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

Felipe Araujo
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Manchester's Muslim community under siege: "We are part of the fabric of this nation"

As the investigation into last week's bombing continues, familiar media narratives about Islam conflict with the city's support for its Muslim population.

“You guys only come when something like this happens,” said one of the worshippers at Manchester's Victoria Park Mosque, visibly annoyed at the unusual commotion. Four days after the attack that killed 22 people, this congregation, along with many others around the city, is under a microscope.

During Friday prayers, some of the world’s media came looking for answers. On the eve of Ramadan, the dark shadow of terrorism looms large over most mosques in Manchester and beyond.

“People who do this kind of thing are no Muslims,” one man tells me.

It’s a routine that has become all too familiar to mosque goers in the immediate aftermath of a major terror attack. In spite of reassurances from authorities and the government, Muslims in this city of 600,000 feel under siege. 

“The media likes to portray us as an add-on, an addition to society,” Imam Irfan Christi tells me. “I would like to remind people that in World War I and World War II Muslims fought for this nation. We are part of the fabric of this great nation that we are.”

On Wednesday, soon after it was revealed the perpetrator of last Monday’s attack, Salman Ramadan Abedi, worshipped at the Manchester Islamic Centre in the affluent area of Didsbury, the centre was under police guard, with very few people allowed in. Outside, with the media was impatiently waiting, a young man was giving interviews to whoever was interested.

“Tell me, what is the difference between a British plane dropping bombs on a school in Syria and a young man going into a concert and blowing himself up,” he asked rhetorically. “Do you support terrorists, then?” one female reporter retorted. 

When mosque officials finally came out, they read from a written statement. No questions were allowed. 

“Some media reports have reported that the bomber worked at the Manchester Islamic Centre. This is not true,” said the director of the centre’s trustees, Mohammad el-Khayat. “We express concern that a very small section of the media are manufacturing stories.”

Annoyed by the lack of information and under pressure from pushy editors, eager for a sexy headline, the desperation on the reporters’ faces was visible. They wanted something, from anyone, who had  even if a flimsy connection to the local Muslim community or the mosque. 

Two of them turned to me. With curly hair and black skin, in their heads I was the perfect fit for what a Muslim was supposed to look like.

"Excuse me, mate, are you from the mosque, can I ask you a couple of questions,” they asked. “What about?,” I said. "Well, you are a Muslim, right?" I laughed. The reporter walked away.

At the Victoria Park Mosque on Friday, Imam Christi dedicated a large portion of his sermon condemning last Monday’s tragedy. But he was also forced to once again defend his religion and its followers, saying Islam is about peace and that nowhere in the Koran it says Muslims should pursue jihad.

“The Koran has come to cure people. It has come to guide people. It has come to give harmony in society,” he said. “And yet that same Koran is being described as blood thirsty? Yet that same Koran is being abused to justify terror and violence. Who de we take our Islam from?”

In spite of opening its doors to the world’s media, mosques in Britain’s major cities know they can do very little to change a narrative they believe discriminates against Muslims. They seem to feel that the very presence of reporters in these places every time a terror attack happens reveals an agenda.

Despite this, on the streets of Manchester it has proved difficult to find anyone who had a bad thing to say about Islam and the city’s Muslim community. Messages of unity were visible all over town. One taxi driver, a white working-class British man, warned me to not believe anything I read in the media.

“Half of my friends are British Muslims,” he said even before asked. “ These people that say Islam is about terrorism have no idea what they are talking about.”

Felipe Araujo is a freelance journalist based in London. He writes about race, culture and sports. He covered the Rio Olympics and Paralympics on the ground for the New Statesman. He tweets @felipethejourno.

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