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Rich proved himself a prodigy at buying and selling grains and metals. One of his biggest market coups came during the Arab oil embargo of 1973-74, when he used his Middle Eastern contacts to circumvent the embargo and buy crude oil from Iran and Iraq. After purchasing the crude for roughly $12 per bbl. Rich doubled the price and sold it to supply-starved U.S. oil companies. Successes like that inflated Rich's already ample ego, and in 1974 he and Co-Worker Green set up their own company.
While the two men are close business partners, they have widely differing styles. Rich, the more urbane, until recently maintained a Park Avenue apartment and a house on Long Island, while Green lived in a white stucco house in the Flatbush section of Brooklyn.
Rich and Green built their company into a trading empire with an estimated 1,000 employees in 40 offices around the world, and their market exploits continued apace. In 1981, for example, Rich reportedly helped the Malaysian national tin company mastermind a scheme to boost the price of the metal by buying up much of the world's supply and stockpiling it. The ploy proved to be a roller coaster. Initially it reaped huge profits for Rich, then it brought him losses when the U.S. Government sold tin from its stockpiles and forced down the price.
From the time Rich went on his own, commodity-trading insiders were suspicious. For one thing, he broke an industry taboo by wantonly raiding his former employer for dozens of traders. For another, he put his headquarters in discreet Switzerland while actually operating mainly out of his New York City subsidiary. Says one trader: "In the business, we felt there was some hanky-panky under way."
According to the indictment, crimes indeed took place. In 1980 and '81, Rich's domestic company and two Texas firms, West Texas Marketing of Abilene and Listo Petroleum of Houston, carried out an oil-laundering and profit-hiding scheme. In the first step of the process, Rich allegedly went to domestic producers and bought crude oil that had Government-controlled prices as low as $5 per bbl. Rich then supplied the oil to the Texas firms at the legal price. The Texas companies, according to federal officials, laundered the crude through a series of purchases so that it was difficult for Government regulators to trace the oil's origin. Then the Texans sold it back to Marc Rich's New York subsidiary at a profit as high as $20 per bbl. Marc Rich then sold the laundered crude to American oil companies at the higher price. Finally, according to the indictment, a secret arrangement required the two Texas companies, after taking their cut, to return more than $70 million in illegal profits to Marc Rich's headquarters in Switzerland.
One of the most serious charges against Rich and Green in last week's indictment is that during the hostage crisis in Iran they bought 6.2 million bbl. of crude worth $200 million from the National Iranian Oil Co.