In the discreet commodities trading business, Marc Rich, the founder of commodities giant Glencore, cuts a controversial figure. While he was pursued for decades by US justice on accusations of tax evasion and illegal trading with Iran before finally being pardoned, Rich has also been credited with revolutionising commodities trading through a firm he founded 37 years ago, called Marc Rich + Co, later named Glencore.
“Marc Rich is a pioneer of the globalisation era and an architect of modern commodities trading,” said Daniel Ammann, his biographer and a Swiss journalist. (The King of Oil)
Now 76, Rich has effectively created the spot trading market, Ammann claimed, noting that in the early 1970s, only five percent of oil trading was made by offer and demand, while the rest was traded through futures contracts.
“Thanks to Marc Rich, oil has been negotiated more freely since the 1970s, in a more efficient manner and at more transparent prices,” said Ammann.
Born to a Jewish family, Rich was taken in 1941 to the United States to flee the rise of Nazism.
In 1954, he joined US trading firm Philipp Brothers as an apprentice and quickly worked his way up the group, according to a profile on the website of his eponymous foundation.
He was soon groomed to take over as president of the US firm, but in 1974, he decided instead to launch a company based in Switzerland’s canton Zug with a former colleague Pincus Green as well as several other traders.
From a small start-up, the company grew into a key player in the sector over decades.
Rich, together with his partners, managed to “break through the cartel of major groups that dominated the petrol market, from the wells to the petrol pumps,” said Ammann.
This success brought Rich a fortune worth $1 billion today (720.8 million euros) according to Forbes’ estimates, though not without controversy.
Rich was on the FBI’s wanted list for decades before being granted a pardon by Bill Clinton on the last day of his presidency in January 2001, said Ammann.
Rich’s business tradings with Iran, Cuba and apartheid South Africa had brought the wrath of US justice down on him. Accused of tax evasion, as well as illegal trade with Iran, Rich was forced to flee to Switzerland in 1983.
His foundation pointed out that he has not admitted to these accusations.
Even though its founder was embroiled in justice issues, the company continued its astral ascent.
In 1993, however, Rich lost $172 million in a contract, obliging him to give up his participation in the company. He sold his interest to senior managers of the firm, who then renamed it Glencore.
Now based in central Switzerland’s Meggen, Rich has since built up another discreet trading company.
He has also launched several charitable foundations on education, culture and the fight against leukaemia, which killed his second daughter Gabrielle in 1996.
king-of-oil.com 