Rich Cashed In a World of Chits to Win Pardon

Alison Leigh Cowan - NY Times - April 11, 2001

Late last year, a former Mossad agent who works for Marc Rich came to New York on a delicate mission.

The retired spy, Avner Azulay, was hoping to enlist Mr. Rich's estranged former wife, Denise Rich, in a campaign to win a presidential pardon for Mr. Rich, the billionaire businessman. Their divorce in 1996 had been bitter and hard fought, but Mr. Azulay believed the effort to secure a pardon would be doomed without the support of Ms. Rich, a friend of President Bill Clinton and a lavish fund- raiser for the Democratic Party.

Months earlier, Ms. Rich had spurned his plea to ask Mr. Clinton to press the Justice Department to review Mr. Rich's situation.

Now, Mr. Azulay was asking her help for an even bolder venture. He brandished a sheaf of letters from prominent Israelis praising Mr. Rich. "Look at this massive support Marc is getting in Israel from V.I.P.'s," Mr. Azulay said he told Ms. Rich. "It would be ridiculous for the mother of his children and the grandmother of his grandchildren not to place a word of support, especially if she has a good relationship with the Clintons."

Ms. Rich was not enthusiastic, but she agreed to consider it. Within days, thinking more as a mother than an angry divorced woman, her friends said, Ms. Rich had a change of heart, signing a letter to Mr. Clinton drafted by Mr. Rich's lawyer.

Weeks later, she had adopted the mission as her own, pulling the president aside at a White House dinner on Dec. 20 for a personal plea. "It would mean a lot to me," she told the president, Mr. Rich's lawyer, Jack Quinn, said. One month later, Mr. Clinton granted the pardon.

A review of the campaign to persuade Mr. Clinton, drawn from interviews with people directly involved and documents made public for Congressional hearings, shows how Mr. Rich and his supporters orchestrated the use of every imaginable chit to win their goal.

The pardon of one of the United States' most-wanted fugitives, granted in the final hours of the Clinton presidency, is under investigation. Congress and the United States attorney for the Southern District in New York are examining, in particular, whether it was improperly connected to donations from Ms. Rich.

Mr. Rich, in his one statement on the matter, called the pardon a "humanitarian" act. Ms. Rich has declined comment, as has her lawyer, Martin R. Pollner, who said only that she had "committed no wrongdoing."

Ms. Rich's support was part of a global strategy. Mr. Rich's representatives said they worked hard to find a way around the implacable opposition of federal prosecutors in New York and career officials at the Justice Department in Washington.

Israeli officials disclosed in interviews that they rallied around the campaign out of gratitude for Mr. Rich's philanthropy in Israel and because of Mr. Rich's clandestine role as a "sa-ayon," a Hebrew word for an unpaid supporter of intelligence operations. Mr. Rich, they said, financed sensitive missions and allowed agents to use his offices around the world as cover, when Israel was isolated diplomatically.

Mr. Rich had been trying to find a way out of his legal difficulties for years. In 1991, he even hired investigators to search for another fugitive whose arrest, he hoped, might win him points with prosecutors.

But friends and associates said the pardon drive was hastily arranged, only beginning in earnest last fall. They said it involved deft international lobbying, not improper activities. "I'm sorry to disappoint you," Mr. Azulay said in an interview. "It's not such a beautiful conspiracy."

The campaign was organized around personal connections, participants say, starting with Mr. Azulay's. When one of Israel's most decorated young officers, Ehud Barak, was conducting deadly forays into Lebanon to deal with terrorists, he often used the services of an intelligence-gathering unit run by Mr. Azulay.

"That's why Barak went out of his way," said a friend of Mr. Azulay, noting that the former prime minister hardly knew Mr. Rich, even as he pressed Mr. Clinton about the matter on his final day in office.

The lawyer Mr. Rich selected, the former White House counsel Jack Quinn, turned out to have the connections that counted most. He had a close relationship with Eric Holder, the deputy attorney general at the time. It was Mr. Holder who delivered a lukewarm but crucial endorsement of the pardon in the waning hours of the Clinton presidency.

Mr. Quinn also had the confidence of the president, having helped manage the White House's response to the travelgate investigation and other dicey problems. When a White House aide found a reference to Mr. Rich trading arms in the government's computerized intelligence files around midnight on Jan. 19, she called Mr. Quinn for an assessment. Mr. Quinn said the accusation was off base, and that was good enough for Mr. Clinton, who signed the papers granting the pardon early the next morning.

That act has drawn almost uniformly negative reviews. Mr. Clinton has said little about the case since writing an Op-Ed article for The New York Times on Feb. 18 that pointed to the pleas from Israel and arguments that Mr. Rich had been selectively prosecuted as factors in his decision.

"I spent a lot of time on that case," Mr. Clinton told reporters asking about the pardon. "There are very good reasons for it, and I think I couldn't say them any better than Jack Quinn, Mr. Rich's attorney."

The Trader: Rich Goes to Work, Then on the Run

Marc Rich's life as a commodities trader began in 1954 in the mail room of Philipp Brothers. The 19-year-old Mr. Rich, son of Jewish refugees from Belgium, quickly showed a knack for the business of trading oil, sugar and metals. Twenty years later, he struck out on his own.

Extensive contacts in the Arab world guaranteed him access to relatively cheap oil during the energy crisis of the late 1970's.

But prosecutors said Mr. Rich also took advantage of federal price controls intended to encourage American production by allowing higher prices for oil that might not have otherwise come to market newly discovered oil, for example. Through a "daisy chain" of transactions he passed off shipments of ordinary oil as "new." The $100 million in unreported profits that this produced was hidden in offshore accounts to evade taxes, the prosecutors said.

Investigators also charged that Mr. Rich had trafficked in Iranian oil, violating an embargo imposed after Iranian revolutionaries took Americans hostage. The case was assigned to the United States attorney for the Southern District, and it quickly turned nasty.

Mr. Rich refused to turn over documents to the prosecutors, arguing that his Swiss- based company was beyond United States jurisdiction. A federal judge disagreed, imposing a $50,000-a-day fine. Hours later, Mr. Rich sold the American subsidiary of his company to an associate.

With the fines mounting, on Friday, Aug. 5, 1983, Mr. Rich's lawyers bowed to the demand and agreed to produce the documents. The following Monday night, acting on a tip, prosecutors called Kennedy International Airport to demand that a Swiss-bound plane taxiing on the runway be stopped and searched. Standing behind the special agent making the call, Jim Kilfoil, was the newly appointed United States attorney, Rudolph W. Giuliani.

Federal agents found two steamer trunks full of company documents. Mr. Rich's lawyers insisted that they were merely being sent to their lawyers in Switzerland for review. Prosecutors found the contents to be further proof that Mr. Rich and his partner Pincus Green were directly involved in the illicit trading.

The indictment was handed up a month later, in September 1983, marking the first use of racketeering statutes in a major white-collar case. Mr. Green and Mr. Rich refused to return for trial.

The prosecutors were furious, as was Edward Bennett Williams, Mr. Rich's illustrious defense lawyer, who reassured them that his clients were not flight risks. But the extradition treaty between the United States and Switzerland does not include tax crimes, and Mr. Rich went on doing business from his blue-tinted office in the city of Zug.

Over the next decade, federal agents say they came close to nabbing Mr. Rich several times. They missed him at Heathrow Airport in London, and another time watched helplessly as his private plane changed course in midair instead of landing in Finland, as expected. Events like these supported the notion that the Riches had a source within international law enforcement.

Some countries were indifferent to tax crimes. Howard Safir, the former New York City police commissioner who had led the manhunt as an official of the United States Marshals Service, said he was told by a senior Israeli police offical not to expect much. "Officially we will do everything we can to help you," he quoted the Israeli as saying. "Unofficially, don't waste your time."

Mr. Rich also managed to arrange for safe passage in the late 1980's in several Central and Eastern European countries through Wolfgang Vogel, a prominent East German lawyer who, until the Berlin Wall fell in 1989, was a prime conduit whenever the East and West exchanged spies or prisoners.

Mr. Vogel obtained assurances from local officials that Mr. Rich, his client, would not be arrested. "He wanted to know if he could go without difficulty to Vienna, Budapest and Schnefeld," the airport in East Berlin, Mr. Vogel said in an interview. "And I was able to arrange it."

But from his earliest days on the run, Mr. Rich was angling to return to the United States. In February 1991, Mr. Rich offered to help federal prosecutors in Baltimore track down Tom J. Billman, a white-collar fugitive who was believed to be hiding in Europe.

Officials in Baltimore had no qualms about using a fugitive to catch a fugitive. "His budget for that case was bigger than ours," said David P. Cyr, a postal inspector involved in the case.

Eventually, the marshals arrested Mr. Billman on their own and not because of the $500,000 that Mr. Azulay estimated Mr. Rich spent for the chase. Mr. Rich did win a letter from law enforcement officials attesting to his help, however, Mr. Azulay said.

In the summer of 1992, Mr. Rich secured a sit-down session in Zurich with Otto G. Obermaier, who had succeeded Mr. Giuliani and was in Europe on other business. It was a fresh reminder to Mr. Rich and Leonard Garment, the Washington lawyer whom he had added to his legal team seven years earlier, that prosecutors were still committed to the case.

As Mr. Garment saw it, Mr. Rich could either take his chance on a trial or plead guilty to some charge, which might require a short stay in a minimum-security prison. "It's a few months," Mr. Garment said he told his client, trying to sound upbeat. "You'll lose weight. It'll be easy. No manacles. You'll come back."

The reply came back, "Not one day."

Concluding that there was little more he could do, Mr. Garment resigned from the case.

The Trouble: As Business Booms, a Marriage Fails

Mr. Rich's exile coincided with an extraordinary moment in commodities trading. The collapse of Communism opened up countries that were cash-poor but rich in resources. Elaborate deals and barter exchanges undercut world market prices and lined the pockets of former party functionaries.

Kroll Associates, which conducts global investigations, was hired by the Russian Federation in 1992 to examine why the country's natural resources and capital were disappearing. Within three months, Mr. Kroll said he had evidence that some of the drain could be traced to Mr. Rich.

"Never in the history of Kroll have we found so much money so fast," Mr. Kroll said. At the instruction of his client, Mr. Kroll sent a warning to Mr. Rich in Zug. But soon after, Mr. Kroll said, the Russians told him they would handle the matter themselves.

In Bulgaria, Mr. Rich's operations were implicated in a scheme involving fictitious oil trades. The episode, which cost Bulgaria $50 million of seed capital from the International Monetary Fund, was investigated by Parliament, and though Mr. Rich was never convicted for any of the trades in question, he is still vilified in that country.

These countries were "disconnected" from the marketplace, said Ronald Freeman, a former chief operating officer of the European Bank for Reconstruction and Development. "He took advantage of their innocence."

But while Mr. Rich's business was booming, his marriage was falling apart. Mr. Rich's wife and children had followed him to Zug after the indictment. But there were strains, including, Ms. Rich contended, an affair with a widow, Gisela Rossi, who is now Mr. Rich's wife.

When Ms. Rich walked out sometime around 1991, she debated taking a Van Gogh with her as a down payment on what she intended to collect from him in a divorce settlement, a friend said.

In the end, a person with knowledge of Ms. Rich's financial affairs said she received $100 million from her husband after the couple separated and another $100 million when the divorce was final.

In the fall of 1996, just after the couple parted, their 27-year-old daughter, Gabrielle, died of leukemia. For Mr. Rich, attending her funeral would have meant risking arrest.

"He was just shattered," said Michael Steinhardt, a retired hedge fund manager and philanthropist who happened to be visiting Mr. Rich in Zug the day Gabrielle died. Mr. Steinhardt said he resolved then and there to help Mr. Rich win his freedom.

"He just looked so depressed," said Rhea Schindler, a family friend who visited Mr. Rich in Zug not long after. "He was in this beautiful office surrounded by gorgeous paintings and flying off to his summer home in Spain, and he wasn't a happy soul."

The Insider: A Former Counsel Takes Up the Case

In late 1998, Robert Fink, Mr. Rich's longtime New York legal counselor, began looking for what he later termed a "white-haired man," a Washington insider who could succeed where others had failed.

Mr. Fink turned to Jack Quinn, a Washington lawyer who left public service in 1997 after having served as White House counsel and before that, as chief of staff to Vice President Al Gore.

Mr. Quinn was hired in 1999, but Mr. Rich was not completely sold. In an e-mail message sent on Feb. 17, 2000, Mr. Fink sought to persuade Mr. Rich that Mr. Quinn was "not just a pretty face." Mr. Quinn had "thoughtful ideas and questions and was not simply relying on his past contacts to make this happen," Mr. Fink wrote.

Mr. Quinn's first idea was to try again to persuade the United States attorney in Manhattan to settle the case. Mr. Obermaier had been replaced by Mary Jo White, a career prosecutor, and Mr. Rich's flight 17 years earlier had been neither forgotten nor forgiven. One prosecutor who has worked for the office since the earliest days of the Rich investigation, Shirah Neiman, was now a top aide to Ms. White.

Ms. Neiman declined comment. But in a letter dated Feb. 2, 2000, she restated that her office would not negotiate with a fugitive.

By March 14, Mr. Quinn advised Mr. Fink in an e-mail message that he simply could not "figure out a way around Shira."

Between those two exchanges, another option presented itself at a dinner in Paris.

Mr. Azulay met Abraham H. Foxman, director of the Anti-Defamation League in New York, at a crowded Parisian restaurant on Feb. 14, 2000.

Mr. Azulay, who was head of the Rich Foundation in Israel, had already introduced himself to Mr. Foxman by telephone in November 1999, conveying his desire to renew the financial support that Mr. Rich had once provided the A.D.L. and promising to make up for lost years. In fact, a $100,000 pledge had just arrived.

Mr. Foxman was an acquaintance of Mr. Azulay's boss, Mr. Rich, who had helped the A.D.L. in 1990 when it needed government contacts in Romania to stem an outbreak of anti-Semitism.

Over dinner, Mr. Azulay discussed Mr. Rich's problem. The conversation turned to Denise Rich, whom Mr. Foxman had met in 1995 on Air Force II, en route to Yitzhak Rabin's funeral in Israel.

Mr. Foxman said he knew that there was bad blood between the Riches. But he also knew they had lost a child.

So Mr. Foxman said he told Mr. Azulay, "Why don't you reach out to Denise Rich to see if she had changed her mind about Marc Rich, and if she had, to have her approach the president about a pardon?"

Mr. Azulay said the discussion was not so much about a pardon, as simply having Ms. Rich ask the president to push the Justice Department to re-examine the case. Mr. Azulay said he had recommended that very approach four days earlier, in an e-mail message urging Mr. Rich's lawyers to revisit the "unconventional proposal" he had favored all along.

By March 18, Mr. Azulay notified Mr. Fink in an e-mail message that the idea of using Ms. Rich's ties to "NO1," as they called the president, had been endorsed by Mr. Quinn and Mr. Steinhardt, the philanthropist. Thus, wrote Mr. Azulay, "We are reverting to the idea discussed with Abe which is to send DR on a `personal' mission to No1 with a well-prepared script."

But Ms. Rich was uninterested in the part. "She refused," said Mr. Azulay, telling him "it would just embarrass the president."

The Last Lap: Supporters Gather Steam and Power

Mr. Rich's supporters were undeterred. In autumn, with the Clinton administration on its last lap, they swung into high gear.

Mr. Azulay called in chits throughout Israel from the politicians, charitable institutions and Jewish organizations that had accepted Mr. Rich's favors over the last 20 years.

Mr. Azulay admitted that he was not always candid about the purpose of the testimonials, one reason why so many obliged.

Dozens of dignitaries wrote letters, including Israel's former justice minister Yaakov Neeman; Zubin Mehta, musical director of Israel's Philharmonic; current and former Israeli mayors, and Shabtai Shavit, who ran the Mossad from 1989 to 1996.

Mr. Steinhardt, who knew Mr. Clinton as a past president of the Democratic Leadership Council, wrote an impassioned letter as well.

Prime Minister Ehud Barak and Shimon Peres, a former prime minister, offered assurances that they would call Mr. Clinton.

Letters in hand, Mr. Azulay began his overtures to Ms. Rich. "I met her several times," Mr. Azulay said.

By Nov. 19, an agenda prepared by Mr. Fink for a strategy session that day suggests that he expected Ms. Rich to cooperate. It has a reminder to the group to discuss "maximizing use of D.R."

Ms. Rich finally signed an emotional two- page letter to Mr. Clinton, dated Dec. 6, that Mr. Quinn helped draft. Friends assumed she was influenced by her daughters or just letting go of the past. "I have a good life," one friend quoted her as saying. "He did give me a lot of money even if it wasn't what I felt I was entitled to."

Together with the legal briefs that Mr. Rich's lawyers had assembled, the letters were bound into a two-inch-thick volume and shipped to the president on Dec. 11. Ms. Rich's letter topped the list.

With the Clinton White House struggling with many last-minute goals, imperfections in the package sailed past the people who were vetting pardon applications.

At least 52 of the 73 letters described as being "letters expressing support for the pardon of Mr. Marc Rich" said no such thing. And of the 21 letters that were clearly addressed to the president, six from Switzerland were almost identically phrased.

Nowhere did the petition mention that Mr. Rich had renounced his American citizenship, an omission that a call to the State Department might have caught.

Ms. Rich, meanwhile, had embraced her task. She leaned on a White House social secretary for a last-minute invitation to a dinner on Dec. 20 for recipients of the National Medal of Arts and the National Humanities Medal.

She was seated at the president's table with Barbra Streisand, Quincy Jones and Maya Angelou. But people at the dinner said she looked peeved.

In a burgundy gown with fox trim, she fidgeted through the sweet potato soup and the pheasant course, as Ms. Streisand monopolized the president. Finally, as the cream-colored plates were being cleared, Ms. Rich wrested Mr. Clinton away for a word in private.

In an interview, Mr. Quinn said he believed it "was nothing more than, `I know you got my letter, and it means a great deal to me.' "

Some days later, Ms. Rich telephoned her former husband for the first time in years. According to a friend of his, she wanted him to know what she had done for him. To her own friends, she hinted that Mr. Rich could end up in her debt.

On Dec. 25, while Mr. Steinhardt was in Anguilla giving a Hanukkah party, he learned that a list of 62 White House pardons issued on Dec. 22 did not include Mr. Rich. He grew glum, friends recall.

On Jan. 6, Mr. Steinhardt provided Mr. Rich a last, lavish forum in which to make his case. At a dinner in the Jerusalem convention center for Mr. Steinhardt's charity, Birthright Israel, Mr. Rich hobnobbed with the country's leadership, including Prime Minister Barak.

In an e-mail message dated Jan. 12, Mr. Azulay wrote Mr. Quinn, in their usual shorthand, that "Following MR's mtg with the pm the latter called potus this week," using a common term for the president.

By then, the value of Mr. Quinn had become clear. In a feat of lobbying that still has some members of Congress amazed, Mr. Quinn bypassed the Justice Department's customary checks while convincing White House lawyers that Eric Holder, the deputy attorney general, was on board.

When Mr. Holder was asked by Senator Jon Kyl, Republican of Arizona, whether it as fair for Mr. Quinn, in seeking the pardon, to have told the president that he had "run it by" Mr. Holder, the former official quipped that "running it by Justice is actually a pretty good description of what happened."

Mr. Quinn's access to the president's inner circle also allowed him to buttonhole Bruce Lindsey, a deputy White House counsel, on Mr. Rich's behalf in Belfast on Dec. 13.

And it gave him the foresight to send copies of his pardon request to people like Cheryl Mills, a former White House lawyer who happened to be in the Oval Office the night of Jan. 19, as the president consulted his aides one last time about Mr. Rich. Earlier that evening, Mr. Quinn had even cadged 20 minutes with the president to make his case.

So when the president took a call at 2:30 in the morning of Jan. 20 about the discovery of the arms trading reference in the intelligence file, he simply told a worried White House aide, "Take Jack's word."

See Also:
  • Exposé: Using Pollard To Get Rich
  • The Clemency Page