NS business profile: Marc Rich, Glencore's fugitive founder

Glencore's worst kept secret.

Glencore’s worst kept secret – the company’s former name was that of America’s once wealthiest fugitive. When Marc Rich & Co AG was renamed Glencore after a management buyout in 1993, its founder and namesake was already on the FBI’s Ten Most Wanted List.

Ironically, Marc Rich was not born in the US. He immigrated there in 1941 when his parents fled the war in Belgium. Instead of studying – he enrolled at New York University but dropped out – Rich started his commodities career early at Philipp Brothers (now Phibro LLC).

At Philipp Brothers, Rich pulled off his first Middle Eastern corporate coup. It was 1973, the spring before OAPEC countries imposed the oil export embargo that would wreck havoc on the world’s economies. How he predicted the embargo, and the threefold price increase that accompanied it, is uncertain, but that spring, Rich more or less pioneered a new form of commodities trading. Future trading was the norm in the crude oil market, but realising a price hike was imminent, Rich started buying and selling on the spot (immediate) market. This allowed him to sell on demand as the embargo took effect and, of course, demand and price rose catastrophically.  

Philipp Brothers were appalled, and sold most of the oil before the embargo took effect. Rich resigned and, together with partners Pincus Green and Alec Hackel, founded Marc Rich & Co AG in the laid back rural town of Zug, Switzerland. It was 1974, 20 years before Marc Rich + Co AG would be renamed Glencore, and 37 before its giant IPO.

Trading from his own company, Rich quietly ignored international sanctions. From 1979 to 1993, his company imported 50,000 tons of oil to the heavily sanctioned South African apartheid government according to the Shipping Research Bureau. Then there was Iran.

In the midst of the 1979 hostage crises, the United States banned all oil trading with Iran. Rich, however, ignored these and purchased crude through a maze of front and shell companies.

It was a crime that was only picked up in 1983 by Rudoph Giuliani, then a US Federal Prosecutor. Amid more than 51 counts of tax fraud, $48 m in tax evasion and a 300 year prison sentence, Rich fled to the hills of Zug, not to return to his Fifth Avenue apartment for many years.

Glencore, or Marc Rich + Co AG as it was then, was to remain in Rich’s hands for another 10 years. In 1990, Marc Rich & Co AG became a majority shareholder of another Swiss commodities company called Xstrata.

It was only after nearly bankrupting the company in 1993 through zinc trades that Rich was forced to sell his entire stake of the company to its management. Only then did the company drop the founder’s name, along with his notoriety, to rename itself Glencore.

Bitter at being forced out of his company, where there were already rumours of a Glencore-Xstrata merger, Rich founded another trading company called MRI Trading AG. In 2003, with a $7.5 billion turnover and 240 employees, MRI was sold to Russian Crown Resources.

Rich’s controversy reached its pinnacle when he was pardoned by the US President in 2001. President Clinton made a total of 396 pardons, but the one made to Marc Rich during his last day in office was his most notorious. It emerged only afterwards that Rich’s ex-wife, Denise, was a close friend of the Clintons. The pair had made sizable donations to the Clinton Presidential Library and the Clinton Foundation. 

Although a free man, Rich lives in Switzerland where he enjoys dabbling in the commodities market from time to time. His family office, The Marc Rich Group, guards his estimated $2.5 bn fortune, according to the global wealth consultancy, WealthInsight. This figure includes the superyacht, Lady Joy; a notorious art collection and property in St Moritz, Lucerne, Marbella, Lisbon and Moscow. Through his ‘The Rich Foundation’, he has donated large amounts to Israeli causes and, as a result, been bestowed with honorary doctorates from Bar-Ilan and Ben-Gurion Universities.

No longer a thorn in Glencore’s side, Rich still maintains opinions in the deal that set last week’s headlines: "It is not necessary, because Glencore dominates Xstrata anyway thanks to a large minority stake....The larger a company is, the more market power, it has controlled and thus easier to pricing. In the end, this means higher profits." Rich told the Swiss magazine, Bilanz.

Not that Rich’s opinion counts anymore. No longer a shareholder in either Glencore or Xstrata, he is rarely credited with paving the way for what could be the largest corporate merger in history. As each company comes under scrutiny ahead of the deal, they probably want to forget their match made in lawlessness.

House Hearing on President Clinton's Pardon of Marc Rich. Photograph: Getty Images

Oliver Williams is an analyst at WealthInsight and writes for VRL Financial News

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Inside the progressive alliance that beat Zac Goldsmith in Richmond

Frantic phone calls, hundreds of volunteers, and Labour MPs constrained by their party. 

Politics for a progressive has been gloomy for a long time. On Thursday, in Richmond Park of all places, there was a ray of light. Progressive parties (at least some of them) and ordinary voters combined to beat Ukip, the Tories and their "hard Brexit, soft racist" candidate.

It didn’t happen by accident. Let's be clear, the Liberal Democrats do by-elections really well. Their activists flood in, and good luck to them. But Richmond Park was too big a mountain for even their focused efforts. No, the narrow win was also down to the fast growing idea of a progressive alliance. 

The progressive alliance is both a defensive and offensive move. It recognises the tactical weakness of progressives under first past the post – a system the Tories and their press know how to game. With progressive forces spilt between Labour, Liberal Democrats, Greens, the SNP, Plaid Cymru, the Women’s Equality Party and more – there is no choice but to co-operate, bring in proportional representation and then a whole new political world begins.

This move opens up the wider strategy – to end the domination of the City, and right-wing newspapers like the Mail, so Britain can have a real debate and make real choices about what sort of economy and society it wants. A pipedream? Well, maybe. But last night the fuse was lit in Richmond Park. The progressive alliance can work.

Months before the by-election, the pressure group for a progressive alliance that I chair, Compass, the Greens, and some Labour, Liberal Democrat and SNP MPs and activists, began considering this. The alternative after Brexit was staring into the void.

Then the Tory MP Zac Goldsmith stepped down over Heathrow. To be fair, he had pledged to do this, and we should have been better prepared. In the event, urgent behind-the-scenes calls were made between the Greens and the Liberal Democrats. Compass acted as the safe house. The Greens, wonderfully, clung onto democracy – the local party had to decide. And they decided to stand up for a new politics. Andree Frieze would have been the Green candidate, and enjoyed her moment in the autumn sun. She and her party turned it down for a greater good. So did the Women’s Equality Party.

Meanwhile, what about Labour? Last time, they came a distant third. Again the phones were hit and meetings held. There was growing support not to stand. But what would they get back from the Liberal Democrats, and what did the rules say about not standing? It was getting close to the wire. I spent an hour after midnight, in the freezing cold of Aberdeen, on the phone to a sympathetic Labour MP trying to work out what the party rule book said before the selection meeting.

At the meeting, I am told, a move was made from the floor not to select. The London regional official ruled it out of order and said a candidate would be imposed if they didn’t select. Some members walked out at this point. Where was the new kinder, gentler politics? Where was membership democracy? Fast forward to last night, and the Labour candidate got less votes than the party has members.

The idea of a progressive alliance in Richmond was then cemented in a draughty church hall on the first Tuesday of the campaign – the Unitarian Church of course. Within 48 hours notice, 200 local activist of all parties and none had come together to hear the case for a progressive alliance. Both the Greens and Compass produced literature to make the case for voting for the best-placed progressive candidate. The Liberal Democrats wove their by-election magic. And together we won.

It’s a small victory – but it shows what is possible. Labour is going to have to think very hard whether it wants to stay outside of this, when so many MPs and members see it as common sense. The lurch to the right has to be stopped – a progressive alliance, in which Labour is the biggest tent in the campsite, is the only hope.

In the New Year, the Progressive Alliance will be officially launched with a steering committee, website and activists tool-kit. There will also be a trained by-election hit squad, manifestos of ideas and alliances build locally and across civil society.

There are lots of problems that lie ahead - Labour tribalism, the 52 per cent versus the 48 per cent, Scottish independence and the rest. But there were lots of problems in Richmond Park, and we overcame them. And you know, working together felt good – it felt like the future. The Tories, Ukip and Arron Banks want a different future – a regressive alliance. We have to do better than them. On Thursday, we showed we could.

Could the progressive alliance be the start of the new politics we have all hoped for?

Neal Lawson is the Chair of Compass, the pressure group for the progressive alliance.

Neal Lawson is chair of the pressure group Compass, which brings together progressives from all parties and none. His views on internal Labour matters are personal ones.