The King of Oil: The Secret Lives of Marc Rich

conduct toward his staff creates a family feeling, and people are proud to work for him,” he says.
Pioneer of Globalization
     
    “Marc Rich was a pioneer. He understood that globalization was going to arrive sooner or later. One of the keys to globalization was oil. It was a product that everyone needed.” The trader who told me this had been a part of the oil trade from its very beginnings. I met him in Madrid, where he now runs his own trading company. His office consists of two small rooms. Three telephones, a secretary, a computer, and the contacts he has established over the years are all he needs to close solid business deals. He spoke with enthusiasm about the 1970s when he was still young and bold. “Oil was the glamour of the time. We, the oil traders, were the prima donnas, the stars of the time. This was completely new. It was a new commodity.”
    I have heard similar stories from various traders who have worked for Rich over the years. They all described discovering and developing new markets as the most fascinating and exciting times of their lives. “It’s the most satisfactory thing when you arrive in a virgin country andyou start investigating,” said a trader who had sought out business opportunities in those African countries that had achieved independence in the 1960s and 1970s. “Who are the key players? How do you get access to them? What business is there for you? And you have a company behind you like Marc Rich + Co. that does not tremble when you negotiate a trade worth a hundred million bucks. This feeling in your body is spectacular.”
    “We were discovering new worlds,” an oil trader who was with the company at the beginning enthusiastically said. It really was a new world. The 1960s and 1970s marked the onset of a wave of globalization that had not been seen since the “First Era of Globalization”—a period of global trade spanning the nineteenth century that ended early in the twentieth with the outbreak of the First World War. This second era had a lasting effect on the global economy. At the end of the 1960s, only 5 percent of the world’s crude oil was traded outside of the Seven Sisters oligopoly. A mere ten years later, more than half of all crude was sold on the spot market or traded at prices that were tied to the market price. 11
    No one knew how to profit more from these developments than Marc Rich, and within five years he had transformed his company into a trading empire. Marc Rich + Co. AG was the first newcomer in many years that had managed to establish itself in the industry—and not as a mere niche vendor but as a global powerhouse capable of pressuring the established powers. By the end of the 1970s, the company had thirty offices around the globe. The five partners divided themselves among New York (Rich and Green), London (John Trafford), Madrid (Jacques Hachuel), and Zug (Alec Hackel).
    Then, suddenly, the international oil market was again struck by a wave of insecurity—the essential fuel of every commodities trader. On Tuesday, January 16, 1979, the 2,507-year-old reign of the Persian monarchs came to an end. Mohammad Reza Shah Pahlavi and Empress Farah Diba left the country. The official explanation stated that the couple was heading to Egypt on vacation, yet everyone knew that they would never return. The protests against the autocratic shah’s absoluterule in the last months of his reign had brought Iran to the brink of civil war. An oil strike in the province of Khuzestan had lamed the nation’s economy and significantly reduced the amount of oil the country could export. With the fall of the shah it seemed as if Rich had lost his most important trading partner: Iran.

 

     

 

     

The
CASE
     

    O
ne morning in the late fall of 1981, the phone rang in Morris “Sandy” Weinberg’s office at 1 St. Andrews Plaza. Weinberg was an ambitious young assistant U.S. attorney for the Southern District of New York. On the other end of the line was a staffer at the Fraud Section of the Department of Justice’s Criminal Division. The Justice Department had received a lead involving a crude oil trader named Marc Rich, who maintained an office on New York’s Park Avenue. “Marc who?” Weinberg asked. “I’ve never heard of a Marc Rich.”
    The former assistant U.S. attorney—today partner in a successful law firm—looks a lot younger than his fifty-seven years of age. He is wearing a blue shirt and a yellow tie and is sipping at a bottle