The King of Oil: The Secret Lives of Marc Rich

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CLANDESTINE TALKS
     

    T
he group that came together on July 28, 1992, in Zurich was an illustrious one. Fittingly, they chose to meet in the best hotel in town, the luxurious Grand Hotel Dolder perched high above summery Lake Zurich and set against the backdrop of the perpetual snow of the Swiss Alps. Leonard Garment, Marc Rich’s well-connected Washington lawyer, believed the time had come to have another go at persuading the prosecutors to discuss a settlement in the Rich affair.
    Eleven years had passed since Sandy Weinberg had been put on the Marc Rich case. In the meantime, both the U.S. attorney and the assistant U.S. attorney responsible for the case had changed. Weinberg had left the post in 1985 to work as a lawyer in Florida. The Rich case had been a first-class springboard into an extremely lucrative career in corporate law. Weinberg, by the way, still refers to it in his own publicity material: “As a 32-year-old prosecutor, he led the prosecution against international financier Marc Rich and his network of commodity trading companies in one of the most celebrated tax fraud cases in U.S. history. Mr. Weinberg was able to unravel Rich’s complicated fraud scheme and successfully battle against his team of veteran lawyers from the best firms in the country.” 1 Giuliani, for his part, had left public office andbecome a partner in a law firm after failing to be elected mayor of New York in 1989. He would win four years later.
    Leonard Garment, the former White House counsel for Richard Nixon, was hoping that their successors would see the case less emotionally. He was hoping they would be more prepared to concede what he regarded as fundamental weaknesses in the case against Rich. In November 1990 Garment contacted Giuliani’s successor, Otto G. Obermaier. “The dispute and the accompanying threats and publicity ballooned beyond all legitimate proportion,” Garment wrote in a twenty-page memo to Obermaier. “The case involves many disturbing features, but at its core are transactions which were not criminal. It employed an unprecedented use of RICO that resulted in the defendant’s capitulation, without trial, to the government’s charges. . . . The circumstances of the case, the consequences of its outcome, and the extraordinarily important questions of criminal law enforcement it poses, justify considering such a review.” 2
Secret Meeting with Marc Rich
     
    Obermaier actually agreed to discuss the case with Garment, and he was even willing to travel to Switzerland to meet Marc Rich in person. Traveling to a foreign country to negotiate with a defendant was a highly unusual step for a U.S. attorney to take. It awakened Rich’s hopes that Obermaier was amenable to negotiations. These expectations were reinforced by the fact that Obermaier was being accompanied by Assistant U.S. Attorney James Comey.
    That is how Obermaier and Comey came to be sitting around a table with Marc Rich, Leonard Garment, and André A. Wicki, Rich’s Swiss attorney, in the Grand Hotel Dolder in Zurich at lunchtime on Tuesday, July 28, 1992. Before getting down to business, the adversaries ate
Zürcher Geschnetzeltes mit Rösti,
a local specialty consisting of a ragout of veal and mushrooms in a cream sauce served with hash browns. After lunch, Garment and Wicki set out their client’s position (see chapter 10 ).“Because the case was billed as the ‘biggest tax fraud case’ in history, we asked the prosecutors to review the Wolfman-Ginsburg tax analysis. We once more offered to make the [tax] professors available to address any flaws the Southern District might find in their analysis,” Wicki recounted to me. “It was easy to talk to them,” Rich recalls. His side presented their four most important arguments: the tax professors’ conclusion that Rich’s firms had correctly declared all of their earnings and deducted the right amount of taxes; the lawyers’ view that the “draconian” racketeering statute was a “sledgehammer,” inappropriate in the circumstances; the fact that all comparable cases had been pursued in the civil rather than the criminal courts; and the Department of Energy’s conclusion in a related case that the transactions being objected to by the prosecution had been correctly accounted for by Rich’s firms.
    “Obermaier and Comey listened patiently,” says Rich. “At first I thought the meeting was positive.” The atmosphere may not have been exactly