TOPICS > Politics

Clinton’s Pardon of Marc Rich

January 26, 2001 at 12:00 AM EDT

KWAME HOLMAN: Billionaire Marc Rich was one of America’s most wanted white collar criminals. The commodities trader fled to Switzerland in 1983, shortly after he was charged with more than 50 counts involving fraud, racketeering, and tax evasion. The charges could have drawn a prison sentence of more than 300 years. Federal prosecutors said Rich rigged an oil pricing scheme during the 1973 energy crisis and illegally sold oil to Iran while that country held American hostages. During the final hours of his presidency, President Clinton gave the 65-year-old fugitive a full pardon. Mr. Clinton was asked about the pardon on his first full day as a private citizen.

BILL CLINTON: You’re not saying these people didn’t commit the offense. You’re saying they paid, they paid in full. I spent a lot of time on that case. I think there are very good reasons for it. And I think I couldn’t say them any better than Jack Quinn, Mr. Rich’s attorney.

KWAME HOLMAN: Jack Quinn was one of Bill Clinton’s White House counsels. Quinn was joined in the last- minute appeal for a pardon for Marc Rich by Rich’s former wife, Denise, a political fund-raiser who has donated more than a million dollars to Democrats since 1993. According to news accounts, she and dozens of influential supporters, including Israeli Prime Minister Ehud Barak, wrote to Mr. Clinton urging Rich’s pardon. In 1983, New York City Mayor Rudolph Giuliani was the U.S. Attorney whose office prosecuted Marc Rich. Now he’s urged Congress to review the pardon.

MAYOR RUDOLPH GIULIANI, New York: Well, I’m shocked that the President of the United States would pardon him. After all, he never paid a price. He got on an airplane, took all his records, and ran off to Zug, Switzerland, where he’s remained a fugitive, and has made untold efforts to try to get the charges reduced, including many, many overtures and entreaties based on the use of influence.

KWAME HOLMAN: Presidential pardoning power comes from Article II, Section 2 of the Constitution, which reads: “…he shall have the power to grant reprieves and pardons for offenses against the United States…”. Critics of the Marc Rich pardon complain President Clinton never sought the opinion of the Justice Department, as is customary.

JIM LEHRER: Margaret Warner takes it from there.

MARGARET WARNER: The Marc Rich pardon triggered protests from many quarters. The “New York times” called it “indefensible.” The “Washington Post”: “Scandalous.” Today, attorney Jack Quinn responded on the op-ed page of the “Washington Post.” “This pardon was granted strictly on its legal merits,” Quinn wrote, “not political influence or donations.” Quinn said that Rich’s oil transactions were typical of others at the time, and that two U.S. oil companies who were also involved were pursued only in civil proceedings. Yet, government lawyers refused to drop the criminal charges against Rich. Quinn wrote: “President Clinton insisted that Marc Rich agree to drop procedural defenses against civil actions that might be brought against him by the United States upon his return. Rich has not escaped potential liability for his actions,” Quinn wrote, “only the overreaching criminal prosecution to which he should never have been subject.” A congressional committee has begun reviewing the pardon, but it cannot be revoked. To debate the merits of Mr. Clinton’s action, we turn to attorney Morris Sandy Weinberg, who was lead counsel in the original U.S. Attorney’s Office case against Rich; and Stephen Sherman, a former prosecutor who served on the White House counsel staff during part of the Clinton administration. Welcome, gentlemen. Sandy Weinberg, was this an appropriate use of the President’s pardon power? Was this pardon appropriate?

MORRIS WEINBERG, Former Federal Prosecutor: The pardon is not appropriate. The President can pardon anybody he wants to. I recognize that. But what he did was really, he pardoned two individuals who were… who had committed the biggest tax fraud in the history of the United States, who flaunted the system, who became fugitives, it was one of the most publicized cases of all time, who never paid their due. I can think of no legitimate reason. And for Mr. Quinn– and I will be responding to his op-ed piece shortly– for Mr. Quinn to suggest this was a civil case and somehow was not a crime, it was a crime in 1982 to fail to pay taxes on $100 million of illegal profits and it’s a crime in 2000 to do it. The case is overwhelming. There were two sets of books. They referred to this pot of money as “the pot.” It is absolutely outrageous. I’m a Democrat, I’m a criminal defense lawyer. It is just outrageous to think that the President, without any input from the Justice Department, from the U.S. Attorney’s office in New York, from me, from anybody that had any knowledge of what this case was about and the importance of this case, to have pardoned them. How could you ever prosecute another tax fraud case if you pardon people that renounce their American citizenship, became fugitives and literally in the most important tax case ever brought? It’s just…

MARGARET WARNER: When you mention, two, you are, of course, referring to his partner as well.



MORRIS WEINBERG: His partner Pinkus Green.

MARGARET WARNER: Pinkus Green. We didn’t mention him in the setup. I just wanted to make that clear to our viewers. Your view on this: You obviously disagree.

STEVEN SHERMAN, Former White House Attorney: Well, there has obviously at the outset — there has been a firestorm of protest here. I think a lot of people are making these allegations without really knowing the whole story. And it seems to me, as we learn more of the facts, these facts tend to show that the pardon is defensible and justified. I’d like to open up with three of the facts I think my learned opponent failed to mention. And one, a number of these statutes and regulations that criminally charge Rich and his companies were sued after an indictment was made against them were repealed or rescinded, basically off the books. And they were taken off the books because they were considered to be confusing and difficult to enforce. Basically what we’re saying here: It was a mistake. Sometimes Congress and the government passes bad laws. This seemed to be one of those cases. And two other points: Second point, I think Jack Quinn pointed out in his op-ed page, it was only Rich’s oil companies that were criminally charged. Other major U.S. oil companies were only civilly charged, and the Department of Energy specifically found only Rich’s companies to be not in compliance with the various regulations. And third, the RICO charges brought by the prosecutor…

MARGARET WARNER: You’re talking about racketeering.

STEVEN SHERMAN: Racketeering or conspiracy- like charges that were brought against Rich’s companies were very unusual. And in fact after this case, the Justice Department, in its manual, provides that these RICO, racketeering charges are not to be brought in these types of tax evasion cases. And the final point I want to make is that what Mr. Weinberg doesn’t mention is these oil companies did plead guilty, did pay approximately, I think, about $170 million in taxes, illegal profits, fines, and penalties. In other words, they paid back the illegal profits, they paid back the taxes that had been owed, and they paid the fines and penalties. I think they have gone a long way to make amends.

MARGARET WARNER: All right. Mr. Weinberg, there are a lot of things on the table, but start with the point, because Jack Quinn made it too, that the very statutes under which Mr. Rich was indicted have been taken off the books.

MORRIS WEINBERG: Well, the guts of the case, it is a tax case. The income tax regulations and laws have been in place. They were in place in 1980, they were in place in 1985, and they’re in place in 2000. And when you have $100 million of profits, which happen to be illegal for domestic oil transactions and you don’t pay tax on it but instead you launder the funds out of the United States, that was a crime in 1981 when it was committed, and it’s a crime in 2000. But what they’re talking about is that there were energy regulations, which restricted the amount of money that oil companies could make in reselling crude oil. And what Mr. Rich and Mr. Green did was that they violated those regulations, which were in effect at the time, and they made $100 million of profit on domestic transactions here in the United States that were illegal. They couldn’t disclose those profits to the government because they would have had to disgorge them or give them up. And therefore they devised a scheme where they parked the profit on two other companies’ books in Texas, they created a pot, and they laundered them out of the country, and they failed to pay tax on it. So there’s nothing technical, there’s nothing that any other company was doing. I don’t know of any other company that was cheating the government out of $48 million in taxes on $100 million worth of profits. It was a crime then, and it is a crime now. And to suggest that 17 years ago they paid $170 million and they made amends and therefore 17 years later the two individuals that committed the crimes should be allowed to be forgiven, because 17 years ago they ran and they had enough money to fight extradition, to convince the Swiss government not to extradite them, and somehow because the passage of time or for whatever reason Mr. Clinton would like to set forth, they should not be prosecuted anymore is outrageous and doesn’t make sense and is outrageous.

MARGARET WARNER: Mr. Sherman, that really raises the key point that all the editorials have said, because most people don’t know the ins and outs of the case, but if Mr. Rich and his partner are so sure that they would have no liability, why not come back and face the music the way most people do and then go to trial, maybe even get convicted or not convicted?

STEVEN SHERMAN: Well, first of all, they weren’t so sure that this would be… this indictment would be dismissed. I guess, fortunately for their sake, they had the financial means to live abroad and not run the risk of this prosecution. But still, as Mr. Weinberg did not refute, the fact is that the statutes are now off the books. But at the time that doesn’t mean the indictment wasn’t valid. It was a valid indictment, and they couldn’t do anything about it.

MARGARET WARNER: Are you saying as a matter of principle that it’s okay to leave the country to evade prosecution? I mean, if you think you’re innocent, why not go to trial?

STEVEN SHERMAN: Well, it is not okay to run, but I’m just saying in this context, these people were fearful of prosecution, and didn’t want to take the risk. I’m not saying it is right. But they were able to do so, and they waited the period out. And now with hindsight, the statutes in which they were… some of the statutes in which they were charged with are no longer in the books. He doesn’t refute that. Basically he doesn’t refute that…


STEVEN SHERMAN: Perhaps it was overreaching to charge with RICO charges, racketeering. He doesn’t refute, he says just because other oil companies were not charged doesn’t make the case against Rich okay. But these regulations were enacted to prevent this type of activity. Congress was looking to clamp down on this activity.

MARGARET WARNER: Mr. Weinberg, let me ask you about a related matter. Jack Quinn made clear in the letter that the President exacted a quid pro quo here and he made Jack Quinn write a letter saying, “my client will waive a statute of limitations if the government wants to come after him as a civil matter.” One, does that mitigate this outrage, you feel, in any way? And two, is he vulnerable to civil charges now if and when he comes back?

MORRIS WEINBERG: The answer is no, no. It was a corporate tax that was evaded — $48 million in tax on $100 million worth of income — and that was paid when the companies, his companies, companies that were run by him and Mr. Green, when those companies pled guilty to conduct that he committed with Mr. Green those companies pled guilty and they paid not only the $48 million tax, but penalties and fines that totaled $170 million. But there isn’t any – I mean, this promise to face the civil cases is a completely empty promise because there isn’t a civil case. And there never would have been a civil case because that was eliminated at the time back in 1984, when the companies pled guilty. But let me just respond to what –something Mr. Sherman said. He keeps talking about the regulations are not regulations anymore. Well, I think that he has forgotten or he is ignoring the fact that the guts of what this case is about — it was always publicized as the biggest tax fraud in history. The tax statutes have been on the books since long before 1980. When you earn income and when a corporation earns income on American transactions– which was a case in this case– and they don’t pay taxes on it, and they do it intentionally– like in this case-where they had second set of books and they laundered the money out of the country– that’s fraud and that’s tax evasion. And that was a crime then, and that’s a crime now.

MARGARET WARNER: But you’re saying he still would not be… there is no way to recover any of that civilly or the company has already paid it, is that it?

MORRIS WEINBERG: Yeah. We already recovered it. We recovered it against the companies in 1984. It’s never been a question of money as it relates to Marc Rich. He offered us then and he has offered various U.S. Attorneys offices vast amounts of money to forgo charges against him individually. We told him back in 1983 when he became a fugitive, and I believe the U.S. Attorney’s offices have told him consistently since then it is not about money. The corporations have paid the money. It’s about you and Mr. Green facing the charges that every other individual that is charged with a crime has to face. And there is no amount of money that can make… that should have made it go away. That’s why the pardon in this case, where somebody runs, where somebody doesn’t face the charges, where somebody renounces their citizenship like Mr. Green and Mr. Rich did, is wrong; it’s unforgivable and it just absolutely should never have happened, particularly when there was no input from the U.S. Attorney’s office, the IRS, the people that prosecuted this case.

MARGARET WARNER: All right. Mr. Sherman, brief response from you. Brief, sorry. We’re really out of time.

STEVEN SHERMAN: He makes a valid point to a certain degree with respect to the tax evasion charges, they’re still on the books. All I’m suggesting is that if there is overreaching on part of the indictments, that is what the RICO or the racketeering charges and with the oil company issues, then that perhaps suggests or casts some doubt on the other charges. If there were overreaching on one part of the indictment, perhaps there was overreaching on the other part of the indictment. All I’m saying is that as we learn more, it seems there are more reasons that justify the pardon. I’m not saying I know all the facts. Mr. Weinberg was the actual prosecutor.

MARGARET WARNER: All right, gentlemen, we have to leave it there. Thank you both very much.