Iran Sanctions: The Sobering Lessons of Marc Rich

Rich was indicted in 1983 for trading with the enemy and tax evasion by Rudy Giuliani, then the U.S. Attorney for the Southern District of New York. But Rich's company, the Swiss-based Marc Rich + Co, purchased approximately 60 to 75 million barrels of Iranian oil every year up to 1994, when Rich finally sold the company to the management.

The contract continued throughout the hostage crisis of 1979 to 1981, after the USA had broken off diplomatic relations and prohibited the import of Iranian crude oil.

"We sold oil because it was available and the price was right.," said Rich. "We didn't force anyone to either buy from us or sell it to us." When asked if the new Iranian authorities, who had no experience whatsoever in running their oil company, would have been helpless without him, Rich said: "They didn't behave that way, but in a way it's true."

Rich says his most important clients after the Iranian revolution were two countries that had been almost completely dependent on oil from the Shah's regime: Israel and apartheid South Africa. The new Islamic regime explicitly prohibited the sale of a single drop of oil to these two countries.

As I show in my book, Rich would serve as the most important single supplier of oil to both Israel and South Africa. Rich told me he remembers selling Israel "between 1 to 2 million metric tons per year," or 7 million to 15 million barrels). For many years, Rich provided Israel with at least one out of every five barrels that it needed, and the bulk of the oil he provided was Iranian.

The business with South Africa -- which itself was under an international embargo -- was even bigger. I calculated that Rich's companies delivered at least 400 million barrels of oil to South Africa, making a profit of $2 billion over the course of 15 years. A former employee told me that in the wake of the Iranian revolution, Marc Rich + Co was at times making a profit of up to $14 per barrel.

Iranian inner circles were well aware of Rich's dealings with Israel and South Africa, and with American oil companies such as the Atlantic Richfield Company. They knew exactly where their oil was flowing; yet no one at the National Iranian Oil Company seemed to mind.

"They didn't care," Rich told me. "The professionals in the oil business in Iran didn't care. They just wanted to sell oil."

"Business is neutral," Rich answered when I asked how it is possible to remain neutral when doing business with countries like Iran, apartheid-era South Africa, or Cuba. "You can't run a trading company based on sympathies."

When I replied that he was viewed as a crisis profiteer and sanctions buster, he said: "Whatever we did, we did legally. We were doing business with Iran, Cuba, and South Africa as a Swiss company. These businesses were completely legal according to Swiss law."

The U.S. government felt differently. Though the Belgian-born Rich now holds Spanish and Israeli passports and has resided in Switzerland and Spain for years, U.S. prosecutors considered him a U.S. citizen who had violated the ban on doing business with Iran. He was a wanted man until Clinton pardoned him on Jan. 20, 2001. Rich has still never returned to the U.S.

Are today's oil traders more responsive to the threat of sanctions? The Swiss trading giant Glencore recently stopped supplying Iran with gasoline ahead of any tightening of international sanctions. Glencore is the current name of the company that Marc Rich founded in 1974 and sold in 1994.

Daniel Ammann is the author of "The King of Oil: The Secret Lives of Marc Rich."

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