The King of Oil: The Secret Lives of Marc Rich

of the company’s South African business, mainly in the manganese and chrome trade, in the late 1970s. Alec Hackel, one of the founders of Marc Rich + Co., was in charge of South African affairs back at company headquarters in Zug. Shortly after the Iranian revolution, the apartheid government secretly approached Fenton in order to discuss oil deliveries, and the two parties soon came to an agreement.
    On April 12, 1979, South Africa signed a long-term contract with Rich for the delivery of large sums of oil. In order to keep their business relationship as discreet as possible, an unknown Swiss company was named in the contract. Minoil was located only a few hundred feet from Rich’s headquarters in Zug. No one knew that Minoil also just happened to be a part of Rich’s trading empire. Switzerland again proved tobe a clever choice for the headquarters of Marc Rich + Co. In those days the neutral country was not a member of the United Nations and did not generally participate in economic or political sanctions.
    Under the terms of the contract, Rich was obliged to deliver oil to South Africa for a period of at least one year. The contract stated that Minoil would deliver 2.4 million metric tons of oil in the first six months followed by 1.6 million metric tons in the second half of the year. Together these deliveries amounted to around one-third of South Africa’s yearly oil needs. South Africa paid Rich an average of32.80 per barrel—8 higher than spot market prices. 18 This contract for approximately 4 million metric tons—nearly 30 million barrels—was worth almost1 billion. Rich was able to make an estimated profit of around230 million.
    South Africa was in a desperate situation and was forced to resort to “unconventional means” in order to secure its oil supply. These were the words that appeared in a report from June 27, 1984, by the advocate general of South Africa, Piet van der Walt, who was investigating rumors of massive corruption surrounding the oil deliveries. One of the most important of the “unconventional means” involved government risk premiums of8 per barrel—the same8 that Rich made above the spot market price. Van der Walt’s report stated, “As a further incentive to international oil companies to supply . . . South Africa with crude oil,8 per barrel of crude oil was paid under a subsidy scheme during 1980. For each barrel of crude oil imported by a company8 per barrel, adjusted in terms of oil quality, was repaid to the company.” 19 South African president Pieter W. Botha later admitted that South Africa, to be able to get oil supplies, had paid between1 billion and2 billion each year above the normal price as a result of the boycott. 20
    South Africa under apartheid is the best example of the double moral standards that are still prevalent in the discussions about ethics in the commodities trade. The list of countries from which the oil for the apartheid regime was obtained reads like a complete list of all oil-producing nations. The oil came mainly from Iran, Saudi Arabia, the United ArabEmirates, and Oman. 21 Oil deliveries also came from Dubai, Angola, Nigeria, Ecuador, Brunei, and the Soviet Union. All of these countries were vocal opponents of the apartheid regime and had loudly proclaimed that they would maintain the boycott against South Africa.
    In reality, however, profit triumphed over principles in these countries. Islamic Iran, the Communist Soviet Union, and capitalist Ecuador were all looking for hard currency. They all made, via Marc Rich, lucrative secret deals with the apartheid regime in South Africa. Rich was used in order to conceal the contradictions between these nations’ political rhetoric and economic deeds, and they were content to let him take the political heat. Today there is absolutely no doubt that Rich was the ostracized regime’s most important oil supplier from 1979 to 1994 (when Rich sold his company). His company was responsible for at least 15 percent of the identified oil deliveries, according to the Dutch Shipping Research Bureau’s conservative estimates. These deliveries consisted of 149 tanker loads—a total of 26.2 million metric tons, or around 200 million barrels, of oil. 22 From information gathered during the extensive interviews that I conducted for this book, I have come to the conclusion that the true sum was actually more in the region of 400 million barrels.
    Rich made a lot of money in those years. “Believe me, we