The King of Oil: The Secret Lives of Marc Rich

by Daniel Ammann

  This was certainly the case with the U.S. Marshals Service, which is responsible for conveying international fugitives to U.S. courts. Many of their cases involve fugitives on the lam, their whereabouts unknown, but the U.S. marshals knew exactly where Rich was to be found. They even had his address: Himmelrichstrasse 28. He lived in a large house at the edge of the woods in Baar, a rural village with a wonderful view of Lake Zug. The very fact that Rich was living so openly infuriated the agents, and they swore they would get him. Howard Safir, the associate director of operations for the U.S. Marshals Service, knew that special problems required special solutions. He was prepared to do everything possible to bring Rich before an American court, “as long as it doesn’t involve a violation of the fugitive’s human rights.”1 In October 1985, Safir packed his bags and headed to Switzerland. He did not intend to return empty-handed. “This time,” he told his colleagues, “this time we’ll get him.”

  The HUNT for MARC RICH

  A

  s befitted a man regarded by the United States as a traitor and fugitive, American officials made strenuous and sometimes almost comical efforts over the years to apprehend Marc Rich, ranging from psychological pressure to tricks to lure him away from Switzerland to spying to outright kidnapping. Many of these efforts have never before been revealed.

  A shroud of fog covered Lake Zug against the backdrop of beautiful central Switzerland on an October morning in 1985. As is often the case in the fall, the fog would dissolve in the course of the afternoon. Howard Safir traveled to Zug that morning disguised as a tourist. He was accompanied by Chief Inspector Don Ferrarone, a legendary former DEA agent with vast international experience who was involved in the famous “French Connection” heroin case. The two U.S. marshals brought with them detailed maps of Rich’s mansion and business offices as part of the ingenious plan they had devised to capture Rich. They even knew the gradient of the street in Baar. Their reconnaissance had discovered that a helicopter could land on the street, if necessary.

  Safir’s plan was to overpower Rich and secretly smuggle him out of the country. It was all to take place without the knowledge of the Swiss authorities and was thoroughly illegal. He wanted to ferry the oil trader to either Germany or France over Switzerland’s “green border”—the national boundary characterized by numerous border crossings that are not subject to constant to constant surveillance by Swiss customs officers. Safir left nothing to chance. Before traveling onward to Switzerland, the U.S. marshal had met with local police in Germany in order to discuss the case. Shortly before departing on his delicate mission, Safir had made sure that the U.S. office of Interpol had sent an arrest warrant for Rich “with a view to extradition” to the Interpol headquarters in Saint-Cloud on the outskirts of Paris.

  “WANTED INTERNATIONAL CRIMINAL” served as a title for the arrest warrant that had been signed on October 9, 1985, by Richard C. Stiener, then the director of the U.S. office of Interpol. Marc Rich, it said, was “a commodities trader/businessman” who was wanted on charges including “Income Tax Evasion, Racketeering, Trading with the Enemy.” The maximum possible penalty for these charges amounted to “325 years’ imprisonment and/or 100 million forfeiture and/or fines.” Rich’s physical description on the warrant—177.8 cm, 81 kg, black hair, brown eyes—was accompanied by a photograph. It was the only recent photograph of Rich; prosecutors had taken it from a 1984 Forbes article. The warrant described a “slight red mark on left cheek” as one of Rich’s “distinguishing marks.”

  The marshals had covered every angle. As soon as Safir crossed the Swiss border with Rich, he could drop his tourist disguise. Rich would have immediately been arrested by any French or German police officer. However, Safir knew that his activities as a U.S. marshal in Switzerland were illegal. Article 271 of the Swiss Penal Code prohibits anyone from undertaking action for a foreign country without Swiss approval. Punishment for violating this law would be nothing less than a prison term. Safir and Ferrarone were well aware that kidnapping Rich was a serious offense. They were prepared to take the risk, however, as Rich’s arrest was of the utmost importance.

  The two undercover marshals tried to keep a low profile while waiting for an opportune moment in front of Rich’s office building in Zug—with limited success. Two men approached them after a while and identified themselves as police officers. They wanted to see Safir and Ferrarone’s identification. Safir knew immediately that his cover was blown. In the most courteous of tones, the Swiss police threatened the two U.S. marshals: “If you take any more action in Switzerland, you will be arrested.”

  The U.S. marshals called this type of secret operation “extraordinary rendition,” a form of state-sanctioned kidnapping. It was a term that would become widely known in George W. Bush’s “War on Terror.” Such methods have their origins in nineteenth-century bounty hunting. One of the most prominent examples is the case of the former CIA agent Edwin Wilson, who was involved in the illegal export of arms and explosives. In 1982 an undercover U.S. marshal tricked Wilson into leaving his Libyan safe haven. Wilson flew to a meeting in the Dominican Republic, where he was seized and put on a plane to the United States.1 The U.S. Supreme Court later explicitly legitimized such abductions in the now famous case of Humberto Álvarez Machain.2 This Mexican physician, who was allegedly involved in the killing of a U.S. drug agent, was abducted from Mexico by bounty hunters and brought to trial in the United States. (He was acquitted.)

  A Leak in the U.S. Administration

  On that foggy day on Lake Zug in October 1985, Howard Safir was suddenly struck by a terrible thought—there was a leak somewhere in the U.S. administration or in the international law enforcement establishment. Safir was by no means wrong. Although the authorities still cannot officially confirm it was the case, a Swiss official who was involved in the affair admits that the Swiss had received a quiet tip-off concerning Safir’s activities. Whether this tip came from the U.S. Department of Justice or the U.S. State Department remains a subject of debate. A classified report from the Swiss embassy in Washington dated from the time of the case provides a telling hint: “Top [U.S.] officials are slowly becoming aware of the fact that agencies and courts have gone too far in recent years. They are beginning to realize that the most wonderful prece dents blessed by the highest courts are of absolutely no use in cases where the foreign country opposes the decision. In fact, as in the Marc Rich case, they appear almost ludicrous to their foreign partners.” It is an open secret that the State Department and the Department of Justice often opposed one another in the Rich case. The State Department had actually wanted to seek out Swiss cooperation, whereas the Department of Justice had wanted to go it alone.

  Safir’s failed mission was a small part of a huge, top-secret project known as the Otford Project, the goal of which was to apprehend Marc Rich and Pinky Green at almost any price. A multiagency team was put together consisting of personnel from the FBI, the IRS, the Office of International Affairs at the Department of Justice, the U.S. attorney for the Southern District of New York, Interpol, and the U.S. Marshals Service. The Otford Project was directed by the U.S. Marshals Service, which as of 1979 was responsible for apprehending federal fugitives (previously the responsibility of the FBI).

  The U.S. marshal who was assigned by Safir to hunt down Rich was Ken Hill. Ever since Rich had fled to Switzerland in 1983, Hill had been devoted “solely and exclusively” to the case—and remained so in the role of case agent for fourteen years.3 The former New York policeman probably knew more about the wanted commodities trader than Rich’s own family did. From his Manhattan office in a faded brick building near the Brooklyn Bridge, Hill kept on the trail of Rich and Green. The task would soon become his entire life.

  I spoke to Ken Hill in Florida.4 He retired in 1997 and became a diving instructor after thirty years of service to the United States. Secrecy is still of the utmost importance to the sixty-two-year-old former marshal. Only a single photograph of Hill is officially known to exist,
in which he appears—unrecognizable—in a wet suit and diving mask. Hill called me shortly before 9:00 A.M. in my Tampa hotel room.

  Code Name: The Riddler

  “It’s all about money,” Hill told me right after the initial greetings. “If Marc Rich calls you he asks himself a) can I make money with you today, b) can I make money with you tomorrow? If not, good-bye.” Hill’s code name was “the Riddler.” He was on Rich’s heels for fourteen years. During this time Hill spoke with countless people who had had some form of contact with Marc Rich, whether as frustrated employees or tough competitors. Hill had a fixed picture of Rich in his mind. “Do you have children?” he suddenly asked me on the telephone. “He was like a child, you know, who thinks, ‘The rules don’t apply to me. I can get away with it.’ The man is a genius, no doubt, but he thought his entire life, ‘The rules don’t apply to me.’ He had no respect for no country, no people, no law. He screwed a lot of people.”

  I could sense that the Rich case had been no routine job for Hill. The hunt soon became an obsession. “He worked an incredible amount of time on the case,” a former official at the U.S. Department of Justice said. Hill was so frustrated toward the end that his colleagues feared he might be suffering from burnout. This would come as no surprise. The average tax evasion suspect, the U.S. government once calculated, remains at large for three years and eight months. Rich and Green, however, were at large for more than seventeen years before they were pardoned by Bill President Clinton in January 2001.

  One can feel the deep resentment in Hill’s account of the events. During the 1991 Gulf War, for example, as Hill explains, “I phoned Pinky in his hotel in Jerusalem when the Iraqis were firing the Scuds on the city and asked him if he still didn’t want to come back.” Another time he sent Rich a bottle of scotch while the trader was on a ski holiday in St. Moritz. Hill wanted to prove to him that he always knew exactly where he was. He wanted to remind Rich of his favorite maxim: “I can make a million mistakes, you can make none.”

  The U.S. marshals called this form of psychological warfare “mistake-provoking strategy.” The Riddler was driven by the hope that Rich would eventually make some kind of mistake—sometime, somewhere, somehow—but Rich never did slip up. “Marc Rich is described as a man of stealth,” Hill says. “In reality, he paid very well for security. His infrastructure was so wide, he knew everybody, he knew everything. He was so rich, he had so much power. He had security everywhere. People were on the lookout for suspicious signs. He had the money to buy what he needed. It was like tackling a country.” Seldom had U.S. investigators proved themselves as creative as in the case of Rich and Green. They masqueraded as commodities traders in order to keep their most important business contacts in dozens of countries under surveillance. They were in regular contact with local flight regulatory authorities in order to determine if Rich had booked a ticket on a scheduled flight. They sought information from customs authorities all over the world to determine if their targets were currently visiting the country in question. They even sought the assistance of the cartographic company Jeppesen Sanderson, which had a near global monopoly on map and navigational material, asking to be notified whenever Rich’s pilots ordered new map material for exotic destinations.5 They kept in contact with Swiss police, who unofficially assisted the marshals, although officially they were prohibited from doing so. “We had a cordial relationship with the Swiss police,” Hill added. The marshals were hoping for a decisive tip-off about Rich’s travel plans.

  London Fog Saved Rich

  In November 1987, two years after Howard Safir’s failed mission in Switzerland, it finally seemed as if the authorities were presented with an opportunity to catch Rich. Hill’s efforts to find regular contacts among Rich’s business partners had finally paid off. One of these business partners had betrayed Rich and informed the authorities that Rich intended to fly to London the following weekend. The trader would be on board a private Gulfstream IV that would take off from Zürich-Kloten Airport and land at London Biggin Hill Airport in Kent.

  Ken Hill, alias the Riddler, immediately set off for London, where he liaised with the Fraud Unit as well as the Extradition Unit of London’s Metropolitan Police. On a cool fall morning, the U.S. marshal and his British colleagues waited for Rich in a comfortable lounge at Biggin Hill while keeping an eye on the airstrip. The airport, which was the principal fighter station for the British Royal Air Force during World War II, was now a civilian airport for affluent business travelers who appreciated its convenient access to the city of London. The U.S. marshal had known for quite some time what he would say when he finally had the opportunity to arrest Marc Rich: You made the one mistake. Hill even had one of the first-ever satellite telephones in order to report the arrest as soon as he had Rich in his custody.

  It was another foggy day at Biggin Hill. The fog grew thicker and thicker as Hill sat waiting for Rich, and soon he could just make out the faint outlines of the airstrip. At 8:00 A.M. the weather service reported that the fog now covered half of mainland Britain. Hundreds of flights would have to be redirected or canceled.

  Rich was sitting in the Gulfstream on the way to a party in London when his flight, too, was canceled. The fog proved to be a stroke of luck for the wanted trader. The airplane was forced to turn around while still above the European continent and fly back to Zürich-Kloten in Switzerland. Hill woke his superior, Assistant U.S. Attorney James Comey (who would later serve as deputy attorney general under George W. Bush), in New York at 4:00 A.M. local time to give him the bad news. “Damned fog,” Hill cursed quietly into his satellite phone.6

  “I Was Very Careful”

  Was Rich aware of the U.S. authorities’ attempt to arrest him? “In general, yes,” Rich tells me and takes a bite of his Tafelspitz, an Austrian specialty consisting of boiled beef. We are having lunch at the Glashof, Rich’s favorite restaurant in Zug. Although the restaurant is just across the street from the office, both of Rich’s bodyguards accompany us to lunch. One of them walks ahead of us while the other brings up the rear. The commodities trader still takes security very seriously. We enter the Glashof—which Rich’s company once bought in order to provide Pincus Green and other observant employees with kosher meals—by means of a side entrance and are seated in a private room. We are greeted personally and served by the restaurant’s manager. We drink Rich’s favorite wine, the one he served in his chalet in St. Moritz: a 2000 CVNE Rioja Imperial Reserva. “I was careful,” he says, “and while being careful I learned they tried to make certain attempts.”

  He then tells me a story that sounds as if it could have been taken directly from the pages of a spy novel. In the late summer of 1992, Rich received a visitor from Israel whom he had known for quite some time. He introduced a Russian who was interested in doing business with Rich involving a big oil deal. “It seemed very attractive,” Rich explains. Mikhail Gorbachev had just resigned from office in December 1991, and the Soviet Union was officially dissolved on December 25 of the same year. The Communist “Evil Empire,” as Ronald Reagan once described it, had simply ceased to exist. Boris Yeltsin, the new Russian president, immediately introduced a program of economic reform. He put an end to the Soviet-era price controls, cut state spending, and introduced an open foreign trade regime early in 1992. Russia embarked on the largest privatization program that the world had ever seen. If that was not a gigantic business opportunity, what else is?

  “The Russian businessman told me that I had to come to Moscow in order to sign the deal,” Rich says. Nothing spoke against the trip, and Rich trusted the Israeli acquaintance who had arranged the contact. He was a former agent of Shin Bet, Israel’s domestic intelligence service, and now worked in London for Kroll, the global risk consulting company. “If you don’t have the time, we can send you a private aircraft. The new Russian government is interested in you,” the Russian casually mentioned. They discussed the possibility of meeting in the second week of September 1992.

  On September 1 a
t 8:56 P.M. EDT, the FBI sent a confidential fax to the Russian bureau of Interpol marked FOR POLICE USE ONLY: “The FBI has received reliable information that Rich will travel to Moscow on or about September 6, 1992, for meetings in Moscow on September 7, 1992, possibly until September 11, 1992. He will reportedly stay at the Metropol Hotel in Moscow.” The FBI asked the local Russian police to determine if Rich would indeed be staying at the Hotel Metropol during these dates. The Office of International Affairs at the Department of Justice issued a provisional arrest warrant. The Russian police were informed that Rich might register at the hotel under a different name, and the “use of his photograph left with Interpol will be essential.” The FBI thought of everything and warned their colleagues in Russia that “Rich should be considered armed and dangerous because he allegedly travels with armed bodyguards and may utilize, in addition to his own personal staff, hired uniformed private armed security guards who reportedly travel with Rich in a motorcade through the streets.”