The King of Oil: The Secret Lives of Marc Rich

by Daniel Ammann

  There was hardly a single journalist or politician who was prepared to believe that Rich’s pardon was completely aboveboard. Eight years later, Sandy Weinberg’s blood pressure still rises whenever he looks back on the affair. “They were circumventing the entire process. Nobody asked me about it. Nobody asked the Southern District about it. Not one person that had any knowledge about the case weighed in with the president. It’s a complete outrage.” I asked Weinberg if he believed corruption had played a role in the pardon. “I don’t want to speculate,” Weinberg told me. “I don’t know whether there was money involved, whether some corrupt purpose was involved. What I do know is that President Clinton was sold a bill of goods by Jack Quinn.”

  Quinn was taken aback by the outrage he faced. “I considered myself astute politically, and I certainly considered President Clinton to be astute politically, but I think we were both surprised at the extent of the uproar that ensued.” I felt that the entire affair had made a much deeper impact on Quinn than he was prepared to admit in public, and I questioned him on this point during our interview. “It was among the most painful parts of my entire life,” Quinn confided to me. When I asked him what had bothered him most about the reaction to Rich’s pardon, Quinn answered, “Having my integrity questioned.”

  The Role of Eric Holder

  It was not only Bill Clinton, Jack Quinn, and Denise Rich who had to face public outrage over Rich’s pardon. Eric Holder soon found himself in the firing line as well. Holder served at the Department of Justice as deputy attorney general at the time of Rich’s pardon. He was considered a brilliant, independent, and thoughtful attorney who enjoyed a great amount of respect from both Democrats and Republicans. Quinn had met Holder while serving in the Clinton administration, and the two had been in contact ever since. Holder was one of the first people Quinn had approached regarding the Rich affair in November 1999—long before Michael Steinhardt first came up with the idea of applying for a presidential pardon. Quinn was still trying to convince the Southern District of New York to reevaluate Rich’s case. According to Quinn’s memos, Holder believed that the federal prosecutor’s refusal to meet with Rich’s lawyers was “ridiculous.” Shortly after their discussion, Quinn sent Holder a memorandum explaining his position. Holder replied that “we’re all sympathetic” and that the “equities [are] on your side.”18 However, Holder made it clear that he could not force the Southern District of New York to meet with Rich’s attorneys.

  When Rich decided to petition for a presidential pardon in the late fall of 2000, Quinn asked Holder for advice as to how he should proceed. “Deputy Attorney General Holder advised that it should be submitted directly to the White House,” André A. Wicki, Rich’s attorney in Switzerland, told me. Holder would play a crucial role in Rich’s pardon on January 19, 2001—one day before Clinton would leave office—when he received a call from White House Counsel Beth Nolan. She wanted to know Holder’s position on a possible Rich pardon. When he was later called before the House Government Reform Committee hearings on February 8, 2001, Holder informed the assembled committee members of his opinion. “I ultimately told Ms. Nolan that I was now neutral, leaning toward favorable, if there were foreign policy benefits that would be reaped by granting the pardon.”19 In his testimony, Holder told the committee that it was Prime Minister Ehud Barak’s call to the president that had swayed him. He later claimed that he had been unaware that he was the only Justice Department official whose opinion President Clinton had sought while considering Rich’s pardon. The deputy attorney general did not seem to have been aware of the importance the president placed on his opinion. Nevertheless, many observers believed that Holder’s involvement in the affair spelled the end of his career in public service, and Holder seemed inclined to agree with them. He claimed he wanted to “climb into bed and pull the covers up over my head. I’m done. Public life is over for me.”20 In the end Holder was accused of acting in his own interest. It was claimed that he was seeking the position of attorney general in a possible Al Gore administration and that he had been trying to seek the favor of Jack Quinn, Gore’s former chief of staff. (Holder was appointed attorney general by President Barack Obama in 2009.)

  As a result of the tremendous public outrage, the Rich pardon was subject to an unprecedented amount of scrutiny. The powerful House Committee on Government Reform initiated an investigation and held hearings in spring 2001 to determine what had actually transpired and eventually published two reports consisting of over 1,500 pages.21 Hearings were also held by the Senate Judiciary Committee, and the Justice Department’s Southern District of New York even saw fit to open a criminal investigation. All of the accusations were thoroughly reexamined. Had corruption played a role? Had Denise Rich “bought” her ex-husband’s pardon? Was Marc Rich the true source of the money Denise had donated to the Clintons and the Democratic Party? Did Rich pay Denise for her support? Was Rich an arms dealer? Was Jack Quinn guilty of ethical misconduct? Did Clinton break the law by pardoning Rich?

  Instead of the mountain they had hoped for, investigators were left with a molehill. The hearings determined that several White House advisers—including Beth Nolan—had in fact advised Clinton against issuing the pardon. Despite the combined efforts of the House of Representatives, the Senate, and the Department of Justice, the investigations were never able to come up with proof of bribery, arms dealing, or any other misdeed. Rich’s decision to directly petition the president may have been unusual, but it was by no means illegal. Clinton’s decision to pardon Rich without seeking extensive counsel from the Department of Justice was also well within the law. The wording of the U.S. Constitution is quite clear. It explicitly grants the president the “power to grant reprieves and pardons for offenses against the United States, except in cases of impeachment.”22

  President Clinton’s Motivation

  Clinton sought to explain his decision to pardon Rich in an extensive op-ed article published in the New York Times in which he included many of the legal arguments that Rich’s legal team had sought to employ over the years (see chapters 10 and 13).23 Clinton interpreted three of the most important arguments as follows:

  I understood that the other oil companies that had structured transactions like those on which Mr. Rich and Mr. Green were indicted were instead sued civilly by the government; . . .

  Two highly regarded tax experts, Bernard Wolfman of Harvard Law School and Martin Ginsburg of Georgetown University Law Center, reviewed the transactions in question and concluded that the companies “were correct in their U.S. income tax treatment of all the items in question, and [that] there was no unreported federal income or additional tax liability attributable to any of the [challenged] transactions”; . . .

  The Justice Department in 1989 rejected the use of racketeering statutes in tax cases like this one.

  These arguments may have been a good way of legally justifying the pardon, but I am not sure they are sufficient to explain Clinton’s decision to actually grant the pardon. The research and interviews I carried out in the course of writing this book have led me to believe that Denise Rich’s role in the pardon has been grossly overestimated. Of course Denise was helpful—after all, she was a friend and admirer of the Clintons. She was able to get the president’s attention—something that is always in short supply—and thus open a few doors for her ex-husband. Denise was not the deciding factor, though, and her hefty donations to the Clintons and the Democratic Party were not the reason Rich was pardoned.

  Neither was Clinton’s decision to pardon Rich primarily a result of legal arguments. Instead, the president was swayed by the emotional and political aspects of Rich’s petition. On an emotional level, Clinton allowed himself to be convinced by Jack Quinn’s argument that Rich’s case had been “grossly overprosecuted” by aggressive federal prosecutors. The president had himself experienced the lengths to which fanatical investigators were prepared to go. Independent counsel Kenneth Starr was originally appointed to investigate the Clinto
ns’ role in the Whitewater scandal, but Starr later widened his investigation and delved into the president’s affair with Monica Lewinsky. The president soon found himself facing impeachment proceedings as a result of the investigations. Although he remained in office, his reputation had suffered greatly in the aftermath.

  The president felt that he had been the victim of aggressive, overzealous persecution—and Rich’s team had consciously used the president’s feeling of victimization in their petition. “The pardon petition was literally written to the president,” Bob Fink told me before popping open a can of Diet Dr Pepper. “It was written to him with the hope that he would personally read it and with the hope that he would recognize his own personal experiences.”

  When it came to the political aspect of the petition, the support of Ehud Barak and Shimon Peres played a crucial role in the president’s decision—a belief that is shared by Jack Quinn and Avner Azulay, the two masterminds behind Rich’s pardon application. “Without the support of Barak and Peres, Clinton would not have granted the pardon—no doubt about it,” Azulay told me. “The entreaties of Prime Minister Barak weighed very heavily on the president’s mind,” Quinn explained. Clinton seemed to confirm their opinions in his autobiography: “Ehud Barak asked me three times to pardon Rich because of Rich’s services to Israel and his help with the Palestinians, and several other Israeli figures in both major parties urged his release.”24

  Marc Rich was indeed of great importance to the Israelis. Rich’s oil deliveries and assistance to the Mossad had contributed greatly to Israel’s national security. It is difficult to imagine a U.S. president who would have not have had difficulties ignoring the pleas of so many Israeli politicians and dignitaries. Israel is by far the closest ally of the United States in the Middle East. There is a further factor that could have influenced Clinton’s decision as well. On the day he issued the pardon, the Israelis and the Palestinians sat down for important peace talks in the Egyptian town of Taba. Clinton had lent his backing to the negotiations a month prior to this Taba Summit. Israel’s foreign minister, Shlomo Ben-Ami, who had also lobbied for Rich’s pardon, took part in the negotiations. The talks were Clinton’s last opportunity as an American president to help end the Israeli-Palestinian conflict. He almost got his wish, as both sides were willing to make great compromises in the pursuit of peace. Never before had the two sides come closer to a comprehensive peace treaty—and they have never come as close since.

  Rationally Right vs. Morally Bad

  Hardly any of Clinton’s other decisions in office were met with the same amount of extensive and prolonged criticism as his pardoning of Marc Rich. The decision raised hackles in nearly all corners of the nation, and the noise surrounding Holder’s confirmation as attorney general is proof that the controversy has not subsided. Yet hardly any politicians or journalists seem willing to seriously and impartially address the reasons for the pardon. Published reactions to the pardon reminded me of the old saying that journalists are like birds on a wire—if one flies away, they all fly away. The opinions were formed long ago: Marc Rich is a villain, and because he is a villain he should not have been pardoned. Seen from this perspective, it might just be true that only angels have a shot at grace. In the eyes of the public, Rich’s pardon was never really seen as rationally wrong—it was just morally bad. This type of criticism quickly gets bogged down at a moral level that does not allow for any form of counterargument.

  In retrospect it is not only true that President Clinton enjoyed the unlimited and absolute power of pardon that is guaranteed by the U.S. Constitution. It is also important to take Clinton’s words at their face value despite all of the attacks on his reputation: “I may have made a mistake, at least in the way I allowed the case to come to my attention, but I made the decision based on the merits.”25 As I have illustrated in this chapter, Clinton had very good reasons—both political and juridical—for pardoning Marc Rich.

  Tax Bargain

  On March 1, 2001, six weeks after Rich received his pardon, the New York Department of Taxation and Finance sent out the highest tax invoice it had ever issued, for 137,827,781.90. It was addressed to Marc Rich, Kleinnaumatt 9, CH-6045 Meggen, Switzerland. “It is now time for him to pay the piper,” announced state tax commissioner Arthur Roth.26 The State of New York was demanding 26.9 million in back taxes for the years 1980 through 1982 plus 13.5 million in penalties and 97.4 million in accrued interest. The interest alone added up to 20,000 per day. The delinquent taxes were based on the approximately 100 million in oil profits that—from the State of New York’s point of view—Rich had failed to declare. Roth simultaneously froze 5 million in a Citibank account belonging to Rich. He revealed his sense of humor by commenting, “Marc Rich is to asset concealment what Babe Ruth was to baseball.” No one seriously believed that Rich would ever pay off his tax debts. For his part, Rich contested the state’s demands, claiming that he had already legally declared the profits in Switzerland.

  The New York revenue authorities were therefore rather surprised when Rich signaled via his lawyer that he was prepared to pay part of the debt. Ever the trader, he suggested they negotiate a sum. The New York Department of Taxation and Finance declared its willingness to negotiate—under the condition that the talks should remain a secret. To outsiders, the affair seemed to take a rather strange turn. The tax authorities, who were usually quite eager to comment on the most trivial of developments concerning Rich’s case, suddenly insisted on discretion. Could they have been embarrassed by the fact that they were negotiating a deal with the “biggest tax fraudster in the history of the United States”? Were they afraid of the public debate that might ensue if their pragmatic stance were to become widely known? Whatever the case, Rich was able to reach a good deal with the tax authorities. A tax collector confirmed to me that in November 2003 Rich transferred approximately 3 million to the State of New York. No one at the New York Department of Taxation and Finance wished to officially comment on this sum for reasons of confidentiality. One of Rich’s lawyers said, “It would not be in Mr. Rich’s interest to violate an agreement [of confidentiality] he made with a government in the United States.” Naturally I wished to discuss the matter with Rich. “I paid even though the charge was completely unjustified,” Rich said. He confirmed the agreement with the New York tax authorities but did not wish to name the exact sum. “I’m respecting the confidentiality,” he explained. I asked him why he had paid anything at all, since he was of the opinion that he did not owe the State of New York any money whatsoever. “To get rid of it,” he replied. “It was the only way to get rid of it.”

  “I’ll Never Go Back to the USA”

  In the aftermath of the affair, Rich was able to see which way the wind was blowing, and it was a very cold wind indeed. The pardon was like a boomerang. He had hoped to be able to liberate himself from many of the false accusations. He had hoped he would be given the freedom to return unmolested to the United States. He had hoped his name would finally disappear from the headlines. The reality was the exact opposite of what he had hoped for. The reports were even more scathing than they had been before the pardon. The media and the politicians rehashed all of the same facts, rumors, and defamations. Rich, who had been left in relative peace in the years running up to the pardon, was again described as the “fugitive billionaire,” the “most wanted white-collar criminal in U.S. history,” the “unscrupulous trader” who “traded with the enemy.” In addition to all of these accusations, Rich was now seen as the man who was even capable of manipulating the most powerful man in the world: the president of the United States.

  “I regret very much that Bill Clinton got in the line of fire for what he thought was the right thing to do,” Rich tells me in his office, “more so because I believe—independently of the pardon—that he was one of the best presidents the U.S. has had in recent history. Smart, able, eloquent and positive.” He thinks there was a targeted campaign. “The reactions were completely unjustified. Almost al
l of the negative reactions came from interested parties who felt that scandalizing Clinton’s decision would help their own, usually partisan agenda.” “Up to today the main allegation is that you essentially bought the pardon,” I say. “I didn’t,” he answers. “Did you give money to your ex-wife Denise in exchange for her help?” “No,” he says. “I would never give money to my ex-wife.”

  At first, Rich thought that the pardon “gave me back the freedom to travel wherever I want.” He had asked for a pardon, according to Avner Azulay, mainly “so he could visit his daughter’s grave, he could visit his father’s grave, he could visit his family in New York.”27 After the public outcry in the wake of the pardon, though, Rich decided to forgo travel to the United States. “The American law system is peculiar in this respect. It is not possible to get confirmation that all legal proceedings are finished,” he says. “They might still have an unpaid parking ticket of mine from thirty years ago and might make a big case out of it.” I ask him if he intends to return to the United States someday. “Never,” he says firmly. “They would look for some excuse to apprehend me. I don’t want to be exposed to that.”

  Marc Rich had hoped the pardon would allow him to regain his reputation. Now he had again lost control over his own name. Once and for all.

  The FUTURE ACCORDING

  to MARC RICH