issues dealing with Egypt and Israel.

  The Ras Burqa negotiations threatened to break down over the issue of the amount of compensation. Egypt insisted on a sum based on its own standards, which the victims’ families believed was insufficient. Neither side was prepared to back down from its own position. As it was not feasible for the United States to secretly add funds to the Egyptian offer, the State Department began to look for a third party who could discreetly sweeten the deal. Discussions between Garment and the State Department soon turned up a rather controversial name: the “fugitive” Marc Rich.

  Rich, who had supplied Israel with large amounts of oil and also done business with Egypt, was ready to offer his assistance the moment Garment asked him. “Rich gave me discretionary authority to commit up to 500,000 of his funds if I needed it,” Garment remembers.3 Thanks to Rich, the damages that Egypt was prepared to pay were more than doubled by the addition of 400,000 of Rich’s own money. The State Department was not concerned with the fact that Rich was on the run from U.S. authorities and named in an outstanding international arrest warrant, and State Department officials had absolutely no qualms about accepting Rich’s money. “We saw no impropriety to having Marc Rich contribute to the settlement,” said Abraham Sofaer, a former legal adviser to the State Department.4

  “In the end, decent regrets were expressed and decent payments made to the Israeli families of the Ras Burqa victims,” Garment remembers. “This closure in turn proved to be the key to unlocking the Taba issue and bringing about a reconciliation between Israel and Egypt—a precondition for more progress in the peace process. The bone was out of both countries’ throats.”5

  Egypt was particularly thankful to “the European partner” who had allowed it to save face on the international stage. Osama El-Baz, President Mubarak’s most important political adviser, sent Garment a letter of thanks: “The assistance we received from your European partner was a critical factor for solving the controversy on Ras Burka [sic]. We wish to express our gratitude, to you also, especially in view of the fact that, one week later, the solving of the Ras Burka issue helped create the climate contributing to the solving of the difficult controversy surrounding the Taba issue. I want you to know that Mr. Mubarak greatly appreciates your input and your substantial contribution to helping the two sides to finalize this matter.”6

  Sealed Documents

  On January 23, 1989, the U.S. Justice Department secretly added a sealed document to Rich’s court file with the docket number 1:83-cr-00579-SWK. The contents of this document are considered secret, and it could only have been opened had Rich’s case been tried before a court. The sealed document confirmed Rich’s involvement in the Ras Burqa affair and was intended to serve as a mitigating factor in the event of his conviction.

  There is, however, a second sealed document in Rich’s court file dated March 1, 1994, concerning American financier Tom J. Billman. The former chairman of the Community Savings and Loan Association in Bethesda, Maryland, was suspected of embezzling millions of dollars in depositors’ savings. Billman fled the country, and federal prosecutors suspected he was in hiding somewhere in Europe—most likely Switzerland—where he held various bank accounts. In early 1992 Marc Rich’s lawyers were approached by the Justice Department, which wanted to know if Rich had any information regarding Billman and asked for his assistance in the search for this particular fugitive financier. Rich agreed and assigned Avner Azulay to the complicated task of finding a needle in a haystack.

  The reason was clear. “We hoped the Justice Department would treat Marc differently,” Avner Azulay told me. “We contributed to the search for this fugitive, and we provided a lot of information on his whereabouts with the help of American and European detective agencies,” he says. “I made a huge effort to find this man and transferred the relevant data to the official American agencies. The operation was completely financed by Marc. He spent somewhere between half a million and a million dollars.” United States prosecutors had no qualms accepting the aid of one fugitive from justice in order to catch another. “His budget for that case was bigger than ours,” as postal inspector David P. Cyr put it succinctly.7 Billman was, in the end, recognized accidentally by a friend in Paris, arrested, extradited to the USA by the French authorities, and sentenced to a forty-year prison term in 1994. The authorities managed to catch Billman without Rich’s support. Rich’s assistance in the hunt for Billman is nevertheless officially recognized in this second sealed document.

  Secret Cooperation with the U.S. Government

  Marc Rich told me that he regularly helped the country that considered him a traitor and was diligently trying to track him down and put him behind bars. As Rich freely admits, he had his own self-serving reasons for offering his assistance. “I felt if I was helpful to them, they might be helpful to me and change their attitude,” he says. Over twenty-five years ago, in June 1983, Rich hurriedly fled the United States and took up residence in Switzerland. He has not set foot in the United States since. When I spoke to him about his case, I could sense the deep resentment he felt toward those responsible for the “witch hunt” and the “crusade” against him. Yet Rich harbors no hatred of the country that took him in when he was a refugee on the run from the Nazis during the Second World War. “I was always very pro-American,” Rich says over a cup of tea. “It’s a generous country that accepted my parents and me. I’m still very pro-American.”

  The U.S. State Department benefited from Rich’s continual support, and its agents were in regular contact with the fugitive trader—a fact that has remained shrouded in secrecy to this day. They wanted his opinions on various “key people in power” in some of the politically sensitive countries where he did business. State Department officials especially sought details concerning politicians and business people in Iran, Syria, and Russia. He gave them what they asked for. “That’s normal,” Rich says, as if he had only been quoting the Americans a few commodities prices. When I ask for names, he shakes his head. “I promised not to tell,” he says.

  Rich maintained contacts in precisely the same countries in which the United States had hardly any contacts left. It was indeed a remarkable network. He knew Iran, Africa, and the Arab nations better than nearly any other businessman in the Western world. He had direct contact with the inner political circles of countries such as Iran, Syria, Angola, and Cuba—countries that, at least officially, wanted nothing to do with the United States, and vice versa. His business dealings were proof of just how good his sources truly were. “Our intelligence gathering was the most sophisticated in the world,” a longtime employee of Rich’s company proudly told me. “Sometimes we knew critical information before the CIA, especially regarding events in Iran.” Marc Rich and some of his employees regularly share
d this knowledge with U.S. and Israeli officials. I have spoken with several traders who were involved in this exchange of information, and they have substantiated this version of events. They were following the trader’s proven motto: Give and you shall receive.

  The State Department’s willingness to cooperate with a fugitive suspect (and his traders), who was at the same time being hunted by other governmental agencies, might be interpreted as cynical and hypocritical. Yet any intelligence service in the world would have been interested in maintaining a relationship with a man such as Marc Rich—a man who had both the contacts and the ability to bring such disparate partners together time and time again.

  The true value of such contacts and the trusted information that only they can provide becomes tragically clear when they are no longer available. In its 2004 report, the 9/11 Commission, created by the U.S. Congress to investigate the September 11, 2001, attacks, criticized what it saw as a series of “intelligence shortcomings.” The report explicitly mentioned “limited intelligence collection and strategic analysis capabilities” and “a limited capacity to share information both internally and externally.”8

  In light of such criticism, there is only one rational approach for the U.S. government when it comes to using a network of informants like Rich’s, even though they viewed him as a fugitive from justice. The word for this approach is “realpolitik.”

  Helping Israel’s Mossad

  Realpolitik is one of Israel’s greatest strengths. The Jewish state was completely surrounded by its enemies, which had imposed a boycott on the country. None of the Arab states maintained official diplomatic relations with Israel, but there were, of course, a number of clandestine contacts—sometimes quite close. It was the Mossad’s duty to establish and maintain such contacts, for Israel’s intelligence service was the very master of realpolitik. Had the Mossad ignored Rich and his contacts in Iran, Syria, and the Persian Gulf states, the agency would not have been doing its job. The Mossad established its first contacts with Marc Rich back in the 1970s.

  “I’m not giving any names,” Avner Azulay said flatly when I asked him for details. “This would be much too dangerous.” We had been talking about Rich for several hours in a hotel in downtown Lucerne. Azulay explained to me that the Mossad is much more than a traditional intelligence service. It also helps Jews who live in countries where they are in danger or even subject to persecution. It supports Jewish communities in their efforts to organize and defend themselves from anti-Semitism. “We have this duty of solidarity,” Azulay told me. “We have been persecuted. History has not been very kind to us. We have a duty to help each other, especially since the Holocaust. Had the State of Israel existed then, perhaps history would have turned out differently.” Wherever Jews are living under threat, the Mossad helps them to leave the country by covert means and settle in Israel or wherever they wish. Azulay explained how Rich had helped the Mossad with his business contacts as well as with money during such evacuation operations. Thanks to Rich, Jews from Ethiopia, Yemen, and Israel’s enemies could be rescued and brought to Israel in the 1980s and 1990s.

  After Azulay left the Mossad in 1983 and went to work as a security expert for Marc Rich, his former colleagues began to ask him if Rich would be willing to help them in the evacuation of Ethiopian Jews—known as the Beta Israel or Falasha—who had been separated from other Jewish communities for centuries. This was before the famed Operation Moses that rescued tens of thousands of these Jews and flew them to Israel in 1984–85. Many of them had fled to the north of Ethiopia—now Eritrea—and to neighboring Sudan in the early 1980s in the wake of civil war and catastrophic famine. The Mossad believed it had a duty to save them.

  The Israeli government knew it would have to do the Ethiopians a favor if they were to consent to the evacuation. Yitzhak Rabin met with Ethiopian president Mengistu Haile Mariam. “What do you need?” he asked the Marxist, who had ruled the country with an iron hand since 1974. “Medical assistance,” Mengistu answered. “Fine,” Rabin said. “We will build a complete emergency unit for you in Eritrea.” The Israeli government did not have the money to finance the emergency facility, so Azulay asked Rich if he would be willing to take on the costs. Rich agreed immediately. Azulay soon met with the Israeli minister of health at Rabin’s request. The plan was for Azulay to fund the purchase of used medical equipment in good condition from various Israeli hospitals and have the Israeli air force transport it to and install it in Ethiopia. “We set up a full emergency department in Eritrea,” Azulay recounted to me. “This was a wholly humanitarian operation funded by Marc. All these activities had nothing to do with espionage,” Azulay is keen to point out. The trade-off was that a number of Ethiopian Jewish families were allowed to emigrate to Israel. They were thus able to avoid the famine of 1985 that brought Ethiopia such tragic fame.

  Escape from Yemen

  Ten years after the rescue of the Beta Israel of Ethiopia, Rich agreed to finance a similar operation at the behest of the government of Israel—this time in Yemen, in the south of the Arabian Peninsula. In 1949–50, forty-nine thousand Jews had been flown out of the country and taken to the newly founded nation of Israel in the clandestine Operation Magic Carpet. By the mid-1990s there were only a few hundred Jews living in Yemen. They were not allowed to leave the country, although they repeatedly suffered from anti-Semitic attacks.

  “Marc gave me contacts in Yemen, very high officials,” Azulay said. Again, he wanted to avoid getting into details for reasons of security. “It’s too delicate,” he explained. “I don’t want anyone who helped in these activities to be hurt. They don’t deserve it.” Azulay negotiated with the Yemeni officials. They were willing in principle to allow the Jews to leave the country, but they wanted money in return for their consent and services—a per head fee. “Marc was willing to fund whatever was necessary to help the project,” Azulay said. The former Mossad agent first wanted to ensure that these officials would keep their promise. He decided to carry out a trial run and chartered an airplane with which he intended to fly out two large Jewish families of fifteen persons each. It worked—Rich’s contacts, the Yemeni officials, escorted the two families past the Yemeni customs agents, who had not been informed of the plan. The families were able to fly to Israel by way of Rome.

  “We saved thirty people. It was a big success, but in the end it was a very sad story,” Azulay said while regretfully shaking his head. The operation should have been the beginning of an even larger operation aimed at evacuating the entire endangered Yemeni Jewish community. However, the operation was sabotaged by the Satmar, an ultra-orthodox Jewish sect that refuses to recognize Israel or any form of Zionism. When the Satmar got wind of the evacuation of the Yemeni families, the sect threatened Azulay and Rich: “If you continue to do this, we will make public that there are traitors in the Yemenite government.” This put an immediate stop to the operation.

  Years later, Rich’s involvement in the evacuation of Yemeni and Ethiopian Jews was finally confirmed by high-ranking officials. In a very unusual step, Shabtai Shavit, the head of the Mossad from 1989 to 1996, actively campaigned for President Clinton to pardon Rich, thus breaking the Mossad’s code of silence. In a letter to the president, Shavit explicitly wrote, “As head of the Mossad, we [sic] requested his assistance in looking for MIA’s [soldiers listed as missing in action] and help in the rescue and evacuation of Jews from enemy countries. Mr. Rich always agreed and used his extensive network of contacts in these countries to produce results sometimes beyond the expected. Israel and the Jewish people are grateful for these unselfish actions which sometimes had the potential of jeopardizing his own personal interests and business relations in these countries.”9 Shavit knew what he was writing about—he had been personally involved in some of these operations.

  “It’s not healthy to get into this,” Azulay said to me and paused for a moment. He obviously wanted to avoid answering my question. I had asked him about information that I had received stating th
at Rich had helped in the search for missing soldiers (who had been captured by Shiite militias) in Lebanon, Syria, Iraq, and Iran. According to my sources, Rich used his contacts in Iran and Syria to this effect. Azulay would only confirm that Rich had provided him with “some contacts with senior officials.” These “senior officials,” he told me, were able to bring him together with people who knew more about the fate of the missing soldiers. “Marc funded my travel, not the government,” he explains. “It was dangerous for him and dangerous for them.” Azulay then said that he would prefer not to discuss these operations. “Every time the press mentions Marc’s name in connection with the Mossad, this makes him a target.” According to one article in the British Observer, Rich “routinely allowed agents to use his offices around the world as cover”—a claim Azulay says is just a rumor spread by the Americans to “under-mine” Rich’s business.10

  Informal Mediator Between Israel and Iran

  Rich himself also wishes to avoid getting into details when I ask him about the assistance he provided the Mossad. When I ask him why he was eager to help, Rich takes a sip of Diet Coke and hesitates before answering. “First of all, I’m Jewish. Second, Israel is a country I’m involved with. I’m a citizen. It’s a natural thing for me to help Israel.” I ask him if it was dangerous for him to ask high officials in “enemy countries” about missing Israeli soldiers. Rich again remains silent for quite some time, as if considering what he could safely tell me. His answer was not as concrete as I had hoped. “There were not many people that I could talk to about it, but a few people who I felt I could talk to I did talk to.” How did they react? Rich raises both his hands, shrugs, and says, “It was no problem.” “In which countries?” I ask. He shakes his head. Mainly Iran and Syria? “Yes,” he says. I notice that this line of questioning is making Rich increasingly uneasy.