Marc Rich to get $100 million for trading firm

Russian company to merge company with unit of its own

March 21, 2001|By BLOOMBERG NEWS

MOSCOW - Marc Rich, the billionaire trader pardoned by former President Bill Clinton, will sell his commodities trading company to Russia's Alfa Group for $100 million, a spokeswoman for the Moscow-based concern said.

Alfa Group, one of Russia's biggest industrial and financial groups, plans to combine Marc Rich & Co. Investment AG with its Crown Resources AG unit, creating a company with annual revenue of about $12 billion, Crown chief executive Elliot Spitz said when the sale was announced last month.

"Rich will not have a position in the company," said Nadia Antonova, Alfa Group's spokeswoman.

Rich, 66, fled the United States for Switzerland in 1983 after he was charged with evading more than $48 million in taxes and violating U.S. sanctions by trading with Iran. Clinton pardoned Rich in January, just before he left the White House, prompting investigations by three U.S. congressional committees and the U.S. attorney in New York.

Thomas Frutig, chief executive of Marc Rich & Co. Investment in Zug, Switzerland, couldn't be reached for comment. Last month, Frutig said the company represented less than 20 percent of Rich's business assets.

Negotiations between the two companies began in September and concluded in late December, almost a month before Clinton granted Rich's pardon, Crown chief operating officer Christopher Sayer said at a press conference yesterday in New York.

"In case it was getting lost in all the other press that's going on at the moment, we wanted to send the message that this is a commercial deal that takes us toward our goal of being a global commodity company," Sayer said. "There was nothing else driving this," such as politics, he said.

Marc Rich & Co. Investment employs 300 people and has 10 offices in 10 countries, including Britain and Switzerland. It trades metals such as nickel and copper, as well as crude oil and refined fuels. The company has sales of more than $7 billion, Crown CEO Spitz said.

In 1994, Rich sold the last of his stake in Glencore International AG, a trading company he set up in the 1970s, only to create the business now being sold.

Alfa Group has interests ranging from oil to sugar to banking. It owns 50 percent of OAO Tyumen Oil Co., Russia's fourth-largest oil company, which produced 20 million tons of crude oil in 1999 and exported more than 8 million, according to company estimates.

Other subsidiaries include Alfa Bank, Russia's largest private bank; Alfa Eco, which trades commodities ranging from oil to tea; Alfa Estate Group and Alfa-Guaranties, which handle real estate and insurance; Kubansugar, which trades sugar, and Perekrestok, a Moscow supermarket chain.

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