To Swiss, Marc Rich Is a Key Taxpayer

Marc Rich is everywhere and nowhere in this world-class tax haven.

As is customary in democratic Switzerland, the fugitive financier whom President Clinton pardoned on his way out of office is listed in the telephone directory--phone number, address and all.

But he doesn’t answer calls or come to the door of his lakeside villa in the nearby hamlet of Meggen.

The glass office building on Baarerstrasse that Rich built after fleeing the United States in the 1980s is a centerpiece of modern Zug, dubbed a “Dallas palace” after the television show about rich Americans. The Marc Rich Gruppe headquarters is located a block away, above a popular fitness center, but Rich is rarely spotted arriving at work, much less working out.

Always in the public eye, but seldom seen in public these days, America’s most infamous alleged tax evader is Zug’s most famous taxpayer, long appreciated for his contribution to government coffers as well as for his private patronage of Zurich’s opera, Lucerne’s culture center and Zug’s hockey team.

“He is good for Zug. We pay less taxes because of him and would miss him if he left,” said Peter Burki, 63, a retired bank auditor. “You know, it’s not bad to be rich. He is a clever man.”

But even here, in the don’t-ask-don’t-tell heart of Switzerland, Rich’s reputation has begun to tarnish in light of the last-minute pardon.

Residents aren’t overly concerned with the question of whether the nearly $2 million that Rich’s former wife, Denise, donated to Clinton’s presidential library and various Democratic causes played a role in the pardon--that is seen as a problem between Rich and the U.S. government.

Rather, they’re bothered by the fact that the mayors of the Swiss cities of Zurich and Lucerne were among the more than 100 supporters who wrote letters to Clinton on Rich’s behalf.

“During the late Middle Ages, the rich gave money to the churches to be freed from their sins,” Lucerne resident Markus Elsener wrote in a letter to the daily Neue Zuger Zeitung. “At the beginning of the 21st century, a wrongdoer is better off sponsoring the political institutions.”

The mayors’ support for Rich violated the Swiss sense of neutrality that keeps the country out of the European Union and the United Nations: It was none of their business, and they shouldn’t have gotten involved, residents said.

It also offended a deeply held belief in equality. Zurich Mayor Josef Estermann is a Social Democrat, they remarked, so what was he doing urging special treatment for the rich?

“People don’t care whether their neighbor is rich or poor, but it really bothers them if they are not treated equally,” said Markus Mathis, a reporter for the twice-weekly newspaper Zuger Presse.

The pardon scandal, widely covered by the Swiss media, was welcomed by local politician Josef Lang, who has made a career of lashing out at what he calls Zug’s “sacred cow.”

Lang, a member of Switzerland’s Green Party in the state, or cantonal, parliament, has been pushing the Swiss to confront the moral issues surrounding their nation’s status as a tax haven and international bank, often for the world’s ill-gotten funds.

For more than 20 years, Lang has been telling voters that Rich is an immoral trader who bought copper from Chilean dictator Gen. Augusto Pinochet and sold it to the repressive Communist regime of Nicolae Ceausescu in Romania, and who not only bought oil from Iran in violation of the U.S. embargo in 1980, but sold the vital resource to the apartheid regime of South Africa in violation of U.N. sanctions.

But few people were listening in Zug, where Rich’s tax diligence and generosity have bought him much respect.

Fellow fugitive Robert Vesco must be kicking himself in jail in Cuba, where he sought refuge after stays in Costa Rica and the Bahamas. Surely there cannot be a better place than Zug for a wealthy man on the lam. The discreet Alpine canton with low-tax Switzerland’s lowest taxes is home to more than 16,000 international corporations--one for about every five residents. Many of the companies “live” in post office boxes, or the in-boxes of a lawyer’s office.

Rich made Zug his base long before his run-in with the U.S. law. He and Pincus Green, a fellow defector from Phillip Bros. brokers, founded Marc Rich & Co. in 1973, with its headquarters in Zug and offices in London and Madrid, for trading oil, metals, grains and other commodities.

They commuted between the United States and Europe until 1983, when they were charged with 65 counts of racketeering, mail and wire fraud, tax evasion and trading with the enemy--Iran.

Rich’s lawyers have argued that he didn’t break the U.S. ban on doing business with Iran during the 1979-80 hostage crisis, because Marc Rich & Co. was a Swiss company and Switzerland did not have an embargo.

The charges against Rich also were not extraditable offenses in Switzerland. He was safe in this clean and quiet medieval town about 15 miles south of Zurich.

He eventually sold Marc Rich & Co., which became the Zug-based Glencore. Rich later founded the Marc Rich Gruppe, which employs about 200 people in the area and the lion’s share of which is about to be acquired by the Russian-owned energy trading group Crown Resources.

Rich also formed two charitable foundations in Zug. The Doron Foundation awards three $60,000 gifts each year to up-and-coming scientific, cultural and social projects in Switzerland.

The Rich Foundation donates several million dollars a year around the globe. It doesn’t specify how much or to whom, but Rich’s pardon application says that over the years he has made more than $100 million in charitable contributions.

A music and art lover, Rich has personally supported the Zurich Opera and the Lucerne Culture Center, along with Zug’s art museum and its hockey team, now one of Switzerland’s best.

About five years ago, Rich moved out of Zug to the adjoining canton of Lucerne, where he renovated the villa known as “Himmelreich,” or Empire of the Heavens, in the bucolic village of Meggen.

The residence sits at the end of a private road and is protected by a wrought-iron electric gate and security cameras. Israeli guards watch the front and the back, ensuring that no one approaches from the lake.

His house staff is Spanish. His pool, stretching to the shore of Lake Lucerne, is said to be spectacular. An Israeli journalist who interviewed Rich at the villa in 1999 wrote about cream-colored walls hung with original works by Van Gogh, Monet and Picasso, but a local visitor described the house as “an American-style, upper-middle-class” spread, “nothing extraordinary at all. If I had so much money, I wouldn’t live there.”

Until two years ago, neighbors say, they used to see Rich out for the occasional Sunday stroll and exchange nods but not too many words.

“People live here in Meggen, but they work in Zug or Lucerne and don’t worry too much about each other,” said one resident. “We see each other but don’t talk to each other.”

These days, the 66-year-old Rich travels to and from his home by helicopter, or in a chauffeur-driven Mercedes followed by another car with bodyguards. He spends the winter holidays skiing at St. Moritz and summer holidays in Spain, say friends and neighbors. He still enjoys a meal in the expensive dining room of his favorite Rathauskeller restaurant in the old town of Zug but rarely appears at social events now.

“He is a shy person, and he doesn’t like publicity,” said Georg Stucky, chairman of Rich’s Doron Foundation and a board member of the Rich Foundation and the Marc Rich Gruppe.

The controversy surrounding the pardon has taken Rich by surprise, Stucky said.

“It is not entirely what he intended, that’s obvious,” he said. “But in the long run, even in the United States, the pardon will be accepted.”

Rich doesn’t want to move back to the United States, Stucky said. “He doesn’t feel as if he is in exile.” But he wants to visit his two daughters there and the grave of his third daughter, who died of leukemia in 1996. “It is emotional.”

Stucky said that Rich’s foundations didn’t contribute money to Clinton or his causes, as the financier’s former wife did.

Some Zug residents regard the controversy as something of a comeuppance for Clinton, whose administration they feel unfairly pressured Swiss banks to pay more than $1.2 billion to Jewish groups to settle lawsuits alleging that the financial institutions had profited from the wealth of Holocaust victims.

The anti-U.S. sentiment translates into some rooting for Rich. On the other hand, the financier’s court challenge of a new law against money laundering, making commodity traders liable for their clients, has cost him support. He has said he would move his business out of the country if the law is upheld--a threat that the Swiss find “ungrateful” after the refuge they have provided Rich.

Perhaps Zug’s wealthy immigrants are fickle friends, some residents say, echoing the sentiments of the Green politician Lang, whose party has steadily gained votes in Zug over the last 20 years. Doubts are beginning to grow.

“There are a lot of rich people in Zug, and that makes the land prices a problem for average people,” said resident Madeleine Landolt. “Marc Rich is a great case but only one case of what happens here, of people who won’t take responsibility and think it is possible to be above the law.”

Miller was recently on assignment in Zug.