The King of Oil: The Secret Lives of Marc Rich

burst,” they told him. He refused to listen to them and made no attempt to rein in Rosenberg. He was ignoring one of his own most important business principles, for Rosenberg had done nothing to hedge his long position. The company had no way of controlling its losses when the zinc prices began to plummet.
    Rich’s actions were an affront to his senior traders. They were the metals experts—not Rich. “Not that I want to belittle Marc’s knowledge, but he was not in his element,” one of Rich’s former senior traders told me. “He’s not a metals and minerals guy, he’s an oil guy.” Rich not only lost his managers’ support, he also lost their trust.
Defections
     
    Although Marc Rich + Co. had been a close-knit family-like organization for nearly twenty years, things began to unravel. One of the most important indications that all might not be well at the company came in June 1992, during the zinc fiasco. Rich unexpectedly fired Willy Strothotte, a German who had worked for him for fifteen years, the last two as his right-hand man. He had successfully directed the minerals and metals division at Marc Rich + Co. and had made the company into a true market leader. Even Strothotte’s rivals were quick to point out his abilities as a brilliant trader and strategist. Rich’s official statement claimed that Strothotte’s leaving was a consensual decision, the result of “different views on how the company should be managed.” “There is nothing sinister about this,” Strothotte said when he left. “I am parting with the Marc Rich group and not with Marc Rich himself.” 2 In truth, Strothotte had lost out in a power struggle against Rich. “Willy was too up-front,” a former director told me. Strothotte had pushed to discuss the company’s future after Marc Rich. He wanted the founder—then only fifty-seven—to pull back gradually from active business and give up his status as majority shareholder.
    The separation was not nearly as friendly as the company would like the public to believe, as Rich’s employees were soon to discover. Rich had Strothotte’s office replaced with a lounge. In a company that operated according to the trader’s motto “You never close doors,” this was taken very seriously indeed. “Sure, everyone who left the company was considered a jackass,” one of Strothotte’s closest colleagues told me, “but when Marc did away with Willy’s office, it was like when Joseph Stalin had his adversary Leon Trotsky retouched out of photographs.”
    Further evidence of the deteriorating atmosphere at Marc Rich + Co. came only one month later when Manny Weiss and Claude Dauphin, two key managers, left the company. Weiss had successfully expanded the company’s aluminum business and had directed its important London office. For his part, Dauphin had been jointly responsible for thecompany’s oil business. It was a time of dramatic changes for Marc Rich. Within a short time he had lost his most important and longest-serving associates. They had stood at his side throughout his career. Suddenly Rich was alone. He was now the only founding member who was still active in the company. Pinky Green had retired in late 1990 after undergoing a heart bypass operation. Alec Hackel, who had been one of Rich’s most important advisers, had followed his lead and had also taken retirement. Each had received between200 million and300 million for his shares in the company.
    Rich was in sore need of his friends. Although he had always been a good judge of character, he suddenly surrounded himself with poor advisers. Much to his managers’ horror, Rich brought one of his American attorneys onto the executive board, although he had not the slightest inkling of the commodities trade. This was a hard break with the tried-and-true company tradition of allowing into management only people who had learned the business from scratch. Rich, who had always trusted his employees and given them as much free rein as possible, suddenly began to meddle in all of the company’s affairs. The three principles that had served the company so well in the past—openness, team spirit, and limited hierarchy—were slowly fading away.
If You Can’t Catch the Fish . . .
     
    “Marc had lost the big picture,” a trader who was working for the company at that time told me. He drank too much. Glasses of whiskey began to appear on his desk at noontime. He smoked too much. His friends began to worry about his