Metal Men: Marc Rich and the 10-Billion-Dollar Scam

by A. Craig Copetas

  Such knowledge, however, was essential to grasping the bewildering business dynamic of Thailand and figuring the best way of milking profit out of the fifty-year succession of fourteen coups, fifteen prime ministers and forty-four cabinets. Business in Thailand was linked inextricably to negotiating with the military, the dominant force in the country. Mantell understood that Thailand’s barracks had never been united and that it was good sense for a Thai general to maneuver himself into a position of power by purchasing his own cache of weaponry.

  Edmond Mantell was the candy man, a Rich field agent who managed to stabilize sensitive situations through promise and payoff. Thailand, Malaysia, Burma, China — the country or the conflict mattered little to Mantell as long as Marc Rich wanted to create a situation. He was a frequent visitor to Hong Kong and the Peninsula Hotel on Kowloon Island, spending his afternoons brokering arms and metals in the hotel’s famous marble lobby while the cream of Asian society sipped four-o’clock tea alongside tired American tourists relaxing in comfort after two-week package deals to the Great Wall. A heavy and melancholic drinker, he often rode the Star Ferry across the choppy bay to drink at the Captain’s Bar at the Hotel Mandarin with Western traders preparing to visit Chinese metal merchants on the mainland.

  Mantell knew how China worked better than Pearl Buck did and downed more fiery shots of Kweichow moutai with the country’s industrial leaders than did any Western economic attaché. He never missed a Guangchou Fair, the industrial forum held every spring and fall in the Chinese city formerly called Canton. Before train and plane services were initiated between Hong Kong and Guangchou, Mantell chugged up the Pearl River in a motorized junk and crossed the frontier by mule cart to buy or barter for freighters of tantalum, wolfram, and low-grade silicon. “Edmond was not your usual troubleshooter,” one of his colleagues from China explained. “He was always grumbling that he got the shit assignments. After a few drinks he would start boasting that he could put together any kind of deal but that his bosses would never let him.”

  Mantell never carved a niche for himself in the Inner Circle boardroom because he didn’t have the ingenuity necessary to formulate the grand deals Rich loved. He was a bureau chief, an executor who materialized Zug-created situations that were based on local market information he had filtered to Rich via telex. His flaw was an imagination that allowed over twenty years in Bangkok to mislead him into believing that he owned the capacity to manipulate his connection with Zug to wheedle the Orient’s powers-that-were into helping him create his own situations outside the Marc Rich group. “The last time I saw Edmond, he was drinking heavily and was worried about a deal he was working on,” said a tungsten trader who had drunk highballs with Mantell in Bangkok in late 1982. “He wouldn’t talk about it, but from the look on his face, I’d say he was frightened about something.”

  Mantell apparently fled his sixth-floor office in Bangkok’s Chongkolnee Building in January 1983, flying first to Germany and then traveling to Monte Carlo in early April. Mantell and his wife, Hildegard, moved into a temporary apartment on the Monaco waterfront until his Eze condominium could be furnished. His days were spent drinking in cafés along the Côte d’Azur, and he often drove to Nice, where he dined at the trendy Chantecler Restaurant in the Hotel Negresco along the Promenade des Anglais. Why he left Bangkok so quickly was a popular topic of conversation among the friends and business associates he left behind. No one had a good answer. “He probably woke up one morning and saw himself in the middle of something that he had no control over,” remarked an English trader who had dealt closely with Mantell for twenty years. “You just don’t leave Bangkok overnight. It doesn’t work that way unless something went sour. Bangkok is the nastiest place in the world when something goes wrong.”

  Four months later Edmond Mantell was dead, the body discovered by a concierge who used his passkey to let in the man who had arrived to deliver furniture to the ground floor duplex Mantell had bought a few weeks earlier. The ordeal had swelled the body out of shape. The murderers had first bludgeoned Mantell selectively with wine bottles and a telephone. He was picked up and flung repeatedly into the living room wall like an uncontrolled battering ram. The force of the thrusts gouged the wall. Tracks of curdled blood on the brown shag carpet indicated that Mantell was dragged into the bathroom, where he was scourged with more wine bottles and loose toilet fixtures. Plastic-coated copper wire from an alarm system that had yet to be activated was jerked from the wall and spun around the limp torso as if it were a casting fly. The police said the knots were professional.

  Probably the last thing Edmond Mantell ever did was moan; his mouth was stuffed with wallpaper, coarsely textured and with a floral design. The body was left alongside the tub. The coroner indicated torturing commenced around seven P.M. and that Mantell died around midnight. Ritualistic killings in Bangkok were designed to leave an intimidating message, but in the tourist village of Eze, it was simply a murder that people wanted to forget about quickly.

  Six months later Interpol arrested two Swedish men outside of Stockholm. Newspaper deliveryman Jan Kare and kitchen-maker Mikaël Grönhall, both in their early twenties, were charged with the murder of Mantell, whom they claimed first to have met drinking on the afternoon of April 26. The prosecution contended that Mantell had lunched with his assassins in Monte Carlo. Then, for reasons unknown, they accompanied Mantell back to the Les Jardins de l’Ibae apartments at dusk in their victim’s Volkswagen Rabbit. After more drinking at the apartment, the trio walked into Eze to drink further at a cafe overlooking the corniche. They returned to apartment 314 a little before seven P.M.

  Concluding their systematic flogging of Mantell, the pair stole the Volkswagen and sped east to Monte Carlo, where they dumped the car, caught a westbound train to Nice and checked into a cheap hotel. Two days later Kare and Grönhall arrived back in Sweden. Police traced them through the hotel registration forms. The official police report discounted the murder as being sexually oriented and stated that Mantell was a victim of indiscriminate violence, probably as the result of drunkenness, because there was no evidence to indicate that the murder had been motivated by anything else. But investigators said privately that Mantell could have been the target of professionals, left to die after being tortured for information. “The beating seemed too well thought out,” said a policeman who viewed the murder scene. “Someone wanted to know something.”

  It was never clear what the two Swedes were doing in Monte Carlo or why they accompanied him to a totally bare apartment. A French policeman who investigated the murder indicated privately that there was one curious twist to the trial. In a Swedish court, because of a reciprocity agreement with France, the defense astonishingly asserted that Kare and Grönhall — who gave no reason for their atrocity — did not actually murder Mantell, because the trader didn’t die officially until two hours after the Swedes left the apartment. The Swedish court bought their plea and handed the two men sentences of five years each in prison.

  To the metal men who knew Mantell, his death suggested that negotiations with Marc Rich once settled with handshakes were now being settled with hit men. “It never made any sense,” an Associated Metals trader who knew Mantell emphasized. “Strange that he was killed by two Swedes. The Swedes have more business interests in Thailand than any other country. Edmond used to broker Krupp arms to the Thais through some Swedes. Funny.” Those who believed Mantell’s death to be nothing more than the work of psycho-thugs observed that he never liked drinking alone and that his death probably resulted from a drunken argument. Although the truth may forever rest somewhere in between, the event added more drama to the Marc Rich legend. It was not so much that Mantell — a heavy drinker with a history of being an exceptionally rude and morose individual — had been killed, but that nobody in the gossipy metal world knew any of the details. “It was a real mystery,” said a senior Rich trader, who added that the murder was a sour topic of conversation in the New York office and that all questions direc
ted to Rich about what happened to Edmond Mantell were answered with one of his icy stares.

  The most popular theory, according to interviews with Mantell’s associates in Bangkok and his colleagues at Marc Rich, was that a Mantell-brokered deal blistered when Mantell demanded that a group of Thai admirals return a portion of the money he had paid for a load of faulty handheld surface-to-air missiles. Exponents of this hypothesis point out that it’s quite often necessary to deal with a Swede at some point if a trader wants to smuggle something into or out of Thailand. “Many of us were left with the impression that Edmond was in trouble because of a botched arms deal and Marc left him out to dry,” a Rich trader in New York explained cautiously. “It unnerved the entire office.”

  Detailed reasons for Mantell’s death will probably never be known, but like all things in the trading world, the event was more important than any motivating truth. The story was that Edmond Mantell was dead, murdered violently in a French village where he had escaped to avoid some horrible Bangkok fate. Even if the death was an accidental murder, it was yet another inevitable result of working in the world he played in. Rich’s traders were known for their unrestrained behavior and, if the deal warranted, the ability to go to any lengths to create a situation. “If you open up your vest,” said a trader of Mantell, “you have to expect getting a knife shoved in.” Men like Mantell fed the Rich myth, both in life and in death.

  Mantell’s burial also amplified the questions that many of Rich’s younger traders had been asking themselves for years. By the late seventies, there was little delight and a great deal of heaviness associated with working for Marc Rich. “The problem was that the company Rich created grew too big too fast,” one of Rich’s former shareholders explained. “Marc had lost all touch with reason to such an extent that he believed only his decisions to be the right decisions.”

  To his credit, Rich established a nearly perfect team of traders, but it was also becoming apparent that some heavy-handed generals were emerging from their ranks. New recruits, hired for their flair and enthusiasm, were growing increasingly disgusted by the exploitive manner in which Inner Circle bosses such as Manny Weiss, Paul Wheeler, and Danny Dreyfus managed their deals just to keep Rich content. “Many traders urged Marc to split the place up into smaller units where individuality could best be taken advantage of,” said one of Rich’s senior executives. “Marc wouldn’t listen, and it was ironic since he left Philipp Brothers because the power there refused to listen to his ideas.” Malcontent traders didn’t complain too loudly over what was required of them. Far from it: They were Rich’s obedient servants, proportionately loyal to their salaries and trying constantly to argue that their psychic exhaustion could be overcome with another shot of whiskey or a purer line of cocaine.

  “There was something wrong with the way we were living,” said a Rich trader spikily. He is thirty-two years old, but with a brow that looks plowed by a tractor and hands that shake like tin lids on violently boiling pots of water. “I was twenty-five when I went to work for Marc. It wasn’t the drugs or the pressure that got to me. All the young guys he hired could handle that better than the older traders. The problem was a lot more basic: What the hell were we doing with ourselves to make this kind of money? The lifestyle was terrific, but you could never throw the feeling that it could blow up in your face at any moment. No one in the office wanted to hear about it because no one had an answer.”

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  Chapter 14

  “The whole world is about three drinks behind.”

  — Humphrey Bogart

  THE HIGH-PITCHED motion of a Marc Rich office unnerved even young traders accustomed to the fast lane. They had all been hired to make money for the company, of course, and as long as they continued to electrify profits, then Rich did not care if they refused to embrace the traditional temperance most major corporations demanded of their employees. Rich’s attitude resulted from a keen knowledge of the tension associated with trading. Unlike the owners of other commodity firms, Rich never bought the argument that the trading profession was a young man’s game. Rich believed that the money he paid traders cushioned any psychic or physical pressure and that a trader with enough cash in his pocket should be able to trade forever, not burn out by the age of twenty-nine. So it was okay if a Rich trader needed to wire his brain as insulation from pressure, but only as long as the trader made money. And making money for Marc Rich was never a problem because the rules Rich lived by all but gave traders a license to print any major currency.

  “Traders at Rich liked to explain how they could bribe foreign officials without having to go to jail,” said John Hughes of LHW Futures. “They were extremely proud of their ability to pay off despots with impunity because Marc Rich was a private company and was not under the same bribery regulations that hindered companies after Lockheed got caught bribing people to buy airplanes. Rich’s people loved to boast how much money there was to be made if everybody could bribe.”

  The day-to-day cash flow of the Rich empire came from metal contracts secured through floor brokers or consumers who accepted a trader’s guarantee that he would be able to find the metal when it was time to deliver. Absent the metal, a trader is obliged to pay his customer the difference between his offered price and the actual market price — the pernicious “margin” that rules a trader’s very existence.

  Nearly all the metal Rich traded was consigned to the 200,000 square meters of warehouse space owned by the Rotterdam firm of Steinweg, the largest warehouse operation in the world and the place where orange pekoe tea was born when a warehouseman left a load of oranges atop a shipment of Oriental tea. Although a trader’s metal rarely left Steinweg or another warehouse unless sold to a consumer, warehouse managers transferred seventy thousand tons of commodities a week, much of it in the form of ownership documents moved strategically like paper chessmen between companies. Knowing how much metal he had, how much he had paid for it, and where it was at any given time were the most important elements of a trader’s day.

  “Most of us ended up trading because there was no other business for us to go into,” one of Rich’s lehrlings explained. “It was the same at all the commodity firms. They needed young people with no experience whom they could train, but we were very different from the traders who hired us. The traders in my crew protested the Vietnam War, smoked dope all through college, and graduated as hippies. We were wanderers without work. Then all of a sudden we packed in the fantasy world for making a lot of money. Becoming a commodity trader was the only option. You didn’t need a business degree, just some gambling smarts and a lot of strength.”

  “Making eighty grand a year when you’re twenty-six and having your boss tell you that he’s going to hide part of it in an offshore account for you really strokes the ego,” said a trader who helped pay his Manhattan rent by dealing pound parcels of marijuana before entering the Marc Rich traffic department. “You could do anything as long as you produced deals. Money was no object. We’d put cocaine, women, cars, records, anything on our expense accounts. Nobody cared. After a while, it began to dull the senses. You wanted out, but no one could ever bring themselves to leave. Rich was a drug.”

  The fellowship born of this cultural confusion was an informal group of ten traders who called themselves the Heavy Metal Kids. The Kids — all hotshot traders from Marc Rich, Wogen, Brandeis, Mercer International, Derek Raphael, Tower Metals, and Associated Metals — were founded after they lost money on a cadmium deal instigated by Klaus Busch, a trader for Mondial, a German metal firm. Busch had been promoting cadmium heavily and brought his pitch to London, where he entertained a few traders at Miranda’s, a Carnaby Street strip joint known for scantily clad leather girls flogging drunks with velvet whips. By the third round of drinks, Busch began complaining that a major market for antimony trioxide — used in automobile batteries and as a fireproofing agent — had vaporized because of new regulations banning fire-retardant baby clothes in America. It turned out t
hat antimony trioxide, a product of stibnite ore with a history of profitable selling for anywhere between $600 and $7,200 a metric ton, was a carcinogenic material. In between unwrapping themselves from the ten-foot velvet bullcrackers strung around their bodies by the dancing girls, the traders pressed Busch on what he thought would be the next profitable metal. Busch said cadmium, another highly toxic metal removed from zinc ore with sulfuric acid and used to make polyvinyl chloride stabilizers and sprinkler systems.

  “We were shit-faced drunk when we walked out of Miranda’s,” recalled one of the traders. “We got into someone’s car and took a wrong turn down Carnaby Street, which is a pedestrian zone. People were yelling at us through the window and pounding the car with their fists, but the only thing we could hear was how much money we were going to make after pushing cadmium above its all-time high price of $5 a pound.”

  Before noon Tuesday Busch began unloading hundreds of tons of cadmium to the traders he had frolicked with the night before at Miranda’s. By the time New York opened, every trader with a telephone was looking for cadmium. And the quantities they were asking for were staggering. Cadmium was traditionally offered in lots of sticks or ingots and sold in quantities no bigger than five tons, but now traders were pleading with Busch for shipments of fifty to a hundred tons.

  “Klaus, what’s your price for cadmium?”

  “I’m a buyer at three and seller at four if I have it.”

  “I’ll buy a hundred tons.”

  “Booked!”

  “Klaus: I want another fifty tons!”

  “Booked!”

  “I thought you didn’t have that much left?!”

  “Found some more.”