The King of Oil: The Secret Lives of Marc Rich

Bribes
     
    The House Committee on Government Reform has a completely different opinion of Rich’s success. The committee accused Rich, as described in chapter 2 , of developing a trading empire that “was based largely on systematic bribes and kickbacks to corrupt local officials.” The committee also claimed Rich made his fortune “doing business without legal, ethical, or even moral constraints.” 3 “He is only interested in making money, and for that he is prepared to stop at nothing,” a Swiss trader who had worked for Rich once told me. “Rich is without scruples,” a competitor in the aluminum industry said. “He does not owe his fortune to brilliance alone. People in the trade knew that I, on the other hand, was not for sale.”
    “I don’t agree,” Rich says with little indignation when asked about these accusations. In truth, Marc Rich + Co. would never have been able to make the trades it actually completed if it had not paid bribes—really big bribes. Whoever has worked in the Middle East or Africa knows that it is impossible to do business without paying “
un petit cadeau
” (a little present), a “sweetener,” or baksheesh—regardless of the company code of conduct. According to anonymous traders quoted in A. Craig Copetas’s book
Metal Men
, Rich’s company paid a bribe of125,000 to the director of the National Iranian Oil Company. The book also states that the Nigerian minister of transportation received a bribe of1 million in order to ensure the Nigerian government continued to work with Rich. 4 Although he does not go into the details of these (or any other) bribes, Rich does not deny that he had authorized them in the past. “The bribes were paid in order to be able to do the business at the same price as other people were willing to do the business,” Rich claims. “It’s not a price which is disadvantageous for the government involved in the selling or buying country.”
    Depending on a person’s ethical standards, the bribing of officials or politicians in order to do business in the third world could well be regarded as morally questionable, if not outright unethical andreprehensible. Still, bribery was certainly common practice, and by no means only for commodities traders. The bribing of foreign officials was legal in the United States until the passing of the Foreign Corrupt Practices Act of 1977. In Switzerland it remained legal until 2000. Companies in Switzerland and in many other countries could deduct bribes as “commercially justified expenses” from their taxes. When asked about corruption, Rich’s lawyers maintain that he never broke Swiss law. A trader who was active in African nations such as Nigeria and Zaire—two notoriously corrupt countries—told me, “The law is the benchmark, not your morality. As a trader you should abstract yourself from your personal morality. If you don’t agree, you can leave the company.”
    In some cases, Rich may have been able to close a deal more quickly than the competition thanks to corrupt officials. Bribery may have allowed him to trump his competitors, but it is not realistic to attribute Rich’s success to such activities alone. The fact that Rich was able to dominate the commodities trade for decades is not the result of mere corruption. “The successful traders are not the bribers. They don’t last too long,” said the director of one of the world’s largest trading companies, who did not wish to be quoted by name. “[Rich] has survived because he has the most talent,” according to Slimane Bouguerra, the director of the Algerian state oil company, Sonatrach. 5
The Talented Mr. Rich
     
    A few of Rich’s talents have already been described in this book. Rich was faster and more aggressive than his competitors. He was able to recognize trends before other traders, and he successfully created new markets. Rich himself describes this as his most important skill: the ability to see opportunity. His stroke of genius was the fact that in the middle and late 1970s he had been willing to enter into long-term contracts with Iran, Nigeria, Angola, and Ecuador based on his prediction that the price of oil would continue to rise.
    As countries recognized the value of the services he provided, Rich was able to save his existing contracts and business contacts in various countries even though there had been a change of regime. This is true of Cuba after Fidel Castro’s Communist revolution, Iran after