2. The King of Oil: The Secret Lives of Mark Rich by Daniel Ammann

This book is a biography of Mark Rich from his early days when he fled Belgium days before the advancing German armies. Mark Rich's father sold all their belongings for a used car, they drove to France, fled by boat to Morocco, obtained a US visa, and moved to the United States. The family lived all over the US, in fact Marc Rich did not go to the same school for more than a year.

Marc took his first job at Phillips Brothers, a small commodities trading house. He started in the mail room, then moved to the traffic or logistics department, and ultimately ended up running the company's Madrid office. Rich was an innovative guy and he was always looking to set up new commodity markets. In the 1960s the world trade of oil was dominated by the large oil companies, known as the seven sisters (BP, Shell, Chevron, Texaco, Exxon, Gulf, and AMACO), who dictated prices to the oil producing countries. The power in the relationship was squarely with the oil companies so much so that the price of oil hadn't really budged in more than 30 years.

Rich saw that this situation was not to the advantage of the producers and he struck independent relationships with the producing countries. Typically he would agree to purchase their oil at above market rates for a long period of time and he would then look for buyers for the oil. As oil prices increased he made more money. His main trading partners were countries like Iran, Nigeria, Cuba, and South Africa. After setting up these relationships he left Phillips Brothers and formed his own company based in Switzerland.

In this relatively simple way he created the spot market for oil which is the way oil is traded today and slowly took the seven sisters out of the picture. In the early 1970s he did some fairly aggressive but not illegal transactions in the United States that ultimately caught the attention of a young Rudolph Giuliani. Rudy went to town on Rich, accusing him of all sorts of things and looking to prosecute him criminally as opposed to in civil court which would have been normal for tax related transactions.

Giuliani was a pit bull, he painted Rich as a criminal and an uncritical press lapped it up. Then, in the late 1970s, it came out that Rich was trading with Iran during the hostage crisis. So, Giuliani added a trading with the Enemy charge to Rich's indictment and sought to prosecute Rich using RICO (racketeering) laws. Using RICO was the prosecutorial equivalent of using a nuclear bomb.

Giuliani and his successors continued to press their case for years even though Rich lived in Switzerland and what he had done, particularly trading with Iran, Cuba, and South Africa, was completely legal under Swiss laws. In effect, they were trying to prosecute Rich by applying US laws to a Swiss person (Rich had relinquished his US citizenship long ago). Rich was by no means a good guy - he supplied oil to racists and killers and he didn't have an issue with that - but what Giuliani and his cronies did to him was beyond the pale. Because of their case, he was not able to come to the US for the funeral of his father or for the funeral of his 26 year old daughter.

Up till the mid-1990s, even with this case hanging over him, Rich's company prospered. After leaving Phillips he grew his company to become the largest commodities trading house in the world. In 1996 he sold his company to his partners and exited the business to focus on his charities. A little earlier, in 1991, he triumphed over Giuliani when Bill Clinton pardoned him on the night before he left office.

Today, Rich's trading house is known as Glencore and remains the largest commodities trading firm in the world. Glencore is planning an IPO in a few months and will be selling 20% of the company for a paltry $14 billion!

The book is generally well written and it is hard to go wrong with a story like Rich's. What I found very annoying about the writing was the author's incessant insecure need to point out to the reader whenever he was about to write about some previously undisclosed matter.