The King of Oil: The Secret Lives of Marc Rich

David Dinkins once said, were “dangerously close” to a “philosophy that the ends justify the means.” 12 Ed Williams’s biographer described the prosecutor and later mayor of New York City as “zealous and politically ambitious.” 13 According to Leonard Garment, the former special counsel to President Richard Nixon and former U.S. delegate to the United Nations who began to represent Marc Rich in 1985, Giuliani quickly realized that he had a “blockbuster case” on his hands. 14
    The result was a calamitous breakdown in communications between the government and Rich’s lawyers. The situation was worsened by the fact that Rich’s then legal team had attempted all sorts of dubious maneuvers in order to have the case deferred. Sandy Weinberg still has trouble understanding Rich’s behavior. “It was just stupid,” he tells me, shaking his head. “It was self-destructive. He underestimated us. He played games with the documents. He made the case ten times bigger than it ever would have been. If he had stayed here and addressed it, it would have been manageable. He would have done some jail time, you know, but it would have been manageable.”
    The spark in the powder keg was a dispute over business documents belonging to Rich’s companies. After the Southern District had begun its examination of the case, it convened a grand jury that soon began subpoenaing millions of documents from Marc Rich International, Marc Rich + Co. AG, and oil companies and resellers in the United States that had done business with Rich. Marc Rich International—a Swiss subsidiary with a branch office in New York that paid taxes in the United States—complied with the subpoenas. However, Marc Rich + Co. AG, as a Swiss company operating in Switzerland under Swiss law, refused to obey the order. The company argued that Swiss secrecy law prohibited the company from producing documents without the express permission of the Swiss government. 15
Draconian Fine
     
    Nevertheless, District Judge Leonard Sand denied Rich’s lawyers’ motion to dismiss the subpoenas and ordered Marc Rich + Co. AG to produce the documents located at the company’s headquarters in Zug. When the company continued to refuse, Judge Sand ordered a draconian contempt fine of50,000 per day until the documents were delivered. The fine was applied beginning in late June 1983, even though the Swiss government protested the decision with unusual vigor as an unacceptable violation of Swiss sovereignty.
    Rich refused to pay the fine. He secretly sold Marc Rich International to Alec Hackel, his close friend and one of the founders of the company, who then ran the company under the name Clarendon Ltd. in Zug. Judge Sand labeled the sale a “ploy to frustrate the implementation of the court’s order” and threatened to freeze up to55 million of Marc Rich + Co. AG’s assets in twenty American and European banks and other companies that owed Rich’s company money. 16
    Rich’s business was soon suffering under Judge Sand’s record contempt fine and the drastic threat to freeze the company’s accounts. Several business partners and banks pressured Rich to find a solution to the problem. Faced with increasing difficulties in obtaining credit, Rich’s lawyers began to negotiate a resolution. On August 5, 1983, lawyers for both sides met in Judge Sand’s Manhattan apartment and discussed the case until late into the night. They finally reached a deal just before midnight: Rich agreed to pay the New York court1.35 million toward the accumulated fine, to produce the court-ordered documents in Switzerland, and to pay off the remaining fines at a future date. The agreement appeared to smooth all the ruffled feathers, and it seemed as if the case would finally take on a semblance of normality.
    Four days later, however, on August 9, 1983, Weinberg received a telephone call. “A guy said, ‘This is Deep Throat,’ no kidding,” Weinberg recounts. “He called out of Milgrim, Thomajan & Lee, Marc Rich’s law firm, and warned us that subpoenaed documents were beingshipped out of the United States on a Swissair flight. He even called back to give us the correct flight number, SR 111 to Geneva and Zurich.” Weinberg could not believe his ears. He cursed so loudly that his colleagues came into his office to see what was wrong. After he cooled down, he immediately sent a few agents to John F. Kennedy International Airport.
    At 7:00 P.M . the Swissair Boeing 747 was