-Caveat Lector-
Fugitive's Pardon Ended 17-Year Effort
By James V. Grimaldi and Robert O'Harrow Jr.
Washington Post Staff Writers
Sunday, January 28, 2001 ; Page A01
Standing backstage at a rally in Belfast last month, waiting for
President Bill Clinton to give a speech about the Northern
Ireland peace process to an adoring crowd, former White House
counsel Jack Quinn buttonholed presidential aide Bruce Lindsey.
Quinn had been waiting for a moment to press his case for a new
client: Marc Rich, a wealthy commodities trader who fled the
United States in 1983, renouncing his citizenship, rather than
face federal charges that he evaded $48 million in taxes and
traded with Iran during the hostage crisis.
So as Irish politicians and celebrities in the crowd did the wave
to recordings of Van Morrison's "Brown Eyed Girl" and U2 tunes,
Quinn seized the moment. Would Lindsey take a look at a pardon
application Quinn had delivered to the White House two days
before? Would he take it to the president?
That brief exchange on Dec. 13 was part of the final push in
Rich's 17-year global effort to avoid going to prison. It was a
campaign that involved a parade of high-priced legal talent
trying to negotiate a deal with federal prosecutor Rudolph
Giuliani and his successors; Israeli Prime Minister Ehud Barak,
who called Clinton at least twice this month to urge him to
pardon Rich; Nobel Peace Prize winner Shimon Peres; and the
unwitting help of some charity leaders whose groups accepted what
the pardon application said was $100 million in Rich's largess
over the years.
Through it all, Rich, now 66, maintained his luxurious lifestyle,
with homes in Switzerland and Spain. He occasionally appeared at
the World Economic Forum meeting in Davos, Switzerland, a
high-level international economic summit attended by business and
government leaders. Little else is known about his private life
in Meggen, Switzerland. He declined requests for a comment
through his lawyers.
Rich has remained an active trader. According to published
reports, his companies courted business in boycotted South
Africa, post-Soviet Russia, the Nigerian oilfields of strongman
Sani Abacha, and -- despite his close ties to Israel -- Saddam
Hussein's Iraq.
Clinton's advisers were deeply divided over a Rich pardon, former
officials said, with some cautioning that it could create a
political and public relations nightmare.
On Jan. 20, with just hours left in his eight-year tenure,
Clinton gave Rich and his business partner Pincus Green exactly
what they were seeking: absolution from the criminal charges.
The pardon provoked a fury. Some outraged prosecutors in New
York complained that they were blindsided, that Quinn sidestepped
normal procedures for pardons by going straight to the White
House.
Other critics accused Clinton of kowtowing to big campaign
donors, such as Rich's former wife, Denise, an Grammy-nominated
songwriter who gave the Democrats more than $1 million and hosted
a fundraiser for the president at the height of the Monica
Lewinsky scandal in 1998.
An old Clinton enemy in Congress promised hearings on the pardon
and former Clinton White House officials acknowledged they may be
"back in investigation land."
To his many supporters, the outcome of Rich's case is an example
of how a good man can prevail against an overzealous prosecutor
and an unfair press. To his detractors, the pardon shows how
Rich and his hired allies used political and financial influence
to absolve a man who had thumbed his nose at the U.S. legal
system instead of making his case in court.
The Charges
In 1982, Bill Clinton was making the first of several political
comebacks, winning a second term as Arkansas governor after being
defeated for re-election two years earlier. Marc Rich, a native
of Belgium who emigrated to the United States in 1941, was
already a player in international trade and attracting the
attention of the law.
Prosecutors in the office of New York's aggressive U.S.
attorney, Giuliani, were investigating Rich, Green and Marc Rich
& Co., for illegally buying more than $200 million worth of oil
from Iran after President Jimmy Carter banned trade with that
nation during the hostage crisis.
At the time, Rich's companies were buying and selling crude oil
on the world market. In some cases, prosecutors charged, Rich's
companies claimed to be paying higher prices than they actually
paid, secretly kicking back the profits to co-conspirators.
They hid money in foreign accounts, legal papers say, and
routinely reported phony losses to reduce their taxes.
Representing Rich at the time was legendary Washington attorney
Edward Bennett Williams. Before the indictment, Williams met
with prosecutor Morris Weinberg Jr., offering a deal: Rich would
pay a $100 million fine with no jail time, Weinberg recalled.
Williams also promised that his client wouldn't flee.
Williams was mortified when Rich disappeared in mid-1983, telling
him, according to "The Man to See," a Williams biography by Evan
Thomas: "You know something, Marc? You spit on the American
flag. You spit on the jury system. Whatever you get, you
deserve. We could have gotten the minimum. Now you're going to
sink."
The Rich investigation was front-page news. It was spiced by
incidents like federal agents seizing steamer trunks filled with
subpoenaed Rich documents as they were about to be flown out of
the country. A federal grand jury handed up a 51-count
indictment in September. Neither Rich nor Green showed up for
their arraignment.
A judge froze Rich's U.S. business accounts and a imposed
$50,000-a-day contempt of court penalties. A year later, in
October 1984, two of Rich's companies pleaded guilty to criminal
charges and paid $200 million in fines and penalties. One of
Rich's business associates, Clyde Meltzer, pleaded guilty to a
felony in the case, and was sentenced to five years of probation
and was fined $5,000.
About that time, Rich hired Leonard Garment, a well-known
Washington lawyer who had been Richard Nixon's White House
counsel, to continue the legal fight.
Garment prepared a legal attack on the government's case. After
aides worked for two years on the complicated tax issues, Garment
asked Martin Ginsburg of Georgetown University, a top tax lawyer
and husband of future Supreme Court Justice Ruth Bader Ginsburg,
to look at the case. Ginsburg was later joined by Bernard
Wolfman, a tax specialist at Harvard Law School.
Their analysis, given to the U.S. attorney, became the
foundation of Rich's claims of innocence. They concluded that
Rich didn't owe any taxes, in part, because the unreported
profits were properly attributed to two Swiss-based companies
that aren't subject to U.S. taxes.
Fugitive Diplomat
Despite being a fugitive, Rich was asked by the United States and
Israel to help behind the scenes on diplomatic efforts.
In 1986, he helped resolve a diplomatic impasse between Israel
and Egypt over the slaying of a group of Israeli tourists by an
Egyptian policeman in the Sinai the year before, by paying
$400,000 to victims' relatives.
Shabtai Shavit, former head of the Mossad, Israel's intelligence
service, wrote in a letter supporting the pardon application that
Rich routinely offered financial assistance to and assisted the
rescue of "Jews from enemy countries."
In July 1992, it became clear that Rich wouldn't agree to face
charges in New York without a promise that he wouldn't go to
jail. Garment learned that during an extraordinary meeting in
Zurich between Rich and Otto Obermaier, then the top federal
prosecutor in New York.
Rich had been on the lam for nine years, the subject of an
international manhunt, with FBI and police worldwide seeking his
capture should he step foot in a country willing to extradite
him. In fact, that same month, a Treasury Department official
overseeing sanctions violators met in Washington with a lawyer
whose clients offered to help nab Rich in return for $1 million.
Obermaier suggested at the Zurich meeting that if Rich returned
to the United States, prosecutors might settle for a few months
of jail time, Garment recalled. But Rich declined.
In 1994, another Rich lawyer met with another New York
prosecutor, Patrick Fitzgerald, to present the fugitive's case.
Fitzgerald was blunt: If Rich and Green were innocent, why did
their corporations plead guilty and pay $200 million? "As I have
repeatedly stated, if your clients genuinely believe that they
have done nothing wrong, they should board the next plane to New
York and subject themselves to the jurisdiction of the court,"
Fitzgerald wrote to Rich's lawyer. "Your clients, however, have
no intention of being part of any process other than a moot
court, and it is that which remains unacceptable."
Quinn joined Rich's team in 1999. Since leaving the White House
in early 1997, Quinn had been a leading defender of Clinton
during the Lewinsky scandal.
Quinn and a colleague, Kathleen A. "Kitty" Behan, flew to
Switzerland that May to meet Rich in person. Then they
approached officials at the Justice Department and were told to
go through Giuliani's old office.
They wrote to Mary Jo White, now the top prosecutor, making many
arguments familiar to the New York federal prosecutors. A top
White deputy, Shirah Neiman, replied last Feb. 2, saying that
negotiating with fugitives "would give defendants an incentive to
flee," providing them "the inappropriate leverage and luxury of
remaining absent unless and until the government agrees to their
terms."
Quinn and Behan then decided it was time to seek a presidential
pardon. Going back to the Justice Department would have meant
having to deal with the intransigent New York prosecutors again.
That, Quinn said, would be like "painting a bulls-eye on myself."
So that the deal wouldn't appear to be something cut "behind the
barn," Quinn said he alerted Deputy Attorney General Eric Holder
on Nov. 21 that he would be filing a pardon application directly
with the president.
Holder did not call U.S. Pardon Attorney Roger Adams or White in
New York. A Justice Department official said Holder expected
that they would see the application in time to advise the
president.
Support in High Places
The Rich team still had work to do. Pulling all-nighters and
working weekends, they assembled the pardon packet. They sought
letters of support from recipients of Rich's philanthropy.
The first letter supporting the pardon was from the president's
friend, Denise Rich, who also pressed Clinton in a telephone
call. Dozens of other supporters praised Rich for unpublicized
donations to charitable causes in the U.S. and Israel.
But while the pardon application described many of the letters as
"Expressing Support for the Pardon of Mr. Marc Rich," executives
from several of the groups said their letters were written only
to thank Rich and his Israel-based foundation for donations --
not to support a presidential pardon.
At least five were unware that Rich was seeking a pardon. "I
think it was inappropriate for him to use a letter like ours that
was obviously just an acknowledgment type of letter," said Cliff
Sanderlin, director of foundation relations at the Fred
Hutchinson Cancer Research Center Foundation in Seattle.
Quinn said the letters were prepared in a rush by Rich's
foundation.
On Jan. 5, with Clinton's term running out, Quinn wrote a
personal letter to the president, painting Rich as a victim of an
overzealous prosecutor and an unfair press.
"Marc, though, was not only singled out for prosecution," Quinn
wrote. "He was tried in the press. An avalanche of leaks to the
New York press made a fair trial, in his eyes, impossible.
Together with the grossly exaggerated nature of the charges
against him, this led him to remain out of the country and not
return to face charges."
Five days later, Quinn sent Holder a copy of the letter, but not
the pardon application, with a short cover note: "I hope you can
agree with this letter. Your saying positive things, I'm told,
would make this happen." Quinn contends that the letter
establishes that the Justice Department was aware of his efforts
at the White House.
The letter was incorrectly addressed and didn't arrive in
Holder's office until Jan. 17. It's not clear who read the
letter and what they did about it. Holder was unaware that the
pardon was under serious consideration until he got a call from
Quinn at 6:30 p.m. Friday, Jan. 19, saying White House attorneys
would be calling, a Justice Department official said. Eight
minutes later the call came.
Justice Department officials would not say what advice Holder
offered. But Holder did not resist and that played a role in
Clinton's decision, said a White House official speaking for
Clinton.
"Justice did not weigh in with a strong recommendation against,"
the official said. "And they weren't out of the loop, as some
have suggested."
Holder didn't return a call seeking comment.
Early Saturday morning, Justice Department pardon lawyers learned
about the Rich effort in a call from a White House lawyer. They
contacted Holder and a prosecutor in New York.
Warnings to Clinton The top White House lawyer, Beth Nolan, and
others warned Clinton that the Rich pardon was a bad idea,
sources said. "Some of us felt the proper way was for him to
come back and deal with it in court," a participant said.
The earlier calls from Barak prompted Clinton to look at the case
more closely, the participant added. Clinton then focused on the
decade-old Ginsburg-Wolfman analysis that Rich had no tax
liability, another aide said.
Clinton also asked Quinn to write a letter agreeing that Rich
wouldn't fight any government effort to seek civil penalties.
Federal authorities and tax experts said, however, that it was
unclear that Rich could be held accountable for a tax liability
when the fine paid by his companies appeared to exceed what had
been documented as evaded taxes.
Clinton thought that Quinn had made a strong case. "He [Quinn]
was critical. The president knew him, trusted his judgment. He
pressed pretty hard, said it wasn't just another client, that he
really believed in the case," a Clinton aide said.
The former president defends his decision to pardon Rich.
Friday night, outside his home in Chappaqua, N.Y., Clinton said:
"The only thing I would ask people to do is look at the facts.
I think when people have the facts they'll agree with me."
Staff writer Bill Brubaker contributed to this report.
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