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Spot On: Marc Rich – King of Oil

I just posted an article at the Ludwig von Mises Institute (LvMI) on the book The King of Oil: The Secret Lives of Marc Rich by Daniel Ammann. Below is the text:

To hear author Daniel Ammann tell the story, Marc Rich was run out of the United States. If his thesis is correct, President Clinton’s pardon of Rich (and Pinkus Green for that matter) should have been just the beginning of an apology the size of which could be immeasurable.

At the heart of Ammann’s book is the life of Marc Rich who created what is known as the spot market for crude oil.

Rich began his commodity career working for Philipp Brothers, (now Phibro) – a part of Occidental Petroleum – before launching his own firm in 1974 with Pinkus Green and Alec Hackel. The new firm was to be called Marc Rich + Co AG. Rich is a Randian and was known for making large commodity deals on handshakes.

Most international companies, including the American Seven Sisters, had legitimate offshore entities to better manage their tax liability, among other reasons. So that Marc Rich + Co AG had several such entities should not have come as a surprise to any international commodity dealer.

If not for an overzealous US Attorney Rudolph W. Giuliani, Rich undoubtedly would be in the United States. He was indicted for dealing with Iran during the hostage crisis. Yet, according to Ammann, each of the American Seven Sisters – through subsidiaries – were doing business with Iran all the while…obviously a double-standard. President Carter’s nationalist decree, as many government interventions, eventually harmed Americans more than helped. Carter was impotent and for the most part powerless during the whole Iran hostage crisis.

Marc Rich + Co AG admittedly was never part of the establishment. Furthermore, their main office was founded in Zug – not the US. This would allow them to legitimately recognize revenue through channels that would lower their tax liability. There’s not a publicly traded firm on the NYSE that doesn’t have legitimate offshore entities for their foreign dealings.

Rich was ultimately indicted for illegally dealing with Iran during the hostage crisis and tax evasion. He did not flee: he was in Switzerland at the time and never returned to the US.

Giuliani, no stranger to the perp walk, saw an easy target and literally made his case. Giuliani got his political win in that he very publicly seized tens of millions of dollars in frozen assets in the US.

However, he didn’t drop the case as he often did after all the fanfare and press that he got BUT he didn’t bring the case to trial either. Had he taken Rich through the court system and lost, he would have lost much political capital.

You can hear a podcast interview I did with Daniel Ammann on his book, The King of Oil: The Secret Lives of Marc Rich

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