Metal Men: Marc Rich and the 10-Billion-Dollar Scam by Copetas A. Craig

Author:Copetas, A. Craig [Copetas, A. Craig]
Language: eng
Format: mobi
Publisher: E-Reads
Published: 2010-07-01T04:00:00+00:00

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Chapter 9

“Every moment is a risk.”

— Jack Swigert,

APOLLO 13 ASTRONAUT

SHAH MOHAMMAD REZA PAHLAVI was a great man for a private trader such as Rich to do business with, despite the fact that the Western trading community never considered the Shah’s regime reliable or stable. Rich liked the Shah because he grew most cooperative whenever the time came to raise the price of oil on the world market. When Rich began doing business with Iran in 1974, the country had the capacity to pump nearly 7 million barrels of oil a day. Such figures looked good on the surface and served the Shah well in becoming a powerful force in the Gulf region until he was toppled by Ayatollah Ruhollah Khomeini in 1979. But from the moment Pinky Green first arrived in Tehran, Rich and his senior oil staff knew that the Shah owed $3 billion in foreign debt as early as 1975 and, more important to Rich, Iran’s debt was rising much faster than its income, prompting the Shah to jump into the Eurodollar market for dollar loans. Ironically, despite his vast oil wealth, the Shah was cash-short, a trading situation devilishly structured for what one of Rich’s Middle Eastern oil traders called “funny business.”

“We spent a lot of money in Iran paying for introductions,” a senior Rich oil trader explained. “The question is, really, what constituted a bribe. We gave vacations to government officials with lousy salaries both in Iran and in countries such as Angola and Nigeria. We helped their families with cash and took care of their business expenses. This was considered a matter of good business and convenience.” But the arrogance of Rich’s cash opened oil pipelines that had been closed to others. Iranian crude was sold to Israel, Royal Dutch Shell, and Elf, the French oil corporation. Rich installed Gerard Demanget, a Frenchman, as his oilman in Tehran. The appointment was on the surface a curious choice, since Demanget had previously represented the French automotive company Citroën in Iran and knew absolutely nothing about trading oil or metal. “He was a public relations man and Marc hired him because he knew whom we needed to pay off to get into Iranian oil,” a former Rich executive said candidly. “Gerard was our front man and he grew very rich.”

Rich’s Iranian oil deals were extremely sweet and allowed him to glide above the oil apocalypse of the 1970s, particularly during 1976 and 1977, when oil imported to the United States hit its peak, constituting nearly half the petroleum consumed by the American public. If the going rate for a barrel of OPEC oil was $20, then Rich would purchase it for $15 and then sell it at whatever the spot market would bear, a figure that changed daily, sometimes hourly, and was always significantly higher than the OPEC price. And although OPEC was a powerful cartel that maintained a series of quotas and price structures that looked good on paper, the day-to-day business

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