Still, the real secret to Glencore's success is operating in markets that scare off more risk-averse companies that fear running afoul of corporate governance laws in the United States and the European Union. In fact, those markets are precisely where the future of the company lies. Consider what Deutsche Bank identified as Glencore's "key drivers" of growth: copper in the Democratic Republic of the Congo, coal in Colombia, oil and natural gas in Equatorial Guinea, and gold in Kazakhstan. All are places with a heady, dangerous mix of extraordinary natural wealth and various degrees of instability, violence, and strongman leaders. Glencore's experience and adeptness operating in these "frontier regions" and "challenging political jurisdictions" -- Deutsche Bank's delicate euphemisms for countries known for corruption, autocracy, and human rights abuses -- is central, the investment firm wrote, to Glencore's "significant growth potential."
LEVERAGING TIES TO DICTATORS has always been at the heart of the business empire built by Rich, the Belgian-born U.S. citizen who founded what would become Glencore in Switzerland in 1974. "Focus your analysis on Marc Rich," the Geneva source advised me when I first mentioned I was researching Glencore. "He knew that you have to deal with governments and ministers, and you have to service those people. You can call it corruption, but it's part of the system."
Undeniably brilliant, Rich started in 1954 as a mail clerk at Philipp Brothers, then the world's dominant commodities firm, and within two years had worked his way into the position of junior trader. His own politics were conservative, but money trumped ideology for Rich; he was just as willing to cut deals in fascist Spain -- where he worked for a time at the company's Madrid office, which specialized in handling business in rough countries in Africa and the Middle East -- as in communist Cuba, where Philipp Brothers had dispatched him soon after Fidel Castro took power. He went on to travel frequently to Havana, where, in addition to picking up a lifelong fondness for Cohiba cigars, he did business in pyrite, copper, and nickel.
He and Pincus "Pinky" Green left Philipp Brothers in 1974 and established Marc Rich & Co. in the canton of Zug, Switzerland's most business-friendly tax and secrecy haven. From early on, Rich cultivated ties to monarchs and presidents, diplomats and intelligence agencies, especially Iran's SAVAK under the shah and Israel's Mossad. He periodically lent a hand to the latter's clandestine operations, among them the evacuation of Ethiopian Jews to Israel in the 1980s.
Rich made a fortune by buying oil from Iran during the hostage crisis and Libya when Ronald Reagan's administration imposed a trade embargo on Muammar al-Qaddafi's regime, as well as supplying oil to apartheid South Africa. An inveterate sanctions-buster, Rich used offshore front companies and corporate cutouts to try to stay below the radar. He also pioneered the practice of commodity swaps, like the uranium-for-oil deals he brokered in the 1980s between apartheid South Africa and Islamic Iran and Soviet Russia. Such deals frequently caused him trouble with U.S. authorities, and in 1983 Rich fled his home in New York to Switzerland just before the Justice Department issued an indictment against him and Green on charges of racketeering, illegal trading with Iran, and tax evasion. A House committee later described his business as "based largely on systematic bribes and kickbacks to corrupt local officials."
Still, Rich continued to thrive, until he unsuccessfully tried to corner the global zinc market in 1992 and nearly bankrupted the firm with $172 million in losses, at which point he was forced out in a management buyout. The new directors renamed the company Glencore, which is reportedly -- though even this is a secret -- short for Global Energy Commodities and Resources.
Rich's forced exit from Glencore and the U.S. indictment hanging over his head had little impact on his business success. He created a new, independent firm and within a decade was trading 1.5 million barrels of oil a day, with an annual turnover of $30 billion. Then in 2001, on Clinton's last day in office, the president granted Rich a controversial pardon stemming from the 18-year-old indictment; critics argued that the pardon was connected to the generous contributions that Rich's ex-wife, Denise, made to a variety of Democratic causes, including Hillary Clinton's successful 2000 Senate campaign and the Clinton Presidential Library fund. A number of prominent American Jews and Israelis, including then-Prime Minister Ehud Barak and former Mossad Director General Shabtai Shavit, also pressed the White House on Rich's behalf.
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