Billionaire Marc Rich Is Off The Hook For Tax Evasion And Racketeering After 15 Years

Ulrika Lomas, Tax-news.com, Brussels

23 January 2001

In his final hours as US president, Bill Clinton granted billionaire commodities trader, Marc Rich, a final pardon. The move comes at the end of an era of legal and political wrangling between the United States and Switzerland, the latter being where Rich has spent the last 15 years to avoid charges of racketeering and tax evasion made against him by the US government.

The commodities trader will now be able to venture past the Swiss borders safe in the knowledge that he will not be arrested by US law enforcement officers. Well known for his secretive nature, the eponymous head of the Swiss-based Marc Rich Group has been unavailable for comment since the news of his pardon was released.

Rich was indicted in 1983 by a US federal grand jury on over 50 counts of wire fraud, racketeering, trading with the enemy and evading more than $48 million in income taxes. Collectively, the punishment for his crimes would have added up to 300 years' imprisonment.

The US government accused Rich, now 66, of making huge profits from an illegal oil pricing scheme that took advantage of the 1973 oil crisis. According to the US Department of Justice, Rich conspired in 1980 with the Iranian government to buy more than six million barrels of oil - an activity in violation of the trade embargo imposed by the US. He then evaded taxes by transferring profits from his US company to its parent company in the low tax jurisdiction of Switzerland.

When asked why he pardoned Rich at this time, President Clinton said he only pardoned those he thought deserved it and remarked: 'I spent a lot of personal time (on the Rich case) because it's an unusual case, but Quinn [Rich's lawyer] made a strong case and I would suggest he was right on the merits.'

The mayor of New York City, Rudolph Giuliani, who played a significant role in bringing the charges against Rich in the 1980s, has expressed his disappointment at Clinton's decision, saying: 'I'm shocked that the president of the United States would pardon him. After all, he never paid a price. He got on an airplane, took all his records and ran off to Switzerland, where he's remained a fugitive since then.' He added that Rich had made 'untold efforts to try to get the charges reduced, including many, many overtures and entreaties based on the use of influence.'

The 'Rich' altercation between the Swiss and American governments had been ongoing since 1982 when a New York judge subpoenaed documents from Rich's company, and issued a contempt fine of $50,000 per day until the documents were released. The Swiss viewed this as an insult to national sovereignty, saying that the usual diplomatic route was ignored and consequently seized the documents to prevent the US court from obtaining them.

Two years on the United States was still calling for Rich's extradition but to no avail as the Swiss refused, saying that tax evasion was not a crime in Switzerland. An out-of-court settlement was later reached for approximately $150 million in tax payments but Rich remained wanted by the US on other charges.

More controversy followed Rich as he eventually left his original company, Marc Rich & Co., in 1993. Now known as Glencore it continues to be a world leader in commodity dealers. In 1995, Rich returned with the Marc Rich Group which maintained his commodity trading activities. His wealth, now allegedly a fraction of its former glory, has been assessed at around $1 billion dollars.

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