SOPHISTS AND OTHER SCOUNDRELS
Part Two
© 2005 by Linda Minor
Part 2 - Scooter Libby’s Client
Marc Rich
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| Marc Rich |
As an attorney in one of those firms, Libby represented his wealthiest and most mysterious client—Marc Rich. Only one of a myriad of Rich’s attorneys, Libby, nevertheless, worked for the metal and oil trader for a period of eighteen years. Understanding Marc Rich is essential in understanding Scooter Libby and the financial network which invaded Iraq.
Strategic Metals
Craig Copetas, Marc Rich’s biographer, who lumped his subject, Rich, into the category of the “Metal Men,” [1] attempted to trace Marc Rich’s mysterious background. Marc’s father, David Rich,
a descendant of the Belgian Reich
family who fled Europe during World War II, assisted by a Jewish placement
agency, changed his family's surname to Rich.
David Rich engaged in an assortment of secretive businesses
- Jewelry distribution in Kansas City, Missouri;
- Importation of burlap at Melrose Bag in the Bronx, New York;
- Expansion into Sidec Overseas, S.A., a diversified agricultural import company which traded with Bolivian merchants; and
- Setting up of the American Bolivian Bank in La Paz.
While
his father was busy trading, young Marc was quietly attending school
and going to summer camp. He graduated from the private “Rhodes School”
in mid-town Manhattan in 1952, just ten years before a future commerce
secretary, Ron Brown, would receive his diploma there.[2]
An advertisement for the school in 1917 (above) sported photographs of selected members of its illustrious faculty, which included former Harvard and Columbia professor Adolphe Cohn; Alexis Irene du Pont Coleman, a scion of the gunpowder and chemicals family that owned Dupont; and Dr. Jose F. de Fernandez, recruited from New York’s Jesuit St. Francis Xavier College. Those years at Rhodes constitute the sum total of Marc Rich’s formal education, apart from a year or so of study at New York University. He dropped out of college in 1954 to begin his trading career at Hamburg-based Philipp Brothers.
Philipp’s
London office first opened in 1908. A New York branch appeared in 1927,
just nine years before Rich’s boss, Ludwig Jesselson, arrived there
from Germany. Philipps Brothers also had close connections to Spain and
to Bolivia. David Rich—allegedly in connection with his burlap bag
business—traveled frequently to La Paz and even set up a bank there, where the
physical commodities business tends to
be based, along with Brazil, Colombia and the Ivory Coast.[3]
It is impossible to trade physical commodities without arranging for
their transportation from one place to another at a time certain.
Marc’s
twenty years at Philipp Brothers was spent
“buccaneering between North and South America, Africa and Europe…Copper was king at the time, and Rich was one of the metal’s crown princes…He went on to learn tungsten under the direction of Henry Rothschild and Steven Dale, a former British commando who was the tungsten expert….” [4]
Rich’s reward was a posting to the Philipp Brothers office in Madrid as
manager in 1967. He used this outpost as a base through West Africa
and the Middle East, and he gained contacts through his seat on the
European management committee in Zug, Switzerland.
Goldfinger
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| Andre Meyer |
Engelhard (sometimes called “The Platinum King”) also fabricated gold and other precious metals and lived in northwestern New Jersey’s aristocratic hunt country. His neighbors included Treasury Secretaries Douglas Dillon and Nicholas Brady—two partners in the Dillon, Read investment bank. Both Dillon, Read and Lazard Freres--as well as being favored investment arms of Rockefeller corporations and banks-- were also heavily involved in investments in the State of Texas, whose favorite son (Lyndon Johnson) had been in control of the Presidency since November 22, 1963.
In “Who ‘Created’ Condi Rice?”—Linda Minor explored how Eugene Meyer, Jr. and Bernard Baruch used the War Finance Corporation and the War Industries Board “to administer minerals and materiel into a massive war machine.” It was this war profiteering endeavor which first brought Samuel Bush (George H.W. Bush’s grandfather) into government operations—as discussed in “Money and Gunpowder, Part Two—A Place for Cannons”. [6]
Liquefying the Metals Trade
The
metals Marc Rich brokered prior to 1973, from
the aspect of national defense, were very strategic ones. Originally, such trading had to be done
in the field, as it necessarily involved physical delivery of the metal
at a specific location and time. Eventually, however, futures contracts
were devised for most metals, allowing financial trading to take place
at the commodities exchange. Before 1973, oil had never been traded on
the futures markets, but things began to change in March of that year
when President Nixon imposed price controls on oil. As reported in Time Magazine on March 19:
Inflation seems once again to be getting out of hand, despite repeated assurances from the President and Treasury Secretary George Shultz that Washington retains ample authority to crack down on price boosters. There was even more concern last week after the Government reported that in February the unadjusted wholesale price index jumped 1.9%, the biggest monthly rise in 22 years. With that, in an obvious attempt to regain its credibility, the Administration reached for its vaunted ‘stick in the closet’ and re-imposed direct controls on the nation's 23 biggest oil companies.”
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| Shah Pahlavi of Iran |
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| Harry Oppenheimer |
Diamonds are Forever
Prior
to the diamond discoveries in South Africa in the 1860’s, the supply of
that precious gem was feared to be in danger of depletion. Author Edward Jay Epstein relates:
According to the records of the British East India Company, Jewish traders controlled virtually the entire world diamond traffic by the end of the eighteenth century. The Brazilian fields, however, were becoming rapidly depleted of diamonds, and no more diamonds were coming out of India. Just as it appeared that the world might run out of diamonds, the South African mines were discovered in the eighteen-sixties. The ten leading Jewish merchants in London, fearing that the market would be flooded with South African diamonds, quickly formed a syndicate to buy up all of the production from these new mines. A number of the merchants in this syndicate had also acquired large stock holdings in the De Beers monopoly itself. One of the merchants who took the lead in arranging the deal with Cecil Rhodes was Dunkelsbuhler. Dunkelsbuhler brought into his London company a sixteen year old apprentice from Friedberg, Germany. [8]
Rough diamond
Oppenheimer created Consolidated Diamond Mines (CDM) of South West Africa in 1917 by first setting up Anglo-American Corporation of South Africa
in London with some assistance from his brothers and the House of
Morgan. He offered to give each major German investor shares in
Anglo-American in exchange for their holdings in the “forbidden zone” in
Namibia, which he held in a South African corporation. With this
leverage he convinced De Beers to trade him a share of stock and a seat
on the board in exchange for an interest in his properties. By 1929, he
and his cousins had become a powerful force in the diamond monopoly.
With support from Lord Rothschild, whose bank still owned a large block
of stock in De Beers, he was named chairman and added De Beers to his
Anglo-American Company.
He
first found industrial applications for poor-quality diamonds in
manufacturing--diamond grinding wheel—which became an indispensable tool
for mass production. Oppenheimer sent his son Harry to New York City to
work with Madison Avenue strategists on a campaign touting the four
“C’s” of diamond perfection—cut, color, clarity, carat—helping sales to
increase more than 50 percent in two years. A new custom was
declared—diamond engagement rings—with the slogan “a diamond is
forever,” a slogan adapted by Ian Fleming for one of his James Bond novels.
The Gold Fix
Britain,
devastated by economic depression, abandoned the gold standard in 1931,
though the United States kept the price of gold fixed at $20.67 per
ounce until 1933, when America prohibited gold exports, ended
convertibility of dollars into gold, and mandated that all gold held by
citizens be exchanged for dollars. In January 1934 the price of gold was
devalued to $35 per ounce, and the gold standard resumed. London
continued its fixings until the outbreak of World War II in September
1939, when they were suspended for almost fifteen years.
The task of keeping the sterling price of gold at $35 per ounce became increasingly more difficult as the market grew. As early as 1961 the Bank of England had to occasionally sell from its reserves on the fix to hold the $35 per ounce. This led to the creation of the gold pool—an alliance between central banks—to maintain the $35 level. The pool worked well until 1965, when private buying of gold began to exceed mine supply, forcing central banks to sell reserves into the market to hold the price steady.
The task of keeping the sterling price of gold at $35 per ounce became increasingly more difficult as the market grew. As early as 1961 the Bank of England had to occasionally sell from its reserves on the fix to hold the $35 per ounce. This led to the creation of the gold pool—an alliance between central banks—to maintain the $35 level. The pool worked well until 1965, when private buying of gold began to exceed mine supply, forcing central banks to sell reserves into the market to hold the price steady.
A
run on gold in March 1968 resulted in suspension of gold selling in
London for two weeks—reopening with prices thereafter fixed in dollars
rather than sterling. The gold price, free to float, was set twice a
day, morning and afternoon. London’s action was followed two years later
by President Nixon, who in August 1971 repudiated the United States’
obligation to redeem its dollars in gold. By the end of 1974, gold had
soared from $35 to $195 per ounce.
Gold
is a stabilizing influence in global trade, useful in maintaining a
level of confidence in the government’s ability to ensure the value of
investments both at home and abroad. The author previously mentioned the
importance of gold in an article called “Taking the Golden Eggs.” The
strategic value of other metals was discussed in “Who “Created” Condi Rice?”
These two articles are part of an ongoing project by this author to
describe the historical trail that has been taking America and the rest
of the world into a new world order—a centralized order where local
control no longer exists. Implicit in this new world order is the
recognition of one absolute truism: Power comes from controlling vital and strategic commodities.
The countries which are the sources of those commodities must,
therefore, be dominated and not allowed to exercise any form of
independence or nationalism.
A Citizen of the World
Marc
Rich fits snugly into this new world order. Jack Quinn, Rich’s lead
attorney in charge of obtaining a pardon from President Clinton,
explained the crime for which Rich was convicted on CNN’s Larry King program:
This case arose out of a complicated series of oil transactions that occurred during the time when we had price controls on oil. And, in essence, what happened was that Marc Rich and major United States oil companies, including Arco, had linked domestic transactions to foreign transactions in an effort, admittedly, to circumvent those price controls. I think they were trying to do so lawfully. But what they tried to do was to find a way to get the real value out of a price of oil. [10]
For
years Howard Safir, working for Rudy Giuliani as his New York City
police commissioner and later as chief of operations for the U.S.
Marshals Service, had been tracking Rich down from one country to
another. Safir told Larry King:
He was hard to get because he had a great deal of influence in a lot of countries, and we were pretty much restricted to just a few countries where we could apprehend him. He had a Bolivian passport, he had a Spanish passport. The Israelis were very clear they weren't going to help us apprehend him. So it was very difficult to get him, plus he had a lot of money….You know, Marc Rich is one of those people who considers himself a citizen of the world, inconvenienced by the petty laws of nations. And the message that this sends is outrageous. [11]
Such
“world citizenship” makes perfect sense, of course, to those persons
who make their livelihood from global trade—what can best be termed the
merchant adventurer class which brought us slavery, tobacco, rum,
spices, and last but not least, opium.
NOTES:
[1] A. Craig Copetas, Metal Men: How Marc Rich Defrauded the Country, Evaded the Law, and Became the World’s Most Sought-After Corporate Criminal (New York: HarperCollins Publishers, 2001).
[2] Steven A. Holmes, Ron Brown: An Uncommon Life
(New York: John Wiley & Sons, Inc., 2000). According to Holmes,
the school was a favorite preparatory academy for sons of middle-class
black families.
[3] The Wall Street Journal, May 24, 1984.
[4] Copetas, Metal Men, 80.
[5] Judith Ramsey Ehrlich and Barry J. Rehfeld, The New Crowd: The Changing of the Jewish Guard on Wall Street (New York: Little, Brown and Company, 1989), 197.
[6] This series will be continued as time permits. Interested readers are encouraged to read George Bush: The Unauthorized Biography—by Webster G. Tarpley & Anton Chaitkin—for more detail about the Pryor family’s link to the Bush network,
which revolves around the Brown Brothers Harriman investment bank,
Rockefeller banking and oil interests, and investments of the Payne and
Whitney families.
[7] Mark Honigsbaum, The Observer, May 13, 2001.
[8] Edward Jay Epstein in The Rise and Fall of Diamonds: The Shattering of a Brilliant Illusion (New York: Simon and Schuster, 1982). (This book appears online at Epstein’s website.) Epstein adds: "Until
the early part of the eighteenth century, the entire world's supply of
diamonds came from India. The caravans that brought them across Arabia
traded these rare stones to Jewish traders in Aden and Cairo for gold
and silver. The traders then resold them to Jewish merchants in Venice,
Lithuania, and Frankfurt. It was a natural enterprise for the Jews
scattered throughout central Europe: Since they were moneylenders, they
had to concern themselves with assessing, repairing, and selling gems
that had been offered to them as collateral for loans. They also had
close connections with the Jewish trading centers in the Ottoman Empire
through which all the Indian diamonds passed…. When the Jewish diamond
merchants and workers were forced by the Inquisition to flee from Lisbon
and Antwerp, they resettled in Amsterdam. Since cutting factories
required no equipment except for hand tools, which were portable, the
Jews instantly transformed Amsterdam into the diamond center of Europe.
By the middle of the seventeenth century, Jewish diamond merchants
helped finance the Dutch East India Company, which organized its own
trade route to India. So Amsterdam then replaced Lisbon as the port of
entry in Europe for India's diamonds. Just as the fields in India began
to cease yielding diamonds, more were discovered in 1725 in Brazil. The
Dutch maneuvered to gain control of this traffic, but now they had to
contend with the rise of British sea power. By the mid eighteenth
century, the British had almost completely taken over the trade in
diamonds, both from India and Brazil. As the trading center for uncut
diamonds shifted from Amsterdam to London, so did the Jewish diamond
merchants…. The Jewish traders sent the diamonds to cutting factories
that had been re-established in Antwerp, and from there, the jewels were
sold to all the royal courts of Europe. To select and evaluate these
diamonds, the courts chose Jewish gem experts, who became known as
‘Court Jews’ "
[9] Ibid.
[11]
Safir indicated as well that in 1986 Rich “had a lawyer from East
Germany offer $225 million for him and Pinky Green if the prosecutions
were wiped out.”
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