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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In the 1980s, I went to a rally where Labour Party speakers shared the stage with men in balaclavas

The links between the Labour left and Irish republicanism are worth investigating.

A spat between Jeremy Corbyn’s henchfolk and Conor McGinn, the MP for St Helens North, caught my ear the other evening. McGinn was a guest on BBC Radio 4’s Westminster Hour, and he obligingly revisited the brouhaha for the listeners at home. Apparently, following an interview in May, in which McGinn called for Corbyn to “reach out beyond his comfort zone”, he was first threatened obliquely with the sack, then asked for a retraction (which he refused to give) and finally learned – from someone in the whips’ office – that his party leader was considering phoning up McGinn’s father to whip the errant whipper-in into line. On the programme, McGinn said: “The modus operandi that he [Corbyn] and the people around him were trying to do [sic], involving my family, was to isolate and ostracise me from them and from the community I am very proud to come from – which is an Irish nationalist community in south Armagh.”

Needless to say, the Labour leader’s office has continued to deny any such thing, but while we may nurture some suspicions about his behaviour, McGinn was also indulging in a little airbrushing when he described south Armagh as an “Irish ­nationalist community”. In the most recent elections, Newry and Armagh returned three Sinn Fein members to the Northern Ireland Assembly (as against one Social Democratic and Labour Party member) and one Sinn Fein MP to Westminster. When I last looked, Sinn Fein was still a republican, rather than a nationalist, party – something that McGinn should only be too well aware of, as the paternal hand that was putatively to have been lain on him belongs to Pat McGinn, the former Sinn Fein mayor of Newry and Armagh.

According to the Irish News, a “close friend” of the McGinns poured this cold water on the mini-conflagration: “Anybody who knows the McGinn family knows that Pat is very proud of Conor and that they remain very close.” The friend went on to opine: “He [Pat McGinn] found the whole notion of Corbyn phoning him totally ridiculous – as if Pat is going to criticise his son to save Jeremy Corbyn’s face. They would laugh about it were it not so sinister.”

“Sinister” does seem the mot juste. McGinn, Jr grew up in Bessbrook during the Troubles. I visited the village in the early 1990s on assignment. The skies were full of the chattering of British army Chinooks, and there were fake road signs in the hedgerows bearing pictograms of rifles and captioned: “Sniper at work”. South Armagh had been known for years as “bandit country”. There were army watchtowers standing sentinel in the dinky, green fields and checkpoints everywhere, manned by some of the thousands of the troops who had been deployed to fight what was, in effect, a low-level counter-insurgency war. Nationalist community, my foot.

What lies beneath the Corbyn-McGinn spat is the queered problematics of the ­relationship between the far left wing of the Labour Party and physical-force Irish republicanism. I also recall, during the hunger strikes of the early 1980s, going to a “Smash the H-Blocks” rally in Kilburn, north London, at which Labour Party speakers shared the stage with representatives from Sinn Fein, some of whom wore balaclavas and dark glasses to evade the telephoto lenses of the Met’s anti-terrorist squad.

The shape-shifting relationship between the “political wing” of the IRA and the men with sniper rifles in the south Armagh bocage was always of the essence of the conflict, allowing both sides a convenient fiction around which to posture publicly and privately negotiate. In choosing to appear on platforms with people who might or might not be terrorists, Labour leftists also sprinkled a little of their stardust on themselves: the “stardust” being the implication that they, too, under the right circumstances, might be capable of violence in pursuit of their political ends.

On the far right of British politics, Her Majesty’s Government and its apparatus are referred to derisively as “state”. There were various attempts in the 1970s and 1980s by far-right groupuscules to link up with the Ulster Freedom Fighters and other loyalist paramilitary organisations in their battle against “state”. All foundered on the obvious incompetence of the fascists. The situation on the far left was different. The socialist credentials of Sinn Fein/IRA were too threadbare for genuine expressions of solidarity, but there was a sort of tacit confidence-and-supply arrangement between these factions. The Labour far left provided the republicans with the confidence that, should an appropriately radical government be elected to Westminster, “state” would withdraw from Northern Ireland. What the republicans did for the mainland militants was to cloak them in their penumbra of darkness: without needing to call down on themselves the armed might of “state”, they could imply that they were willing to take it on, should the opportunity arise.

I don’t for a second believe that Corbyn was summoning up these ghosts of the insurrectionary dead when he either did or did not threaten to phone McGinn, Sr. But his supporters need to ask themselves what they’re getting into. Their leader, if he was to have remained true to the positions that he has espoused over many years, should have refused to sit as privy counsellor upon assuming his party office, and refused all the other mummery associated with the monarchical “state”. That he didn’t do so was surely a strategic decision. Such a position would make him utterly unelectable.

The snipers may not be at work in south Armagh just now – but there are rifles out there that could yet be dug up. I wouldn’t be surprised if some in Sinn Fein knew where they are, but one thing’s for certain: Corbyn hasn’t got a clue, bloody or otherwise. 

Will Self is an author and journalist. His books include Umbrella, Shark, The Book of Dave and The Butt. He writes the Madness of Crowds and Real Meals columns for the New Statesman.

This article first appeared in the 25 August 2016 issue of the New Statesman, Cameron: the legacy of a loser