My encounters with Marc RichJuly 2, 2013: 2:07 PM ET
A Fortune senior editor-at-large recounts how he landed an exclusive interview with the elusive late financier.
By Shawn Tully
FORTUNE -- It was the "get" of a lifetime. In late 1986, Marc Rich –– America's most-wanted white-collar fugitive –– agreed to spend an entire day with me in his sanctuary, the famously ritzy hamlet of Zug, Switzerland. No other U.S. journalist had ever spoken to the shy, secretive Rich. But smoking Cuban cigars and downing diet-Cokes in his office, his narrow face framed with black, bushy sideburns, the patrician, soft-spoken Rich was amazingly confessional and candid. "I've been portrayed in a horrible way," he told me. "As a workaholic, a loner, a money machine. I'm a modest, quiet person who has never done anything illegal." What followed that day was a kind of moveable investigative feast that started in the six-story blue-reflecting glass headquarters of his company, Marc Rich AG, and shifted to his chalet-style home overlooking the misty lake of Zug, where I viewed his collection of Miros and Giacomettis and listened to his songwriter wife Denise laud what she described as Marc's mythic strength and generosity.
On June 26th, Marc Rich died at age 78, still living near Zug. In the years between, he'd seen the trading firm he built from a cramped apartment grow into Glencore Xstrata, the world's biggest commodities trader, endured a bitter divorce from Denise that cost him a reported $365 million, and had striven unsuccessfully to settle the charges against him and restore his reputation. In a final twist to his mercurial saga, Rich deployed his fortune and dues from politicians to secure a full pardon from Bill Clinton on the former president's final day in office in 2001, virtually the only time a fugitive has ever been exonerated, and a decision universally vilified by both the press and the prosecutors who worked on and followed Rich's case.
Back in 1986, I was thrilled to secure that exclusive because Rich wasn't just another tycoon on the lam, like Robert Vesco, then domiciled in Cuba. This brilliant trader was accomplishing one of the most extraordinary, unlikely feats in the annals of capitalism: Running a global commodities colossus trading everything from aluminum to zinc beyond the reach of prosecutors, who'd indicted him in the biggest tax fraud case in U.S. history on charges that carried a 325-year jail term. I'd actually written a story on Rich, "Secrets on Marc Rich," three years earlier with my colleague Ford Worthy, without his cooperation. In reporting that story, I'd closely followed his extraordinary career and the highly publicized case that barely slowed his remarkable ascent.
In 1982, U.S. Attorney Rudy Giuliani convened a grand jury to investigate if Marc Rich AG had violated the price controls on newly-produced oil to generate $105 million in illegal profits, then shipped the money offshore to dodge $48 million in taxes. Rich unwisely refused to cooperate with the investigation, claiming that Marc Rich AG was a Swiss company and shielded from American laws, even though Rich had long been running the company from New York. Rich later argued that Swiss secrecy laws prevented him from releasing documents, a position that infuriated prosecutors.
Fearing they'd be indicted, Rich and his partner Pincus Green fled to Switzerland, where their company had a big trading operation. Several months later, the grand jury issued a 65-count charge against Rich and Green that encompassed the oil price violations, tax fraud, and trading oil with Iran during the hostage crisis in 1980 and 1981. Had Rich and Green simply agreed to settle the case, they would probably have avoided any criminal action, and been lauded as extraordinary entrepreneurs instead of reviled as fugitives. The oil majors routinely abused the maddeningly complex, misguided oil price controls and escaped prosecution by paying fines.
Even as fugitives, Rich and Green skillfully used money and machinations to keep their business thriving. After Giuliani criminally indicted their U.S. subsidiary, Rich and Green paid $50,000 a day in fines for more than a year to maintain operations and finally settled all charges for $150 million (total cost: $171 million). That left even their U.S. arm as free to trade as any rival. The Swiss government refused American demands to extradite Rich and Green on the grounds that tax evasion isn't a crime in Switzerland. Spain, where Rich had worked for 13 years for trading house Philipp Bros, granted Rich citizenship, and also refused to extradite him. Rich regularly vacationed at his seaside pleasure dome in Marbella, comprising three sleek houses shaded by Lebanese pines with room for forty guests, hosting an A-list of celebrities that included opera star Placido Domingo.
His money also won him great favor among the Swiss. The attorney general of the canton of Zug and other officials served on the boards of charities he established. Those officials didn't relish answering questions about their benefactor. "You're not going to squeeze me like a lemon," remarked one person I was attempting to interview.
During my reporting on the first Rich story, I'd learned that his life story had been a primer in the art of survival. An only child, Rich was born in Antwerp, where his father was a prominent diamond dealer. The family fled the Nazis to Morocco, and spent nightmarish weeks confined to an interment camp. Rich arrived as a seven-year old refugee in, of all places, Kansas City, where his father opened a jewelry store. A few years later, the family moved to New York, and his father established a highly successful burlap bag exporting business. In 1963, Rich dropped out of NYU to work in the mailroom of commodities giant Philipp Bros. Over the next 21 years, Rich performed brilliantly in a series of foreign assignments, including that long stint in Spain, rising to become heir apparent to trading legend Ludwig Jesselson.
But Rich and Green clashed with Jesselson over their bonuses in 1973, then departed with half-a-dozen of Jesselson's best traders to start their own operation, named for Marc Rich himself, that would eventually dwarf their alma mater.
When I approached Rich in 1986 for an interview, he dispatched his attorney, Leonard Garment, to Paris to interview me first, as a kind of audition. Garment was the ultimate politically connected attorney, with a glittering resume that including a two year-stint as special counsel to President Nixon. Garment regaled me with stories of how he'd befriended Nixon when he joined Garment's law firm while in the political wilderness in the early 1960s, and how, after a story appeared in which Garment confessed "I can be mean," the President took him aside at a White House reception and lectured him, no humor intended, "Now, Len, don't be mean!" Garment was also a former jazz musician who played saxophone in a New York-based band alongside section-mate Alan Greenspan.
Garment confided to me that Rich had summoned a group of his closest friends and advisors from far and wide to discuss whether he should grant the interview. Among the counselors was an octogenarian rabbi and hotel magnate from Spain who'd been a mentor to Rich. At one point, Garment related, the sage rabbi interrupted the discussion to ask, "This Tully, is he Jewish?" evoking gales of laughter from the assembled, and a rejoinder from Garment that Tully was most likely a nice Irish boy.
The highly personable and widely respected Garment recommended that Rich speak to me. The discussions began in his Zug headquarters appointed with salmon pink carpeting and elevators streaming soft jazz. I opened with questions about the business. Even though Rich couldn't travel to most of the countries where he did business for fear of being arrested by Interpol, his company was already gigantic. Rich gave me numbers that no other reporter knew: Marc Rich AG generated $12 billion a year in trading volumes, earning around $100 million a year, figures that would multiply in the years to come. A swashbuckler, he swore, he was not. "We're not sexy or speculative," he said, "We buy commodities only after lining up a buyer first, and take a small markup or commission. Buying commodities any other way is incredibly risky."
Rich exuded an air of dour, world-weary gentility. He spoke in extremely soft tones, with a slight European accent that was hard to place. His account of his rupture with Jesselson was typically understated: "Jesselson talked about handing over responsibility to me, but he really didn't mean it. He still wanted to control the company." Notoriety clearly disturbed him. "People point and gesture when I walk into a restaurant," he complained. He confessed to being extremely shy, and even unforceful. "When I fire a person, sometimes they don't notice right away," he quipped. In the course of interviewing present and former colleagues, another highly impatient, demanding side emerged. Rich apparently hated long-winded conversations. His office featured an electrically operated door so that Rich could buzz in visitors without leaving his desk. When bored, he'd leave his desk without saying a word and buzz himself out, dispatching an underling to finish the meeting.
It was also clear from those conversations that Rich could evoke tremendous loyalty. His Swiss attorney and others said that Rich would write highly emotional, handwritten letters thanking them for a job well done, or congratulating them on a wedding or the birth of a child.
My overall impression: Rich was so colorless he was colorful. He did show flashes of humor. Asked where he could travel, he declined all specifics, except to note, "Not to the U.S., that would be a one-way trip!" To my amazement, we were joined by someone I never thought I'd meet, Rich's partner, Pincus Green. The Brooklyn-bred Green had avoided extradition by becoming a Bolivian. I'd heard that Green was a great jokester with a style all his own –– he'd stand in line at airports to travel coach, explaining, "It's the same airplane, why pay more?" An Orthodox Jew, Green drove around his neighborhood in nearby Zurich in a mud-spattered Oldsmobile.
Upon entering Marc's office, the tall, crew-cut Green declared, "You came to see Marc, so here I am!" Known as the "Admiral," Green was practically a walking database of shipping rates, especially for oil tankers. That elicited the query, Pinky, how's the oil business? He quipped: "Isn't that the stuff you pack sardines in?" I don't know what inspired this question, but it was inspired: "Pinky, what do you think of women's liberation?" Answer: "Never heard of it!"
At lunchtime, we drove to Rich's hilltop home, named Himmelreich, which is German for paradise. Rich spoke Spanish with his three daughters, and even to "Macho," his terrier. Denise Rich was the antithesis of her husband, a gregarious optimist who gushed, "I'm surrounded by positive energy!" She described how when they first met, Marc had invited her on a date on New Year's Eve in 1965, and she agreed to go if he could find dates for her roommate and another friend. He complied, and when he heard her mother was in a New York hospital, the relentless trader tracked her down and sent her flowers. Denise also described how the family, avid skiers all, had taken an unmarked trail while on a vacation in Squaw Valley, and gotten hopelessly lost. It was her stalwart husband who kept them walking and praying, she said, until they were found, almost frozen to death, two days later.
Denise had just written a hit called "Frankie" for the group Sister Sledge, and issued an album for MCA, "Sweet Pain of Love." She said she'd pondered writing a tune called "Marc Against the World."
My story appeared under the title, "Lifestyle of Rich the Infamous," a derivation on the TV show, "Lifestyles of the Rich and Famous." It's hardly surprising that Rich liked neither the story nor the title, although I'd found him both frank and humble, and clearly a business genius. If ever two people less needed to cheat or scheme to make money –– if they did as prosecutors allege –– it was Marc Rich and Pincus Green. Despite the Clinton pardons, Green got one as well, this brilliant pair never redeemed their tarnished reputations. Seldom has so much wealth, so much success, even so much grudging respect from rivals, been overshadowed by so much tragedy –– tragedy they brought on themselves.