The King of Oil: The Secret Lives of Marc Rich

and5 million profit in 1973. Marc Rich did not earn much more than70,000 per year at the time; with his bonus included he possibly made100,000. After racking up such amazing trade successes, Rich came to the conclusion that100,000 was nowhere near enough.
    In February 1974 he flew from Madrid to Switzerland to negotiate with Jesselson, who was on a skiing holiday in the Swiss Alps. He demanded a bonus of500,000 for himself and the same again for Green. “My request was influenced by what I knew the company was making,” comments Rich. Jesselson, who was already sixty-three years old, offered Rich150,000. He also tried to persuade Rich to return to New York, where he would become Jesselson’s successor as president of Philipp Brothers. “I said yes, provided we come to an agreement on the remuneration,” Rich told me. Jesselson refused on principle to pay more than150,000. “So I had to leave,” Rich says. “I didn’t want to leave. I had been there for twenty years, I liked the company, I liked Jesselson, and I think he liked me. I always thought that the company would be my career for the rest of my life, but Jesselson got stuck on the principle.”
    As soon as the meeting was over Rich phoned Green, who was inNew York at the time. “I told him that I didn’t reach an agreement with Jesselson.” Pinky did not hesitate for a second. “So we’re going,” he said. That one telephone call would mark the beginning of the most successful commodities company the world had ever seen.

 

     

MARC RICH + COMPANY
     

    T
hings now had to move quickly. After his unpleasant meeting with Jesselson, Rich immediately flew back to Madrid from Switzerland. He went straight from the airport to his office, where he informed his two most important employees what had happened. He intended to leave Philipp Brothers and set up his own company immediately together with Pinky Green. He also told them he was still looking for two or three more business partners. John Trafford, Rich’s personal assistant, and Jacques Hachuel, an oil specialist in the regions of Africa and South America, accepted the offer without a moment’s hesitation: “We’re in,” they said. Green was on the telephone shortly thereafter. He had wooed away Alexander “Alec” Hackel, who had worked with Green at Philipp Brothers’ Swiss offices as an expert on alumina and Eastern Europe.
    Not twenty-four hours had passed since Rich’s split with Jesselson, yet Rich had already put together a core team for his new company—“the Founders” or “the Partners,” as many former employees whom I interviewed for this book almost reverently called them. “We all liked each other, and they felt there was more opportunity to make money,” Rich says. “To make money”—this was a phrase I heard time and againfrom Rich when he spoke of his own motivation or the motivation of others. Money was the prime mover. Senior executives at Philipp Brothers finally realized what had happened when they came together for the traditional group photograph for the 1974 annual report. Rich and Green were absent. “Before the rumors start,” Jesselson began his speech, “I want to say that Rich and Green asked for bonuses so high they would break our rules and traditions. They have separated. It’s time to close ranks.” 1 Their departure was seen by many as an act of treachery. Philipp Brothers was a company where the employees began their careers at an early age and stayed on until they retired. The separation was like separations usually are: bitter. Rich and Jesselson never spoke another word to one another. “It’s a sad chapter in my personal life,” Jesselson said. “They were like my own sons. I brought them up from nothing, and they turned their backs on me.” 2 “He forgot me in his will,” Rich said sarcastically when I asked him about the split. He added, “Jesselson’s wife called my mother and complained.”
    Though the skies were slightly overcast, April 3, 1974, was a warm day in the Swiss town of Zug. Marc Rich + Co. AG was founded that morning in a law firm’s downtown office. The five partners brought a total of 2 million Swiss francs in seed capital to the table. Rich borrowed money from his father-in-law, Emil Eisenberg, as well as his own father. John Trafford sold his vintage car in order to contribute his share of the pot. Alec Hackel had no money at all, so Rich lent it to him. Altogether, 1,055,000 Swiss francs in common